JOINT LABOR-MANAGEMENT BENEFITS COMMITTEE www.myFlexLA.com

Joint Labor-Management Benefits Committee

COMMITTEE REPORT 15-26

JOINT LABOR-MANAGEMENT BENEFITS

COMMITTEE MEMBERS:

Management

Wendy G. Macy, Vice-Chairperson

June Gibson

Tony Royster

Matthew Rudnick

Miguel Santana

Employee Organizations

Cheryl Parisi, Chairperson

Paul Bechely

Chris Hannan

David Sanders

Gregory West

Date: October 2, 2015 To: Joint Labor Management Benefits Committee From: Staff Subject: Health & Dental Plan Procurements RECOMMENDATION: That the Joint Labor-Management Benefits Committee (JLMBC) receive and file this report and related presentation regarding design of the 2015 Medical and Dental Requests for Proposal.

DISCUSSION: At its meeting on September 3, 2015, the JLMBC approved moving forward with Requests for Proposal (RFPs) for health and dental service providers in 2015/2016 with a target implementation date for new service provider contracts to be in place by January 1, 2017. The JLMBC further approved staff’s proposed procurement development plan and calendar for RFP development, as well as a Pledge Form Regarding Conflict of Interest, Confidentiality and Proposer Communications and its execution by all JLMBC members/City staff involved in the development process for this procurement.

A. Presentation

Accompanying this staff report is a presentation from staff and Mercer Consulting regarding the concepts and considerations related to development of medical and dental plan procurements. This presentation is intended to be interactive and engage JLMBC members regarding RFP design concepts, preferences and decision points. This presentation will attempt to place these procurements within the context of benefit service mission, define major service categories, review the current medical and dental landscape and trends, and introduce concepts being considered by staff and the consultant relative to incorporating RFP best practices.

B. Updates & Next Steps At the JLMBC’s September 3, 2015 meeting, staff presented and the JLMBC adopted a project plan which included a timeline for executing the development, issuance, review

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and decision-making related to the medical/dental procurements. That timeline is updated as follows:

Month(s) Action Status

Sep-15

Approve staff proposals related to moving forward with the health/dental procurement development

Completed

Oct-15

(1) Staff/consultant review/discussion of medical and dental plan RFP development

(2) Conduct focus groups of Flex Plan participants

(1) Completed 10/8/15 (2) In progress

Nov-15

(1) Staff/consultant review/discussion of medical and dental plan RFP development

(2) Finalize membership survey

(1) (1) Scheduled for 11/7/15 (2) (2) To be approved 11/7/15

Dec-15

(1) Staff/consultant review/discussion of medical and dental plan RFP development

(2) Issue membership survey

(1) Scheduled for 12/3/15 (2) Proposed no later than early

December 2015

Jan-16 (1) Review first draft RFPs (2) Review survey results

(1) Scheduled for 1/7/16 (2) Scheduled for 1/7/16

Feb-16 (1) Finalize and Release RFPs

(1) Finalize RFPs 2/4/16; issue RFPs 2/15/16

Mar-16 Response Due Date (1) Scheduled 03/31/16

Apr/May-16 Response Evaluation

Dates TBD

May/Jun-16

(1) Provider Selections (2) Report to Council re 2017 Flex Program

adoption

Dates TBD

Dec-16 Execute contracts Date TBD

RFP Development Update: The first phase of discussion with the JLMBC regarding medical/dental plan RFP development will take place on October 8, 2015 and will focus on review of benefit service mission, major service categories, current medical/dental trends, and RFP design best practices. The meeting on November 7, 2015 will focus on reviewing primary categories for benchmarking and defining the menu of RFP inquiries, and addressing RFP evaluation and final decision-making provisions. The meeting on December 3, 2015, will resolve any outstanding issues in order to provide final direction to staff and the consultant for RFP construction. Member Communications Update – Staff is working with Mercer Communications to execute a series of focus groups concurrent with development of a member survey. A solicitation for focus group volunteers was issued on September 28, 2015 (see Attachment A). As of the time of writing this report, 187 individuals had volunteered to join the focus group pool. From this pool focus group volunteers will be identified and

