Agenda Item   

AGENDA STAFF REPORT

 

                                                                                                                        ASR Control  19-001090

 

MEETING DATE:

10/22/19

legal entity taking action:

Board of Supervisors

board of supervisors district(s):

All Districts

SUBMITTING Agency/Department:

County Executive Office   (Approved)

Department contact person(s):

Renee Catanzariti (714) 834-2564 

 

 

Duane Bankey (714) 834-2081

 

 

Subject:  Amendment Number Three to Contract with Standard Insurance Company

 

      ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Discussion

 

 

3 Votes Board Majority

 

 

 

    Budgeted: N/A

Current Year Cost: N/A

Annual Cost: FY 2020-21: $648,550
FY 2021-22: $648,550

 

 

 

    Staffing Impact:

No

# of Positions:

Sole Source: No

    Current Fiscal Year Revenue: N/A

  Funding Source: ISF 298: 100%

County Audit in last 3 years: No

 

 

    Prior Board Action: 7/16/2019 #19, 08/14/2018 #26, 11/10/2015 #34

 

RECOMMENDED ACTION(S):

 

Authorize the Chief Human Resource Officer, or designee, to execute Contract Amendment Number Three with Standard Insurance Company for Provision of the Long-Term Disability Insurance and Administration of Short-Term Disability Insurance Plan and Reserve Deputy Sheriff Disability Income Protection Plan to extend the current contract for a sixth year for the period effective January 1, 2021, through December 31, 2021, under the same terms and conditions and scope of work, estimated at $1,297,100.

 

 

 

 

SUMMARY:

 

Approval of Amendment Number Three to the contract with Standard Insurance Company for continued administration of the County’s self-funded Short-Term Disability Insurance Plan and Reserve Deputy Sheriff Disability Income Protection Plan and for the provision of Long-Term Disability Insurance will allow the Standard Insurance Company to continue providing services during the time Human Resource Services will be developing and releasing the Request for Proposals for the aforementioned services.

 

 

 

 

BACKGROUND INFORMATION:

 

The County utilizes the services of a third party to administer the self-insured Short-Term Disability (STD) Plan for Administrative Management, Executive Management, Law Enforcement Management, Attorney, Craft and Plant Units (eligible employees) and the Reserve Deputy Sheriff Disability Income Protection Plan.

 

The County is fully insured for Long-Term Disability (LTD) for eligible employees. The LTD insurance provides eligible employees with income protection if they have a disability that prevents them from performing their regular job duties upon exhausting their STD benefits.

 

Approval is requested for Amendment Number Three to the contract with the Standard Insurance Company (Standard) to renew the contract for the period January 1, 2021, through December 31, 2021, for a total contract term of six years. On November 10, 2015, your honorable Board of Supervisors (Board) approved execution of the initial contract, following a Request for Proposal (RFP) solicitation, for a period of three years (January 1, 2016, through December 31, 2018) with two one-year renewals for calendar years 2019 and 2020. On August 14, 2018, the Board approved Amendment Number One to renew the Contract with Standard for one additional year, from January 1, 2019, to December 31, 2019, amend Attachment B - Cost/Compensation of the contract to reflect a rate increase for LTD Insurance as well as changes in Payment Terms and Payment Invoicing Instructions and amend Attachment D - Performance Guarantees, for an estimated amount of $919,000.  On July 16, 2019, the Board approved Amendment Number Two to renew the contract with Standard for one additional year, from January 1, 2020, to December 31, 2020, for an estimated amount of $1,297,100.

 

Rationale to Extend Contract for a Sixth Year

During the final renewal period, January 1, 2020, through December 31, 2020, Human Resource Services (HRS) was scheduled to initiate an RFP solicitation process, pursuant to Section 3.3-105 of the 2018 Contract Policy Manual (CPM), to bid its vendor contracts every five years to ensure the County is providing services that reflect the current market landscape at a competitive cost. However, with HRS implementing a new Benefits Administrator, including a new benefits enrollment web platform, and adding a new Cigna Select Narrow Network Health Maintenance Organization health plan in January 2020, HRS is requesting the Standard contract be extended for a period of one year. Extending the Standard contract by one year allows for a smooth implementation of the new Benefits Administrator and the first Open Enrollment under this new web platform before introducing additional changes. Section 3.3-106 of the CPM allows for extending the contract with Standard for one additional year upon Board approval.

