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Bill Munch and Andrea Billings. Procurement versus trust participation – options in insurance buying. Options in Buying Insurance. Public Procurement Process Contract Negotiations. Bill Munch. Public procurement process. Theoretical Intent of Public Procurements.

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Presentation Transcript
options in buying insurance
Options in Buying Insurance
  • Public Procurement Process
  • Contract Negotiations
theoretical intent of public procurements
Theoretical Intent of Public Procurements
  • Open, transparent and non-discriminatory procurement is generally considered to be the best.
  • Optimizes competition among suppliers.
  • To prevent waste.
public procurements
Public Procurements
  • The laws in Arizona regulates procurement closely.
  • There are some distinct phases in the public purchasing process:
    • Call for bids or Request for proposals (RFPS)
    • Request for information, prior to bid
    • Bid delivery
    • Evaluation of the bid (awarding procedure)
    • Contract award
public procurements1
Public Procurements
  • For buying insurance, a consultant is typically hired prior to development of the RFP, which is separate RFP process.
  • The consultant works with the Purchasing staff and typically a selection committee.
  • It usually requires the procuring authority to issue public tenders if the value of the procurement exceeds a certain threshold.
contract negotiations1
Contract Negotiations
  • Broader, more innovative, and competitively priced services and contracts.
  • Contract negotiations capitalize on the knowledge, capabilities, and opportunities of each party involved, making the purchase as efficient as possible.
contract negotiations2
Contract Negotiations
  • Do not have the same “limitations” as the public procurement process. Some limitations include;
    • When the need for a contract is urgent.
    • High cost of preparing a bid.
    • Excessive standardization restricts innovation.
    • Negotiated savings are not achieved.
    • Scope creep.
    • Personnel assigned to the bid committee are not familiar with the services they are charged with evaluating.
contract negotiations3
Contract Negotiations
  • When are negotiated contracts advantaged over the public entity purchasing process?
    • When the scope is complex.
    • When more information is required.
    • For unique and innovative proposals.
    • To learn what firms are willing to negotiate.
trust participation
Trust Participation
  • Many public entities have elected to pool together to benefit from the “best of both worlds”, and is truly a competitive bid.
  • Taking advantage of collective bargaining allowances under the statutory authority afforded in ARS 11-952, 11-952.01,15-382.
arizona public insurance pools
Arizona Public Insurance Pools

As reported by the Arizona Dept. of Insurance there are currently as many as 23 public insurance pools operating in the State of AZ:

  • Arizona Counties Insurance Pool
  • Arizona Counties Worker’s Compensation Pool
  • Arizona Health Insurance Pool
  • Arizona Local Government Employee Benefit Trust
  • Arizona Municipal Risk Retention Pool
  • Arizona School Alliance for Workers’ Compensation, Inc.
  • Arizona School Risk Retention Trust, Inc.
  • Behavioral Health Insurance Pool, Inc.
  • Cochise Combined Trust
  • Mohave Schools Insurance Consortium
  • Navajo County Schools Employee Benefit Trust
arizona public insurance pools1
Arizona Public Insurance Pools
  • Northern Arizona Public Employees Benefit Trust
  • RSNA Employee Benefit Trust
  • Rural Arizona Group Health Trust
  • School Construction Insurance Pool, Inc.
  • Schools Medical Insurance Trust
  • Social Service Contractors Indemnity Pool
  • Valley Schools Employee Benefit Trust
  • Valley Schools Insurance Trust
  • Valley Schools Workers’ Compensation Pool
  • Verde Valley Employee Benefit Pool
  • Yavapai Combined Trust
  • Yuma Area Benefit Consortium (Trust)
vsebt fixed expense fee comparison
VSEBT Fixed Expense Fee Comparison
  • Compare like programs to accurately evaluate fixed expenses.
    • Self-Insured
    • School Districts
    • UnitedHealthcare
    • NOT participating in a Trust or Pool
  • Fixed Expenses
    • Medical Administration
    • Prescription Drug Administration
    • Stop Loss Coverage
    • Wellness Administration
    • EAP/Managed Care
    • COBRA Services
    • Consulting
vsebt fixed expense fee comparison1
VSEBT Fixed Expense Fee Comparison
  • Public Records Requests
  • Fees for the 2011/12 Plan Year
vsebt fixed expense fee comparison2
VSEBT Fixed Expense Fee Comparison
  • The above rates include claims administration, network usage, Stop Loss coverage, employee assistance program, COBRA administration and consulting services.
  • Dental, vision, and life program fees are not included in this analysis.
  • The consulting services PEPM is calculated based on the monthly paid invoice divided by the total employees.
  • Behavioral health programs vary from fully insured to self funded.
  • The more significant differences in programs are noted here. This analysis does not include each possible program variation, or capture every contractual difference.

PEPM Not In VSEBT: $54.32VSEBT PEPM: $46.90

vsebt fixed expense fee comparison3
VSEBT Fixed Expense Fee Comparison

District 2

  • The stop loss level is $175,000 per specific loss and does not include retirees.
  • The number of EAP visits is 3 per issue, per lifetime.
  • The managed care fees/costs were not reported.
  • Does not include an online employee benefit/enrollment system.

District 1

  • The stop loss level is $225,000 per individual, plus an additional specific deductible of $200,000; does not include retirees.
  • Fee above does not reflect RX rebates at 80%.
  • The number of EAP visits is 8 per issue, per lifetime.

PEPM Not In VSEBT: $54.32VSEBT PEPM: $46.90

in conclusion
In Conclusion
  • There are basically two options for a municipality in insurance buying –
    • Public Procurement/Consultant Route
    • Trust and Pool Route
  • There are major differences in the Pools/Trusts to examine.