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Home My WebLink AboutA021 - Health Insurance Administrative Services Contract renewal with Wellmark BCBS July 1, 2026 - June 30, 2027ITEM #:24 DATE:05-26-26 DEPT:HR SUBJECT:HEALTH INSURANCE ADMINISTRATIVE SERVICES CONTRACT RENEWAL COUNCIL ACTION FORM BACKGROUND: For the past 21 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 SERVICES: Wellmark has a proven record of being able to administer the existing plans and has been a willing and capable partner in the City's efforts to improve the health status of employees and their families through quality programs and health promotion. In renewing the administrative agreement for FY 2026/27, Wellmark will charge $59.00 per member per month in administrative and access fees, effective July 1, 2026. This is a per member, per month increase of 4.7% compared to FY 2025/26. Administrative and Access Fees FY 2025/26 FY 2026/27 # of Covered Members 553 564 Per Member, Per Month Fee $56.34 $59.00 Total Cost $373,872 $399,312 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 2025/26, the stop loss rate charged per member, per month was $209.30. However, the stop loss trend over the past several years has significantly exceeded Wellmark’s projections. For that reason, effective July 1, 2026, Wellmark will charge $227.66 per member per month for specific and aggregate stop loss premiums, an increase of 16.6%. Due to a slight reduction in the number of covered members, in FY 2026/27, the City will pay 1 $1,540,803 in specific and aggregate stop loss premiums, an 11% increase over the total amount paid in FY 2025/26. Specific and Aggregate Stop Loss Premiums FY 2025/26 FY 2026/27 # of Covered Members 553 564 Per Member, Per Month Fee $209.30 $227.66 Total Cost $1,388,915 $1,540,803 WELLNESS SERVICES: The City has been obtaining Wellness Services from Wellmark since FY 2023/24. Services provided 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 regarding 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 2026/27 year will cost no more than $30,469. This assumes that every eligible employee participates with all aspects of the program, including portal access and coaching. Considering past utilization is just under half of the eligible employees, staff estimates actual cost for the wellness portal and associated coaching will be approximately $15,450 for FY 2026/27, which is reflected in the final budget. OVERALL IMPACT: Gallagher, the City’s contracted Health Benefits Consultant, provided assistance with reviewing the overall administrative fees and services Wellmark presented for FY 2026/27. The total for medical health care costs, including projected FY 2026/27 medical claims, pharmacy claims, all Wellmark administrative fees, stoploss premiums, and wellness costs are estimated to be $14,501,274. This projected total cost was reported to City Council at the February 5, 2026 budget hearing. At that time, staff reported to Council that the recommended 8% increase in premiums from the department and employees would not fully cover the budgeted increased expenses, so $266,890 of available balance in the Health Insurance Fund also was designated in the budget 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 2025/26, the Health Insurance Fund is projected to have an total balance of $7,423,561. Of that amount, $4,630,830 is reserved for future contingencies, leaving a projected unreserved fund balance of $2,792,731. 2 FY 25/26 Renewal FY26/27 Final Budget FY 26/27 Renewal Administrative and Access Fees $373,872 $411,444 $399,312 Specific and Aggregate Stoploss Premiums $1,388,915 $1,564,075 $1,540,803 Wellness (Per Person, Per Month) $29,582 $15,450 $30,469 The budget was developed and adopted based on past experience and anticipated increases. Renewal information for Admin/Access Fees and Stoploss Premiums was provided by Wellmark later in the year and varies slightly from budgeted amounts based on factors, such as number of members and actual utilization from the previous year. For Wellness, the renewal information is strictly based a maximum bill amount assuming all eligible participants utilize all services. The budgeted amount reflects what the City projects in actual utilization. Given this information and including the amount for projected claims, the 8% budgeted premium increase from the departments and employees plus the $266,890 from the unreserved balance in the Health Insurance Fund will be sufficient to cover all required medical and wellness related costs. 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, 2026, to June 30, 2027. 2. Do not renew the City's health insurance administrative services contract with Wellmark and direct staff to seek other providers for 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 Alternative No. 1, as described above. ATTACHMENT(S): Wellness Services FY 2627.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 Final Pricing Group Name: City of Ames Rates and Services effective: July 1, 2026 – June 30, 2027 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: Platform Wellmark Connect Premium Pricing based on the following eligible individuals: Employees on the health plan Employees not on the health plan Spouses on the health plan 600 Annual price $8,300 Wellmark Physician Form (Value added service for comprehensive platform) Yes Bill date August Additional Services Service Price Pricing Method Telephonic Health Coaching – High Risk $189.06 Per participant Telephonic Health Coaching – Moderate Risk $143.22 Per participant Telephonic Health Coaching – Low Risk $57.29 Per participant Positively Me Weight Management Coaching $383.83 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. --Additional fees may apply to Wellness Screening options. -- 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  Configurable platform including organization logo, 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  Benefit page for promoting your specific benefits and 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)  Claims analysis, if applicable  Wellness Center Telephonic Help Desk  Online inquiry support form 5