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focus groups held at a variety of dates/locations. Focus groups will take place in the month of October. A schedule is presently being finalized and will be provided to the JLMBC at its October 8th meeting. Concurrently, staff is working with Mercer to develop and execute a member survey. The survey will incorporate focus group feedback and will be issued to all Flex Program members. The survey is being constructed to assess member benefit awareness, utilization, and service preferences. That survey will be presented to the JLMBC for review/approval on November 7, 2015, and issued no later than early December 2015. Employee Benefits Division is completing and will be issuing an electronic newsletter in early October 2015 providing City employees with information regarding benefit programs administered by the Personnel Department, including the Flex Program. This newsletter will be used to provide initial and ongoing notification to employees regarding the health/dental procurement development process. Additional communications will be posted on the Flex Program’s myflexla.com website and JLMBC Governance website (the latter is available through the Personnel Department’s home page).

Submitted by: ______________________________ Steven Montagna

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Attachment A

City of Los Angeles FLEX BENEFITS PROGRAM

HEALTH & DENTALREQUESTS FOR PROPOSAL

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MEETING OBJECTIVES

• Define procurement mission• Review current medical/dental design structure• Discuss proposed guiding principles for procurements• Review concepts for RFP best practices & innovations• Review next steps

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I. PROCUREMENT MISSION

HOW SHOULD WE MEASURE SUCCESS?

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PROCUREMENT MISSION

Member Benefit Awareness

Member Benefit Engagement

Member Outcomes &

Service Satisfaction

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WHAT IS MISSION OF HEALTH & DENTAL PROCUREMENTS?

To identify the service providers who can best support and deliver on a robust health and wellness strategy through the Flex Program by:Ø Providing a sufficiently broad range of quality choices for

members in the delivery model and benefit levels of how they receive care

Ø Providing timely and good geographic access to careØ Communicating and assisting members in navigating benefit

and service complexityØ Providing easy flexible member self-service toolsØ Engaging members in wellness, prevention, diagnosis,

treatment andØ Producing and improving upon measurable member outcomes

PROCUREMENT MISSION

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II. FLEX MEDICAL/DENTAL DESIGN STRUCTURE

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Medical Design & Member Value Structure

Staff Model HMO

Non-Staff Model HMO (Narrow Network)

Non-Staff Model HMO (Full Network)

PPO (Full Network)

Member Choice: Service integration (“one-stop shopping”), benefit delivery consistency, integrated Electronic Medical Record (EMR), lower cost, fixed copay structure, lower EE contributions

Member Choice: Narrower Provider Medical Group (PMG) and facility provider choice, lower cost, fixed copay structure, lowest Employee contributions

Member Choice: Expanded access PMG and facility providers, greater individual choice, Moderate cost, fixed copay structure, High EE contributions from full vs narrow price difference

Member Choice: Maximum service provider choice and customization, highest cost, deducible coinsurance benefits w/maximums, High EE contributions with dependent coverage

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Dental Design & Member Value Structure

Dental HMO

Dental PPO

Dental Preventive Only Member Choice: very limited benefit, low member benefit cost, incentive for single part enrollment, lowest member contributions for dependents. lowest premium cost

Member Choice: Very limited service providers, lowest cost, fixed copay benefit schedule, lowest premium cost (obtained through capitated provider arrangements, fixed benefit co-pay schedule, only benefits on schedule are covered, etc.)

