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TO: Mayor Richard C. Irvin
FROM: Alisia Lewis, Chief Human Resources Officer
DATE: August 27, 2024
SUBJECT:
A Resolution Authorizing Agreement for Administrative Services with Blue Cross Blue Shield of Illinois(BCBSIL) for HMO, PPO and Value HSA(HDHP) Group Health, Prescription Benefits Management(PBM), Flexible Spending, Dental, Vision, C.O.B.R.A. and Stop Loss Plan Administration for period January 1, 2025 through December 31, 2025.
PURPOSE:
To authorize an agreement for administrative services with Blue Cross Blue Shield of Illinois for the City's HMO, PPO and Value HSA(HDHP) health insurance plans, dental insurance, vision coverage, prescription benefits management (PBM), flexible spending, C.O.B.R.A. and stop loss insurance coverage.
BACKGROUND:
The City of Aurora provides a fully insured HMO for active employees through BSBSIL Illinois (BCBSIL does not allow retirees to remain on the HMO), and two self-funded plans for active employees and Pre-65 retirees through CIGNA. CIGNA’s offerings include a Traditional Plan and a High Deductible Health Plan. January 1, 2018, the City carved out the Post-65 Medicare retirees to a Medicare Advantage Program and set separate funding rates for the active employees and the Pre-65 retirees to cover their necessary liabilities under the CIGNA plan.
DISCUSSION:
The Human Resources team requested Assured Partners perform a complete market analysis for the city’s BCBSIL HMO plan and the CIGNA OAP and HDHP plans for the 2025 plan year. The analysis included the following:
PPO Network Disruption and Claims Repricing
HMO Network Disruption
Rx Reprice and Disruption (PPO plan)
Administration Services
Individual Stop Loss
Dental Administration
Vision Administration
Aetna declined the city’s request due to an inadequate HMO network. The HR team received offers from Blue Cross Blue Shield of Illinois, CIGNA, and United Healthcare. BCBSIL and CIGNA provided the most competitive combined offers for the city’s consideration.
BCBSIL initial HMO renewal increase was 5.4%.
Final Offer on a combined HMO, PPO, &HDHP
No change on HMO (ASO contract)
Guaranteed Rx Rebates of $902,400 HMO & $1,694,550 PPO
Pre-65 Retirees can elect the HMO plan effective January 1, 2025
$262,316 in Administration Fee Credits 2025
$125,000 Administration Credit for 2026 & 2027
Benefit Value Advisors included at no charge.
CIGNA’s HMO does not include Duly, thus we requested only renewal offer for the current plans. Claims year to date through June have been running at 3.5% above projections for the pre-65 Retirees, the Active OAP, and Value HSA. CIGNA’s renewal offer:
Individual Stop Loss insurance renewal is increasing 7.9% reduce from an initial 16% increase resulting in $100,000 reduction.
Rx Rebates are improving to $2,213,516 from $855,641 however they are not guaranteed.
Wellness Fund is remaining at $40,000.
CIGNA’s final offer would have resulted in a 12% increase for the OAP and HDHP plans for 2025 vs. 3% with BCBSIL.
BSBSIL offers a significantly larger network for employees as well as a significant cost savings for the City. The HR team’s recommendation is to have BCBSIL administer the HMO, PPO and HDHP, vision, dental, flex spending, COBRA and stop loss plans for the city.
Human Resources is seeking approval to enter into a one (1) year agreement with BSBCIL.
IMPACT STATEMENT:
No impact.
RECOMMENDATIONS:
Place on the Finance Committee agenda for approval to City Council.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing an Agreement for Administrative Services with Blue Cross Blue Shield of Illinois(BCBSIL) for HMO, PPO and Value HSA(HDHP) Group Health, Prescription Benefits Management(PBM), Flexible Spending, Dental, Vision, C.O.B.R.A. and Stop Loss Plan Administration for period January 1, 2025, through December 31, 2025.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, it is in the best interests of the City of Aurora to enter into a contractual relationship by and between the City of Aurora and Blue Cross Blue Shield of Illinois(BCBSIL) for administration of HMO, PPO and Value HSA(HDHP) Group Health, Prescription Benefits Management(PBM), Flexible Spending, Dental, Vision, C.O.B.R.A. and Stop Loss Plan Administration for City employees and retirees; and:
WHEREAS, the 2025 proposed City budget will provide funding for this item in employee health account numbers 602-0000-410.28-02; 602-0000-410.28-04; 602-0000-410.28-21; and retiree health account numbers 704-0000-410.28-52; 704-0000-410.28.54; 704-0000-410.28-62; 704-0000-410.28-64; 704-0000-410.28-72 and 704-0000-410.28-74.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows:
I. That the Mayor is hereby authorized to enter into an administration contract with Blue Cross Blue Shield of Illinois(BCBSIL).
II. That said contract is for the period January 1, 2025, through December 31, 2025.