HomeMy WebLinkAboutOrdinance 3000 ' FOR
ORDINANCE NO . � 8y 40OA
MICROFMAED 9 /� d
AN ORDINANCE WAIVING THE REQUIREMENTS OF 'COMPHTITIVE
BIDDING FOR THE PURCHASE OF EMPZfOYEE GROUP4 rLPH 200
INSURANCE . CIR 4 ^ !e "
CO
BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE
FAYETTEVILLE , ARKANSAS :
Section 1 , That the Board of Directors hereby waives
the requirements of competitive bidding for the purchase of
` employee group health insurance for the reason that said
M requirements are not practical as there is only one potential
bidder meeting bid specifications .
Section 2 . That the Board of Directors hereby authorizes
" a the purchase of employee group health insurance plan from
v Blue Cross Blue Shield of Arkansas in accordance with the
recommendation of the city ' s insurance consultant , a copy of
which is attached hereto , marked Exhibit "A " , and made a part
hereof ,
Section 3 . The Board of Directors hereby determines that
the City must provide employee group health insurance benefits
in order to attract capable employees and provide efficient
administration of city government ; that efficient administration
of city government is essential to the public welfare ; and that
the immediate passage of this ordinance is necessary to provide
employee group health insurance benefits . Therefore , an
emergency is hereby declared to exist and this ordinance being
necessary for the public welfare shall be in full force and
effect from and after its passage and approval .
PASSED AND APPROVED this 3rd day of April , 1984 .
ON ` AAPPROVED :
ayor
V ` AT,7EST :
,.� .
' BOOK1166PAGE619
o
ty lerk
HALL CONSULTING , INC.
EMPLOYEE BENEFITS - RISK MANAGEMENT '
BOB E. HALL, PH.D., CPCU/CLU 503A Mellroy Plaza
DALE K. RAMSEY, MBA P. O. Box 1025
WILLIAM C. CAMPBELL, AB/CPCU March 12 , 1984 Fayetteville, Arkansas 72702-1025
Phone: (501) 521-7531
Mr . Sturman Mackey
Purchasing Officer
City of Fayetteville
P . O . Drawer F
Fayetteville , _ AR 72702
RE : CITY OF FAYETTEVILLE GROUP HEALTH INSURANCE
Dear Sturman :
I have reviewed the information submitted by Blue Cross/Blue
Shield regarding the loss exceeding the premiums for 1983 - 84
by $ 77 ; 380 . 00 , which is charged against the stabilization
reserve .
• Blue Cross/Blue Shield further recommended a 24 . 3 % increase in
rates in order to :
( 1 ) Replenish the reserve ; and
( 2 ) Help to offset possible losses exceeding premiums for
1984 - 85 year ( as there have been no rate increases for
3 years ) .
As you know , this is a Retrospective Rating Plan whereby the
City ' s liability is limited to the premiums paid . If losses
exceed premiums , the losses are charged to the Stabilization
Reserve and if losses are less than premiums , the excess is
refunded to the City as was done in 1981 ; 1982 ; and 1983 ; for
a total of $ 174 , 083 . 44 refunds .
I recommend the following :
( 1 ) Not go for bids as this is a one year case where losses
exceeded premiums vs . three years of refunds ;
( 2 ) The required additional premiums for the purposes mentioned
earlier , not be passed on to the City as Employer or
Employee premiums but rather that the additional amount
� BooK1106P�;�E620
I
Dir . Sturman ' Mackey
Diarch 12 , ' 1 '934
Page 2
•
be paid from the refunds now held in escrow ( $ 174 , 038 . 44
plus estimated interest should now total approximately
$ 200 , 456 . 32 ) .
. . In the event the same type benefits are retained , the
$ 5 , 408 . 18 additional per month would be taken from the
escrow account .
Then , if at the end of the year , the losses were less than
anticipated , any excess would be refunded to the City .
If losses are worse than predicted , the City owes nothing
else as recommended premiums were paid .
( 3 ) It is further recommended that we consider changing the
plan benefits from what is now called a Wrap Around Major
Medical to a Comprehensive Plan ( the type almost all
Employers now use) . It will also be on the present
Retrospective Self Insured basis .
What the employee gives up is that he or she would not
have the 100 % miscellaneous hospital expense but , rather , pay
• 20 % until all employee out of pocket expenses ( in addition
to the deductible ) reaches $ 500 , thereafter the Plan pays
100 % .
In return the employee receives the following advantages :
( a) $ 1OO . deductible per year vs . present $ 100 deductible
per admission ;
( b) Supplemental Accident of $ 500 , with no deductible or
20 % co- insurance payment vs . no such benefit at
present ( only pays hospital charges ) ;
( c ) Stop Loss ( out of pocket expenses ) of $ 500 plus
deductible vs . present $ 1 , 000 out of pocket expenses
after deductible .
Further , the recommended rate increase is about ; of
present plan recommended rate increase .