 

New Benefits Administrator

HRS has begun the complex discovery, programming, testing and implementation phase of a new benefits administration contract, which will begin approximately June 1, 2020. The key services provided under the contract that will be a part of the implementation process includes, but is not limited to, the following:

 

  • Managing individual benefits eligibility determination and enrollment processing for employees, retirees and their dependents.

 

  • Providing an enrollment and benefits information web platform.

 

  • Operating a customer service call center to support benefits enrollment and information.

 

  • Providing enrollment and premium deduction files to County insurance plans, payroll system and OCERS for pension deductions

 

  • Transmitting weekly enrollment files to ten different benefit plan vendors with whom the County is currently contracting for insurance policies and/or administration of specific benefit claims.

 

  • Annual Open Enrollment beginning in Fall 2020 for the 2021 plan year.

 

Implementation of these services for the new vendor is critical to providing continued, seamless access to benefits required under the law for the Affordable Care Act and under County Memoranda of Understanding. The programming and testing work for interfaces with each current plan and building options, rates and benefit descriptions into the benefit administration system for June 2020 is a lengthy and complex process. If HRS proceeds on schedule to initiate a solicitation for the STD and LTD contract for 2021, HRS could potentially be implementing a new vendor during the County’s first Open Enrollment with the new Benefits Administrator. This adds an element of risk to our first Open Enrollment in the new system and may generate confusion with employees undergoing so many changes at once. HRS would like to ensure that the implementation is stable before introducing major vendor changes in the new system.

 

In order to ensure continuity of services and to guarantee County participants are supported in their health and welfare benefits administration needs during the implementation process of the new Benefits Administrator, HRS is requesting to renew the contract with Standard for the 2021 plan year. The RFP process will then be conducted in early 2021 with a new contract becoming effective January 1, 2022.

 

The Contractor's performance has been confirmed as at least satisfactory. HRS has verified there are no concerns that must be addressed in respect to Contractor’s ownership/name, litigations status or conflicts with County interests.

 

This contract does not currently include subcontractors or pass through to other providers. See Attachment C for Contract Summary Form.

 

Performance Guarantees:

Included with the contract are Performance Guarantees (PG), which set minimum standards for services provided under the contract while also assisting the County in measuring the performance of Standard. The contract includes 10 PGs measured on a yearly basis.

 

For calendar year 2017, Standard met or exceeded eight of the 10 PGs measurements, or 80 percent of the measures. For calendar year 2018, Standard met or exceeded nine of the 10 PG measurements, or 90 percent of the measures. PGs for Contract year 2019 are not yet available; however, HRS is satisfied with Standard’s current performance. Total penalties for 2017 and 2018 are $1,200 and $600, respectively. The 2017 and 2018 PG results and explanations of unmet PGs are shown in Attachment D.

 

 

 

FINANCIAL IMPACT:

 

The estimated annual (calendar year) 2021 cost for this action is $1,297,100. The estimated annual (calendar year) 2021 cost for the LTD premiums is $425,000.  The estimated annual (calendar year) 2021 cost is $41,500 for STD administrative fees and $830,600 for STD claims. The actual amounts will vary based on enrollment and utilization.

 

This contract is contingent upon funding by the County during the term of this Contract. If such funding is not approved, this contract will be immediately terminated without penalty to the County.

 

Appropriation will be included in the budgeting process for the future fiscal year.

 

 

STAFFING IMPACT:

 

N/A

 

 

 

ATTACHMENT(S):

 

Attachment A - Standard Insurance Company Amendment Number Three
Attachment B - Redlined Contract with Standard Insurance Company
Attachment C - Contract Summary Form
Attachment D - Standard Insurance Company Performance Guarantees for Calendar Year 2017 and 2018