Member Choice: Maximum service provider choice with network and non network access (obtained at highest cost, deducible coinsurance benefits w/maximums, and highest member contributions)

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III. PRIMARY SERVICE CATEGORIES

Employer

Cost –Affordable, Sustainable

Population Health & Wellness

Financial, Clinical,

Quality Care Analysis & Reporting

Regulatory Compliance

Integrated Care Delivery

& Payment Reform

Employee

Delivery Model and

Design Choice

Quality Provider Network Access

Tools (mobile

apps, cost, providers) Resources

Member Engageme

nt and Customer

Service

Quality Care and Service

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Medical Landscape/Trends

• Consolidation of health plans and pharmacy benefit managers

• Continual expansion of Accountable Care Organizations, (ACOs), Provider Medical Group (PMG) and ACO-Network based structures

• Rx (prescription drug) increases in:• unit cost on specialty/brand/generic,• utilization of specialty Rx

• Increase in member self service tools• PMG/Facility access and changes• Price transparence• Electronic medical records (EMR)

• Increased employer focus on wellness and incentives• Employers implementing strategies to reduce impact of excise tax• Increase in consumer oriented plan designs

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Dental Landscape/Trends

• Vendor landscape status quo little consolidation• Provider landscape static as well• More member tools• Under utilized services (particularly preventive)• Some effort on evidenced based practices (customizing

treatment protocols to individual patients)• Some effort on exchanging diagnostic findings to medical

plan (e.g w/integrated medical/dental providers)• Employers moving towards voluntary products

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III. GUIDING PRINCIPLES

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Proposed Guiding Principles for Health/Dental RFPsØ Affirm menu structureØ Focus on provider efficacy at health and wellness strategies and delivery

through:Ø communicating and assisting members in navigating benefit and

service complexityØ providing timely access to careØ providing member self service toolsØ engaging members in wellness, prevention, diagnosis, treatment

andØ producing and improving upon measurable member outcomes

Ø Offer Southern-California based provider networks that provides strong quality and good access

Ø Offer a competitive pricing structure for the menu of servicesØ Offer alternative funding and or risk sharing arrangementsØ Assess vendor capabilities for additional service, innovative services,

menu design, and benefit level options (evolution opportunities over 5-year contract term)

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IV. CONCEPTS FOR RFP BEST PRACTICES & INNOVATIONS

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CONCEPTS FOR PROCUREMENT BEST PRACTICES

A. Assess Participant Service Preferences– Focus groups– Survey

B. Identify Core Group of Services– Identify current core services (compressive medical and dental benefits

through HMO and Fee for Service (FFS) delivery models)– Best fit & thorough exchange of information & mutual understanding– Document current/operations/services– Benchmarking & identifying potential new services

C. Focused Written RFP Questionnaire– Comprehensive without being burdensome– Tables/checklists and “essay” questions – Create with evaluation process in mind– allow for easier evaluation and

scoring – Invitation for value-added and or innovative services– Market receives the same utilization cost, exposure, demographic, rate

history, and utilized provider information.

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CONCEPTS FOR PROCUREMENT BEST PRACTICES & INNOVATIONS

D. Pricing– Standardized format– Price by plan (HMO/PPO), full and narrow networks current benefit levels – Price for design options– Price for alterative funding or risk sharing methods

E. Performance Based Exams– Preset agenda including respondent-specific items– Scored items in process

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V. NEXT STEPS

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Month(s) Action Status

Sep-15 Approve staff proposals related to moving forward with the health/dental procurement development Completed

Oct-15 (1) Staff/consultant review/discussion of medical and dental plan RFP development (2) Conduct focus groups of Flex Plan participants

(1) Completed(2) In process

Nov-15(1) Staff/consultant review/discussion of medical and dental plan RFP development (2) Finalize membership survey

Dec-15 (1) Staff/consultant review/discussion of medical and dental plan RFP development (2) Issue membership survey

Jan-16(1) Review draft RFPs (2) Review survey results

Feb-16 (1) Finalize and Release RFPs Mar-16 Response Due Date Mar - May-16 Response Evaluation

May/Jun-16

(1) Provider Selections (2) Report to Council re 2017 Flex Program adoption

Dec-16 Execute contracts

PROGRESS/TIMELINE