The URL can be used to link to this page

Home My WebLink AboutA001 - Council Action Form dated May 27, 2025ITEM #:20 DATE:05-27-25 DEPT:HR SUBJECT:HEALTH INSURANCE ADMINISTRATIVE SERVICES CONTRACT RENEWAL COUNCIL ACTION FORM BACKGROUND: For the past 20 years Wellmark Blue Cross Blue Shield of Iowa has been the City’s provider for administrative services and excess coverage for the self-insured health and pharmacy programs. Wellmark was originally awarded this contract after a competitive Request for Proposals. Wellmark also has advantageous contractual relationships with medical providers in Ames and throughout Iowa that allow the City to receive significant discounts on services received. ADMINISTRATION SERVICS : Wellmark has a proven record of being able to administer the existing plans and has been a willing and capable partner in our efforts to improve the health status of employees and their families through quality programs and health promotion. In renewing the administrative agreement for FY 2025/26, Wellmark will charge $54.96 per member per month in administrative and access fees, effective July 1, 2025. This is a per member, per month increase of 2.5% compared to FY 2024/25. Administrative and Access Fees FY 2024/25 FY 2025/26 # of Covered Members 561 553 Per Member, Per Month Fee $54.96 $56.34 TOTAL COST $369,991 $373,872 AGGREGATE STOP LOSS COVERAGE: The City also obtains individual and aggregate stop loss coverage from Wellmark. The individual stop loss coverage protects the City from specific claims that exceed $125,000 incurred in a single year, while the aggregate stop loss protects the City in the event that total claims exceed 120% of projected losses. In FY 2024/25, the stop loss rate charged per member, per month was $179.43. However, the stop loss trend over the past several years has significantly exceeded Wellmark’s projections. For that reason, effective July 1, 2025, Wellmark will charge $209.30 per member per month for specific and aggregate stop loss premiums, an increase of 16.6%. Due to a slight reduction in covered members, in FY 2025/26, the City will pay $1,388,915 in 1 specific and aggregate stop loss premiums, a 15% increase over the total amount paid in FY 2024/25. Specific and Aggregate Stop Loss Premiums FY 2024/25 FY 2025/26 # of Covered Members 561 553 Per Member, Per Month Fee $179.43 $209.30 TOTAL COST $1,207,923 $1,388,915 WELLNESS SERVICES: The City has been obtaining Wellness Services from Wellmark since FY 2023/24. Services include: health risk assessments, an online web portal with a wide variety of online wellness programs, incentive administration tracking for the Healthy4Life program that rewards employees for engaging in healthy lifestyle activities, health coaching, integration of participant data with health claims, periodic reporting on portal utilization and engagement, population health risks, projected financial summaries, and analyzing health data in the same population over consecutive years. At the time of purchase, it was stated that the cost of renewal would increase no more than 3% each year. Therefore, wellness services for FY 2025/26 year will cost no more than $29,582. OVERALL IMPACT OF FEE INCREASES: Gallagher, the City’s contracted Health Benefits Consultant, provided assistance with reviewing the overall administrative fees and services Wellmark presented for FY 2025/26. The increase for medical health care costs, including projected FY 2025/26 medical (Wellmark) claims and all Wellmark administrative fees, is estimated at 6.6% for FY 2025/26 (a total of approximately $11,988,231). This increase for medical costs, when combined with dental cost projections, results in an overall increase to the Health Insurance expenses of 8% in FY 2025/26. This projected increase was reported to City Council at the February 6, 2025 budget hearing. At that time, staff reported to Council that an 8% increase in premiums could cover the increased expenses, without having to use any available balance in the Health Insurance Fund to finance these increased costs. The Health Insurance Fund contains a sizeable unreserved fund balance that has been slowly decreased over the past several years to reduce the impact of large premium increases. At the end of FY 2024/25, the Health Insurance Fund is projected to have an unreserved balance of $5,521,364. Since this information was anticipated at the time the FY 2025/26 Budget was prepared, sufficient funds exist to cover the slight increase in administrative fees, increase in stop loss premiums, and anticipated increases in claims with the 8% increase in premiums. 2 ALTERNATIVES: 1. Accept the renewal documents from Wellmark for administrative services, specific and aggregate excess insurance, wellness services, and access fees for benefits effective from July 1, 2025 to June 30, 2026. 2. Do not renew the City's health insurance administrative services contract with Wellmark and direct the staff to seek other companies to perform these services. CITY MANAGER'S RECOMMENDED ACTION: Wellmark has been an effective administrator of the City’s health care administrative services. Wellmark’s services are cost-effective, and they have a strong working relationship with the City’s other health care partners. Renewal of this contract will provide the best value to the City in administering its health insurance program. Therefore, it is the recommendation of the City Manager that the City Council adopt the suggested action. ATTACHMENT(S): Wellmark Wellness Services 2526.pdf 3 Confidential and Proprietary – Wellmark Blue Cross and Blue Shield Wellmark Blue Cross and Blue Shield of Iowa is an independent licensee of the Blue Cross and Blue Shield Association Employer Consulting & Well-being Services Pricing Estimate Proposal for: City of Ames Funding Arrangement: Self-funded Rates and Services effective: July 1, 2025 – June 30, 2026 You’ve invested significantly in a health plan that protects your employees and their families — and Wellmark Blue Cross and Blue Shield’s health and well-being solutions are here to be an extension of that investment. To make sure you have the right well-being programs in place to meet your company goals, we completed a thorough needs analysis through our discussion and data review. The following services are recommended for your organization to engage them in their health and enhance their overall well-being: Wellmark Connect Premium individuals: Employees on the health plan Employees not on the health plan 600 Annual price $8,100 Wellmark Physician Form (Value added service for comprehensive platform) No Bill date August 2025 Additional Services Service Price Pricing Method Telephonic Health Coaching – High Risk $183.55 Per participant Telephonic Health Coaching – Moderate Risk $139.05 Per participant Positively Me Weight Management Coaching $372.65 Per participant --Rates shown are subject to adjustment in the event of any change in the product(s) or scope of services provided or the number of members enrolled. Estimated costs for the program are illustrative only. -- Annual and one-time fees are billed and due upon implementation of the program and are not refundable. 4 Confidential and Proprietary – Wellmark Blue Cross and Blue Shield Wellmark Blue Cross and Blue Shield of Iowa is an independent licensee of the Blue Cross and Blue Shield Association Consulting Support Health Plan Integration Platform Features • Experienced account team including well-being consultant and well-being system specialist • Annual well-being strategy support aligned to your goals, best practice research, and employer group trends • On-going data review and recommendations with quarterly and annual meetings • Single Sign On to platform through myWellmark • Online physician wellness visit submission form included in platform purchase • Eligibility pulled from enrollment system • Preventive exam integration • Customized claims analysis, when applicable • Single itemized monthly bill • colors, rewards and incentive set-up, and benefit page • Pulse survey capabilities • Individual and team challenges • Ability to add-on integrated products for a wholistic program Communication Reporting Member Support • programs • Quarterly health topic employee webinars • Monthly well-being flyers, emails, and newsletter content • Registration and Wellness Assessment promotion kits • Auto engagement and re-engagement messaging campaigns • Monthly completion reports to track and manage rewards • Quarterly dashboard to understand key aggregate metrics (WebMD registration, product utilization, rewards, risks, interests, etc.) • Challenge reporting (registration, goal completion, etc.) • Aggregate year-end dashboard and wellness assessment report o Total and/or Cohort population for year 2+ o Consultant observations & recommendations o Validated biometrics report (if applicable) • • • Online inquiry support form 5