EXAMPLE : In place of paying out of escrow the $ 5 , 408 . 18
per month for 1984 - 85 -- only $ 2 , 918 . 60 need be paid to
replenish the reserve and head off any possible adverse
loss experience in 1984 - 85 .
04
BOOK
1106P��EDal
Mr . Sturman Mackey
March T2 , '1984
Page 3
•
( 4 ) Possibly the following steps might be taken :
( a) Meet with employee representatives or Department
Heads and get the employee preference on the change
of benefits ; then
( b) Present recommendations to the Board .
Please letme know if I may be of further assistance .
Sincerely ,
Bob E . Hall , Ph . D . , CLU/CPCU
BEH/ch
•
CERTIFICATE OF RECORD
State of Arkansas ( SS CERTIFICATE OF RECORD
City of Fayetteville ( STATE OF ARKANSAS ) SS.
I, Suzanne C. Kennedy, City Cleric and Washington County )
Ex-Officio recorder for the City of Fayetteville, 1 , Alma L. Circuit CLrk and Ex-Officio Recorder for
do hereby certify that the annexed or fore- Washington Cmmty, -lo hereby certify that the annexed or fore-
going, is of record in my office and the same ap- . g ' g instrument was fil(a�d1 for recorr' I in my fico on the-nay
pears in Ordinance E2 Resoluti:an hook of _19 dFa Oo'^lorl:ri 1hand the sama i
�e � duly recorded record Id ai page
)(Vill_at pages Jto-- • �`�i nnss my yytness my hand and sea s day o}
rV
hand and seal tl,:s — i^ d of
_ t y Circuit Clerk and
Ex-Officio Rewrded ...
y Cierk ar_d Deputy Clerk
• BOOK IlUOPAGE622
04 - 17 -84
ARKANSAS BLUE CROSS AND BLUE SHIELD , INC .
Retention Agreement for
CITY OF FAYETTEVILLE and FAYETTEVILLE PUBLIC LIBRARY
GROUPS 290041 and 290042
This Retention Agreement applies to the above Group .
The Agreement is a retrospective refund calculation , and will be
determined using earned premiums and incurred claims of Blue Cross , Blue
Shield , and Extended Benefits coverage . The effective date of the Agreement
is to be April 1 , 1984 . Each contract year constitutes a period for
accountability of premiums and incurred claims , and hereafter will be
referred to as a refund period . The refund will be calculated one hundred
and eighty ( 180 ) days after the end of each contract year .
The composition of the formula used to determine the refund amount
and the definition of each item contained in the formula are as follows :
EARNED PREMIUM : Blue Cross , Blue Shield , and Extended
Benefits income for the refund period .
RETENTION : The amount retained by Arkansas Blue Cross and
Blue Shield for claims administration expense , general administration
expenses , general contingency , insurance risk , and large claim pool charge .
The retention used in establishing the refund amount is 14 . 0% of earned
premium .
CLAIMS COST : Claims cost is the amount of earned . premium
required to pay contract benefits for claims incurred during the refund
period .
LARGE CLAIM ADJUSTMENT : The Large Claim Pool base agreed to
by the Carrier and the Group is $ 30 , 000 . 00 per member per contract year . At
the time of settlement , only the $ 30 , 000 . 00 per member per contract year will
be applied toward the determination of the Retrospective Refund and
Stabilization Reserve Fund .
RATE STABILIZATION RESERVE : The amount of earned premium
maintained in reserve for the Group by Arkansas Blue Cross and Blue Shield to
offset unusual fluctuations in claims . This will be 13 . 0/6 of earned premium
for the contract year beginning April 1 , 1984 . Once the reserve is
established , it will be credited with interest earned during subsequent
periods . If an underwriting loss is incurred during the refund period , it
will be charged against the rate stabilization funds . Negative balances in
the rate stabilization fund will be carried forward to the next refund
period .
REFUND : The retrospective refund shall be earned premium ,
less retention , minus claims cost , less large claim adjustment , minus the
adjustment to the stabilization fund . The formula is illustrated as follows :
( EARNED PREMIUM - RETENTION ) - ( CLAIMS COST - LARGE CLAIM ADJUSTMENT ) -
ADJUSTMENT TO STABILIZATION FUND = REFUND .
The refund shall be paid to City of Fayetteville and Fayetteville
Public Library .
TERMINATION : In the event the Group terminates Blue Cross and
Blue Shield coverage during the contract year , any refund or rate
stabilization reserve due the Group will be considered liquidated damages .
If the termination occurs at the end of a contract year , any refund or rate
stabilization reserve due the Group will not be settled until twelve ( 12 )
months following the Group ' s termination .
-2-
This Agreement may be terminated by either the Contract Holder or
the Plan at the end of the contract year by thirty ( 30 ) days prior notice in
writing .
ARKANSAS BLUE CROSS AND BLUE SHIELD , INC .
