Agenda Item AGENDA STAFF REPORT ASR Control 20-000669
MEETING DATE:	08/25/20
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
	Kim Derrick (714)834-7372

Subject: Amendment Number Three to Contract with The StayWell Company LLC

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Consent Calendar

3 Votes Board Majority

Budgeted: Yes

Current Year Cost: $184,900

Annual Cost: FY 2021-22: $1,219,200

Staffing Impact:

No

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: ISF 29W: 100%

County Audit in last 3 years: No

Prior Board Action: 7/16/2019 #24, 4/10/2018 #37, 5/12/2015 #40

RECOMMENDED ACTION(S):

Authorize the Chief Human Resource Officer or designee to execute Amendment Number Three with The StayWell Company LLC for the administration of a Health Management Program, to extend the current contract for a seventh year for the term of May 13, 2021, through May 12, 2022, for a contract amount estimated at $1,404,100 and revised estimated contract total of $7,854,000.

SUMMARY:

Approval of Amendment Number Three to the Contract with The StayWell Company LLC for the administration of a Health Management Program for the County of Orange to extend the current contract for a seventh year effective May 13, 2021, through May 12, 2022, under the same terms and conditions.

BACKGROUND INFORMATION:

Approval is requested for Amendment Number Three to Contract with The StayWell Company LLC (StayWell) to extend the contract for the term of May 13, 2021, through May 12, 2022, for a total contract term of seven years.

The County implemented the OC Healthy Steps wellness program in 2014. The wellness program has been hugely successful in improving employee health risks since the inception of the program. The annual average increase in County health plan premiums over last five years has been 3.9 percent, which is significantly lower than the industry average of 5 percent to 8 percent. It is estimated that this has resulted in $40.7 million in savings for the County and $9.9 million for employees over the five years. StayWell’s performance has been excellent in the last six years, achieving 95 percent of their Performance Guarantees.

Rationale to Extend Contract for a Seventh Year

Human Resource Services (HRS) maintains a regular schedule for bidding its vendor contracts to ensure the County is receiving services at a competitive cost. The current contract for wellness program administration with StayWell is expiring on May 12, 2021, and HRS-Employee Benefits was scheduled to begin a Request For Proposal (RFP) process; however, the impact of COVID and COVID-related projects, such as the Voluntary Incentive Program, has stretched staffing resources and HRS has examined all contract schedules for opportunities to reduce costs and staff time by extending contracts. The StayWell contract is a good opportunity to do so given their excellent performance and agreement to hold costs flat. Holding costs flat results in FY 2020-21 budget savings of almost $100,000.

In addition to the financial savings and efficient management of County contract staffing, this extension gives the County another year under the administration of StayWell to keep the cohort data together for an additional year. Due to COVID, the biometric screening component of the OC Healthy Steps was waived this year. This means we will have a small gap in cohort data from 2020 until we obtain another year of biometric screening in 2021. Having StayWell administer the OC Healthy Steps period in 2021 allows for consistent comparison of cohort data at the end of 2021, despite missing a year due to COVID.

StayWell also just implemented a new and enhanced wellness portal for the OC Healthy Steps program. Continuing this contract for an additional year avoids disruption and frustration for employees who would potentially have to change portals yet again next year should HRS proceed with an RFP and new provider.

Lastly, the implementation of the Voluntary Incentive Program, as well as implementation of COVID related protocols in the months ahead, could lead to an array of changes in benefits, guidelines, and services in the Wellness Center. HRS' current staff needs to remain focused on these critical projects and extending this contract and subsequent RFP will allow resolution of some of the outstanding items so that the development of the RFP for the next contract term can include the proper scope of services and potential changes to current program administration. This will not have a negative impact on HRS' contracting schedule and will be on an alternating schedule to avoid any future conflicts with regard to the RFP process.

HRS is requesting your Honorable Board of Supervisors (Board) to extend the StayWell contract for a seventh year for the term of May 13, 2021, through May 12, 2022. If approved, an RFP will be released in 2021 for a contract start date in 2022.

Contract and Prior Board Action

On July 16, 2019, the Board approved the execution of Amendment Number One to extend the Contract with StayWell for the administration of a Health Management Program for a term of one year effective May 13, 2020, through May 12, 2021.

On April 10, 2018, the Board approved the execution of Amendment Number One to renew the Contract with StayWell for the administration of a Health Management Program for a term of two years effective May 13, 2018, through May 12, 2020.

On May 12, 2015, the Board approved execution of the Contract with StayWell for the administration of a Health Management Program effective May 13, 2015, through May 12, 2018, renewable for two additional one-year terms per Board policy.

Current Performance

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 StayWell. The Contract includes 11 PGs measured on a yearly basis.

In Contract year 2017-18, StayWell met nine of the 10 PG measurements for an overall 90 percent of PGs met. For Contract year 2018-19 and 2019-2020, StayWell met all 11 PG measurements for an overall 100 percent of PGs met.

FINANCIAL IMPACT:

The estimated cost for the one-year amendment is $1,404,100 with $184,900 in FY 2020-21 and $1,219,200 in FY 2021-22. The estimated revised cumulative total of the Contract is $7,854,000. Cost will vary depending on the actual number of employees who participate in the Wellness program. The cost of the contract is partially offset by Wellness revenue of $550,000 from the County employee health plans.

Appropriations are included in the Fund 29W FY 2020-21 Budget and will be included in the budgeting process for future years.

The Contract includes a provision that states that it is subject to and contingent upon applicable budgetary appropriations being approved by the Board for each fiscal year during the term of this Contract. If such appropriations are not approved, this Contract will be immediately terminated without penalty to the County.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - The StayWell Company LLC Amendment Number Three
Attachment B - Redline Changes to Contract with The StayWell Company LLC
Attachment C - The StayWell Company LLC Contract Summary Form
Attachment D - The StayWell Company LLC Performance Guarantees for Contract Year 2019-20 YTD