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1993-215E:\NPDOCS\ORD\HMHP.O NO. 93 AN ORDINANCE APPROVING A LETTER OF UNDERSTANDING BETWEEN THE CITY OF DENTON AND HARRIS METHODIST HEALTH PLAN RELATING TO THE AWARD OF BID NO. 1523; AUTHORIZING THE CITY MANAGER TO EXECUTE THE LETTER; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Harris Methodist Health Plan (HMHP) bid on behalf of Harris Health Plan, Inc. and Harris Methodist Health Insurance Company to provide group health insurance to City employees; and WHEREAS, HMHP is desirous of accepting certain portions of the scope of specifications for Request for Bid No. 1523, but may be unable to do so without approval of the State Board of Insurance; and WHEREAS, HMHP has presented a "Letter of Understanding" to the City which sets forth issues mutually agreeable to the City and HMHP and which the parties will pursue if such issues are not rejected by the State Board of Insurance; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I. That the City Council hereby approves the "Letter of Understanding" attached hereto, between the City of Denton and Harris Methodist Health Plan, and authorizes the City Manager to execute said letter. SECTION II. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the ail day of ~ 1993. ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APP D A 0 LEGAL FORM: DEB A. DRAYOVITCH, CITY ATTORNEY BY: ~G/(G~ x':.Y. Harris Methodist Health Plan 0 LETTER OF UNDERSTANDING November 23, 1993 Mr. Thomas Klinck Director of Human Resources City of Denton 215 E. McKinney Denton, TX 76201 RE: Request for Bid #1523 Dear Mr. Klinck: It is our understanding that Harris Methodist Health Plan (HMHP) and the City of Denton (City) agree to the following: 1. The City of Denton Request for Bid #1523 page two (2) paragraph two (2) reading: "The City of Denton is seeking an insurance policy/ agreement to become effective January 1, 1994, for a minimum of one (1) year. The policy shall provide, if not canceled prior to December 31, 1993, in accordance with the terms of the policy/agreement, bid submission form, and/or request for bidders, for the renewal of this policy for two (2) successive twelve (12) month periods, thereafter subject to renegotiation of the terms of this policy, if the City Manager and insurance company agree, without the necessity of rebidding this insurance proposal as long as the cost of insurance during either the first or second twelve (12) month successive period does not increase more than 30% and the plan design benefits do not decrease more than 30%. However, this proposal may be terminated if insurance company and City are unable to agree in writing to a mutually agreeable plan design and insurance cost no later than seventy-five (75) days prior to the end of the preceding period." (This paragraph applicable to HMHP's Preferred Plus Plan.) A member of Harris Methodist Health System 1300 Summit Avenue I Suite 300 / P.O. Box 901054 / Fort Worth, Texas 76101-2054 / 817-878-58001 Customer Service Telephone Number 817-878-5826 HMHP agrees to provide a rate guarantee through the second and third plan year for the Preferred HMO Plan only. HMHP's condition for the 1995 and 1996 rate guarantee is that HMHP will be the only carrier offered by the City. The Preferred HMO Plan guarantee will be as follows: "The years 1995 and 1996 combined maximum rate guarantee will not exceed a total of 15%. The year 1995 will not exceed 9.9% of HMHP's 1994 rate." (This paragraph applicable to HMHP's Preferred Plan.) As City employees' needs for additional health care services in the Denton area expand, the HMHP is committed to ongoing assessment of these needs and expansion of HMHP's current network through the recruitment of appropriately qualified providers to serve these needs. The (10) additional Denton providers have been approved recently, and will be added to the network as soon as contacts are executed. City's request for additional hospital service through Denton Regional Medical Center will be given consideration for future needs. This ongoing effort will continue as a part of HMHP's partnership with employer groups that HMHP serves in the Denton area. 4. This letter of understanding shall become an attachment to the agreement of the parties authorized rAy City pursuanto the ordinance approved on the o73ti•!/ day of ''~~1993, relating to the award of Bid No. 1523, except for such portions of this letter that are specifically rejected by the State Board of Insurance prior to September 1, 1994. Please indicate City's acceptance of the above conditions by signing below where indicated, and returning this letter to my attention. Kindest re ards, hael D. Clark Senior Vice President Managed Care Marketing CITY OF DENTON By: Tit