Agenda Item # 1
Columbus Consolidated Government
Council Meeting
March 8, 2011
Agenda Report # 605
TO: Mayor and Council
SUBJECT: Benefits Manager Contract Renewal (Benalytics)
INITIATED: Human Resources Department
Recommendation: Approval is requested for the renewal of the benefits manager
contract extension with Benalytics Consulting Group for One (1) Year.
Background: On April 30, 2009 Council authorized the negotiation of a contract
with Benalytics Consulting Group. Subsequently, the CCG entered a 2-year
contract with Benalytics with an effective date of June 1, 2009 and expiring on
May 31, 2011. The contract contains a provision allowing annual extensions for
up to three (3) additional one (1) year terms, unless either party gives
written notice to the other at least sixty (60) days before the expiration of
the initial or any subsequent term.
During the initial contract period Benalytics has performed well in most areas,
providing services, recoveries and savings exceeding $463,500 to date and
expected to exceed $1.8 Million based on performance to date (See Attachment
1). Although our savings so far is significant, we believe that the real value
from the Benalytics contract will occur in the next contract periods as we
address more difficult issues including cost containment and cost sharing
strategies, value-based benefits design, employee accountability (wellness,
care management, culture change, etc.) and cost/benefit analysis of a possible
employee/retiree clinic.
As pointed out during the pre-Council Benefits Manager discussion on February
22nd, there were some issues with Benalytics regarding the retiree health plan
renewal. However, it is our belief that these issues are behind us and will
not be repeated.
Analysis: Starting with the Benefits Manager RFP process, the CCG has invested
significant productive resources in transitioning responsibilities to the
benefits manager that continues to strengthen control over our multi-million
dollar benefits programs. If the contract with Benalytics is not extended, we
will be required to invest significant unproductive resources in the recovery
of data, functions and contract administration currently outsourced to the
benefits manager.
Benalytics has also invested in the CCG with an estimated $40,000 in software
and programming expenses to run the on-line employee enrollment system that was
partially implemented in 2010. Benalytics plans to fully implement this system
during the next contract year. This benefits information and management
feature will not be available to employees if the contract is not extended.
Benalytics also invested in a survey of employee preferences to assist with
future benefits program design.
CCG full time employment has increased by 180 full time employees since January
2008, with no corresponding increase in Human Resources staffing. The benefits
manager concept was developed as a means of outsourcing what was becoming an
unmanageable workload created by our growing employee population in a manner
that would also improve the efficiency and effectiveness of our benefits
management at little to no cost. If the Benalytics contract is not extended,
then another HR Analyst is urgently needed to enable reabsorbing the outsourced
benefits management functions.
Financial Considerations: There is no additional cost to the City for extending
the contract, as payment for services will continue to be from commissions (See
Attachment 2 for commission summary). The estimated cost for a new HR Analyst
is $57,335, including benefits.
Projected Annual Fiscal Impact Statement: Although an exact number cannot be
calculated, extension of the Benalytics contract is expected to generate a
continued positive financial impact. Hiring a new HR Analyst will create a
necessary but recurring annual expense of $57,335 compounded by salary
increases and benefit cost increases.
Legal: Authorization of Council to extend the Benalytics contract for 1 year
is requested.
Recommendation/Actions: The City Manager, Human Resources Director, Finance
Director and Internal Auditor recommend the proposed contract extension
resolution.
A RESOLUTION
NO.________
A RESOLUTION AUTHORIZING A ONE-YEAR EXTENSION OF THE BENEFITS MANAGER CONTRACT
WITH BENALYTICS CONSULTING GROUP.
WHEREAS, the City entered into a two-year contract with Benalytics on June 1,
2009, that will expire on May 31, 2011; and,
WHEREAS, the contract contains a provision for three (3) one-year contract
extensions; and,
WHEREAS, the Columbus Council must authorize the recommended contract extension.
NOW, THEREFORE, THE COUNCIL OF COLUMBUS, GEORGIA, HEREBY RESOLVES AS FOLLOWS:
That the City Manager is hereby authorized to extend the benefits
management contract with Benalytics Consulting Group for one (1) additional
year.
______________
Introduced at a regular meeting of the Council of Columbus, Georgia, held
the _________ day of ____________, 2011 and adopted at said meeting by the
affirmative vote of _________ members of said Council.
