Title
Resolution to Approve Renewal Contracts with Blue Cross Blue Shield of Michigan to Provide Health Care Coverage to City Employees and Retirees and Their Dependents ($1,344,396.70)
Memorandum
The attached Resolution authorizes the City Administrator to execute the renewal of health care services contracts with our health care service provider. Employees and retirees, through their labor agreements or in accordance with the City’s employee benefit plans, have the availability of using the Blue Cross Blue Shield Community Blue Preferred Provider Network for their health care service needs. The plan is administered by Blue Cross Blue Shield of Michigan.
The Blue Cross Blue Shield Community Blue Preferred Provider Network (or its equivalent) is provided for under our current labor agreements and our employee benefits program. This contract continues services now in effect.
In July 2009, the City received a BCBSM renewal offer of “business as usual”. Instead, the City made two (2) significant changes to the previous contracts with BCBSM.
Noting recent litigation activity surrounding ‘access fees’ or ‘additional administrative compensation’ (AAC), the City successfully pursued the matter outside of a long/protracted and expensive litigation process with assistance of McGraw Wentworth and the City Attorney.
The City reached Agreement 10/5/09 with BCBSM to modify historical method of computing AAC; new method will be fully transparent, with fees fixed rather than variable. This has resulted in the following:
? AAC will be fixed at lower rate and added each month to City’s administration fee
? AAC will no longer be variable/higher each year due to trend, and be ‘buried’ in the claims data
? 1st year value of change (retro to 7/1/09) equal to approximately $235,500.00 in cost reduction
? BCBSM agreeable to capping total combined fixed fee from 7/1 forward, making the cumulative, on-going value of this change much more significant than merely the 1st year...
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