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Exhibit 1 - Agenda Information SheetCity of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement ACM: Cassey Ogden DATE: September 19, 2023 SUBJECT Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, authorizing the City Manager to execute a contract with United Healthcare Services, Inc., for the administration of Flexible Spending Accounts (FSA) for medical care and dependent care for City employees for the Human Resources Department; providing for the expenditure of funds therefor; and providing an effective date (RFP 8241 – awarded to United Healthcare Services, Inc., for three (3) years, with the option for two (2) additional one (1) year extensions, in the total five (5) year not-to-exceed amount of $123,237.47). STRATEGIC ALIGNMENT This action supports Key Focus Area: Pursue Organizational Excellence and Collaborative and Respectful Leadership. INFORMATION/BACKGROUND The City requested competitive proposals for the administration of Flexible Spending Accounts (FSA) for medical care and dependent care as part of the City’s comprehensive benefits package. The City pays 100% of the cost for FSA administrative services; however, employees pay 100% of the account contributions in the FSA accounts they elect. FSA services have been provided through WEX (formerly Discovery Benefits) since January 1, 2019. While WEX has been a good partner during this time period, the last of the City’s one-year renewals ends on December 31, 2023. Due to the expiration of the current contract, RFP #8241 was issued to the FSA administration market. An Employee Benefits Survey was conducted in early 2023. Employee feedback included comments that the current FSA coverage for medical care required too many substantiation requests, which caused confusion and issues with the loss of use of member FSA debit cards. The City received responses to the RFP from eight (8) FSA administration companies, including WEX, the incumbent vendor. Table 1 below lists the companies that responded, as well as the comparison of the proposed prices for the FSA services as compared to the current cost through WEX: City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com Table 1 – Proposed FSA Fees Company Increase (Decrease) to Current Fees Ameriflex (12.50%) David K. Young Consulting 52.78% Flores & Associates 9.72% MetLife (17.78%) TASC (8.33%) United Healthcare/Optum – BAFO (19.44%) Voya (9.72%) WEX – Incumbent – BAFO (15.28%) All proposals were reviewed and scored by an evaluation team that included staff from the City’s Employee Insurance Committee (EIC), Human Resources, and other departments. Based on the evaluation of the proposals, both staff and the City’s benefits consultant, McGriff, Seibels, & Williams, recommend awarding the contract for FSA administrative services to United Healthcare Insurance Company (United Healthcare). United Healthcare’s proposal provides a 19.44% annual savings on administrative fees compared to the incumbent vendor, which means savings for the City. United Healthcare also proposed a three (3) year rate guarantee which will hold the rates through the end of 2026. While United Healthcare’s fee savings are not the lowest, the FSA integration with our current health and prescription insurance carrier will provide an improved member experience for employees covered on a City health plan by reducing substantiation requests and reducing strain on members to provide additional information to meet reimbursement requirements. Project Description Rate Increase 10% YOY Years 4 & 5 Only Estimated 5-Year Expenditure FSA Administration – Year 1 $19,627.20 FSA Administration – Year 2* (564 plus 5% = 592 count) $20,608.56 FSA Administration – Year 3 (592 plus 5% = 622 count) $21,638.99 FSA Administration – Year 4 (622 plus 5% = 653 count) $1,134.60 5% EE increase $1,119.60 5% Rate increase $23,856.98 FSA Administration – Year 5 (653 plus 5% = 686 count) $1,267.20 5% EE increase $1,234.80 5% Rate increase $26,302.33 Contingency (10% of Total) $11,203.41 Total $123,237.47 *5% employee increase each year, starting with the 2024 average count Requests for Proposals were sent to 115 prospective suppliers of this item, including two (2) Denton firms. In addition, specifications were placed on the Procurement website for prospective suppliers to download and advertised in the local newspaper. Eight (8) proposals were received and evaluated based on published criteria, including compliance with specifications, probable performance, and price. Based upon this evaluation, United Healthcare was ranked the highest and determined to be the best value for the City. NIGP Code Used for Solicitation: 953 - (Service Only) - Insurance and Insurance Services, (All Types) Notifications sent for Solicitation sent in IonWave: 115 Number of Suppliers that viewed Solicitation in IonWave: 14 HUB-Historically Underutilized Business Invitations sent out: 10 SBE-Small Business Enterprise Invitations sent out: 23 Responses from Solicitation: 8 RECOMMENDATION Award a contract with United Healthcare Services, Inc., for the administration of Flexible Spending Accounts (FSA) for medical care and dependent care for City employees for the Human Resources Department, in a three (3) year, with the option for two (2) additional one (1) year extensions, in the total five (5) year not-to-exceed amount of $123,237.47. PRINCIPAL PLACE OF BUSINESS United Healthcare Services, Inc. Hartford, CT ESTIMATED SCHEDULE OF PROJECT This is a three (3) year contract, with the option to renew for two (2) additional one (1) year periods, with all terms and conditions remaining the same. Services under this contract will begin on January 1, 2024. FISCAL INFORMATION These services will be funded from the Health Insurance Fund account 850500.7714. A requisition will be entered into the Purchasing software system in the amount of $21,589.92 after October 1, 2023. The budgeted amount for this item is $21,589.92. EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Pricing Evaluation Exhibit 3: Ordinance and Contract Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Linda Kile, 940-349-8388. Legal point of contact: Marcella Lunn at 940-349-8333.