Councilor Allen voting __________.
Councilor Baker voting __________.
Councilor Barnes voting __________.
Councilor Davis voting __________.
Councilor Henderson voting __________.
Councilor Huff voting __________.
Councilor McDaniel voting __________.
Councilor Thomas voting __________.
Councilor Turner-Pugh voting __________.
Councilor Woodson voting __________.
_______________________________ _____________________________
Tiny B. Washington, Clerk of Council Teresa Pike Tomlinson, Mayor
Attachment 1
Benefits Manager Report of Savings, Recoveries and Services
ItemSavings $Basis of savings or service value
Tangible Benefits Received to Date
2009 Med Adv. RFP*$50,000conservative estimate
2010 Health Plan RFP**$250,000memo from Buck - Base charge of $100,000 +
$25,000 per proposal (5 submitted) + $30,000 for final selection. No cost
quoted for implementation assistance or separate Rx quote from 5 Rx benefit
managers. Total probably closer to $300,000
2009 Dental RFP*$10,000conservative estimate
Billing/Payroll Reconciliation 18 months @ $250 monthly*$4,500conservative
estimate
BCBS Claims Audit Recovery$99,000Refund from BCBS
Employee Self-Serve Program compared to similar program available from CGI/AMS
(Est.)*$50,000conservative estimate of self-service module cost if purchased
from outside vendor
Total to date$463,500
* estimates based on project complexity **estimate from Buck Consultants our
actuary
Anticipated Savings
BCBS Wellness Grant @$50K yr*$150,000From BCBS RFP
Rx negotiated total savings, including over $300K from ESI
carve-out*$770,000From Benalytics RFP spreadsheet. See total savings under ESI
for total, less BCBS 2011 for difference
Network discounts PPO to POS plan change*$464,798Conservative estimate from
Benalytics RFP spreadsheet. See PPO/POS comparison
Actuarial Services (per year) paid Buck $89,470 in
2010**
$45,000conservative estimate based on verbal quote of $25,000 provided by Chuck
Carr Southern Actuarial Services, Benalytics actuary. This quote was more than
consistent with with quote for funding study that was 10 to 20% of Buck quote.
Total anticipated savings$1,429,798
*estimates from health care RFP **estimate from benefits manager
Grand Total$1,893,298
Non-quantifiable Savings/Services
Restructuring open enrollment and on-site support
Benefits booklets and other emp. education and communications
Savings from payroll reconciliation catching errors earlier
Work in Process
Long Term Disability plan
Employee survey and new benefits program recommendation
Streamlining/automating benefits enrollment
Employee clinic evaluation
Completion of employee self-serve benefits information and enrollment system
Finance Director and Internal Auditor have reviewed and concur with data
contained in this report
Attachment 2
Benalytics Commission Income
Source of Commission IncomeBasis2011 Estimated Commissions
MonthlyAnnual
Hartford Life Insurance CompanyGroup life for employee and dependant coverage
formerly paid to broker Houze & Assoc.$5,050 $60,600
BCBSGA VisionVoluntary vision plan as reported by BCBS$1,112 $13,344
BCBSGA DentalVoluntary dental plan as reported by BCBS$1,693 $20,316
BCBSGA Medicare Advantage PlanRetiree Health Plan, City pays 25% of total$3,575
$42,900
BCBSGA Self-funded Health PlanBCBSGA pays 40 cents per contract per month
service fee$1,000 $12,000
Total 2011 Estimated Commissions$12,430 $149,160
2009 & 2010 Estimated CommissionsMonthly too varied to reportAnnual
Hartford Life $78,581
BCBSGA Vision & Dental $33,930
Total 2009 & 2010 Estimated Commissions$112,511
We were also asked to report the amount of commissions paid to Benalytics for
the period November 2010 through January 2011Average Monthly3 Month period
Hartford Life $5,050 $15,150
BCBSGA Vision $1,112 $3,336
BCBSGA Dental $1,693 $5,079
BCBSGA Medicare Advantage PlanNo commission paid for 2010N/A$3,575
BCBSGA Self-funded Health PlanNo commission paid for 2010N/A$1,000
Period Total $28,140
Attachments
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