. • /� 1 � e.e MsLq 25. 0841
Signe�s B . House , C . H . C . Date :
Vice President , Marketing
CITY OF FAYETTEVILLE and FAYETTEVILLE PUBLIC LIBRARY
(It � , wa"
Signed Mayor Date
City C erk
.3-
Lear ars
'tNt RCOVIR�aAtB�/Kt o�lt ..�'!e�,.r�. • s : :.:M:.+v � ., . .. .« .
CO.OPtTlTIVO •IDOIAO «s- 'la ye.yFUMrr .r '^. r '. ^ "'w i 'V t - f. s '. : ... ' Sit ` ;•�•p„a,a,;,l
C TNt r'1f{14T'teA�Q d
QAtPIOr Ot WYv • tal •a. 14 tax, VM ^1.4e
NQALTN IN:URAMCt. ' v A . N! [ +rr• . 1 t:¢p� aW «t • Lfma n«ns
tt 11 ORDAIOMD tr 1Nt =strs+ ai+ r+:n��cevftt to :.Y a .•v rt / 1�v •.r% t:r. a . cry to A eWezmru n. .a0wr
tOARD OP Ottecrons OF l
TN9 city dI F^TIIT - for rtwm am a ;sef el of :Arnr rhuntnf. rf:rulatr3 And dUltiutinrfT rzvrn r.a
TQVILLQ,"ARI[AM3Aa:^ ” . Mtabilslr`d place of hustnrst to tubf.cnbeM and rraden teneeaDTd aD tuar*
Sftlldn T. That the Baan W In the ClIv and CUnnty for a definiterice for each
direefert here" waiv" ted D cop)'. or • flteU twice pre
rApuirement . of compotulw annum. which price was fixed at what is considered the value al IflepelbilrAnd4
bidding for the perrcnate W ba sed upon the news value and ser% ice value• itcontains, thatal Mast flfIvperrrelt
employee for
he re on m incur- of the subscribers thereto hare aid cash for their subscriptions to the newspaper
emp for me reason mar said P D
requiremems are not practical or its agents or through recognized news dealers over a period of at least six
as there is only one potential months; and that the said newspaper publishes an average of more than forty
bidder .meeting bid specifica.
tiods. percent news matter.
Seciton 2. That the Beard of
the pbrs ase o au nloyee I further certify that the legal notice hereto attached in the matter of
the purchase s employee Y g
group health insurance plan
from Blue in a Blue ce w tof
h _
Arkansas in ar�otion o with
the recummeRtlalion of the " F--��-� >f �t-'>f- Z � �(/ e ����✓
city's insurance consultant, a
copy of which is attached /
hereto, marked. Exh;biti "A.., was published in the regular dailyissue ofsaid newspaperfor —
and made'a pan hereof. consecutive insertions as follows:
Section 3. The Board of
- Directors hereby determines / r
that the city must provide The first insertion on the day of ` If 19 ��
employ" group haalth insur-
ance benefits in order to attract
capable employees and provide the second insertion on the day of 19
efficient administration of city
government; that efficient
administration Of city govern- the third insertion on the dal' of 19
ment is essential to thepub6c
passage
and that i mance is and the fourth insertion 0 h di�y't Of 1
passage of this ordinance is ^
necessary to provide employee /
'group nealth insurance
benefits . Therefore, an
emergency is declared to exist
and mis ordinance being nec Sworn to and subscribed before me on this -� ��r_
essary for the public welfare 1 day of
snail be in NII force and effect / Q
from and after its passllgc and i
approval. I ✓
PASSED AND APPROVED
Mis3rdday of Pp61, 198E - ✓
A13PRO%4ED: \otar ' 1Ib11C
Paul R. Noland }
Mayor
ATTEST : My Commission Expires:
Suzanne Gr Kennedy
Exhibit A is on file at The City
Clerks Oflice. 113 W Mountain,
Fayenliyule; Ar. 1
Foes for Prinlini:
COc1 01 P:aei
- µ
rwt.Jt, .frS Flfrr,., _
MANE CHECKS PAYABLE TO: I+< No .
�_.y � ,_ = y QASSINV INVOICE "'.
21387 NORTHWEST ARKANSAS TIMES LINES TIMES AMOUNT
P. O. DRAWER D FAYETTEVILLE, ARKANSAS 72701 c64L 0-1 �p
212 NORTH EAST AVENUE PHONE (501 ) 442-6242 YOUR CLASSIFIED INVOICE IS
NOW DUE. IF NOT PAID WITHIN 10
DAYS AMOUNT DUE WILL BE _
PHONE CLERK
INDEXING TERMS:
C itu of Fatiett -%-- ; bra
AD GIVEN BY CLASSIFICATION
{� {� .� I C.=
I•Bwav i' COD
LIE SOLICITED BY OPERATOR
raisette •:' LIIe
72102 _
START DATE STOP DATE '< SKIP SCHEDULE
PLEASE PAY PROMPTLY
A IV
1" MiFETITIVc<
` 7 FAYE