DEPARTMENT: Human Resources
DEPARTMENT HEAD: Lori Steward, Human Resources Director
COUNCIL DISTRICTS IMPACTED: City-wide
SUBJECT:
Voluntary Dental Insurance and Third Party Administrative Services
SUMMARY:
This ordinance authorizes the City Manager or her designee to execute a contract with Delta Dental Insurance Company/Alpha Dental Program, Inc. to provide voluntary dental insurance for the City’s civilian, full-time, active employees, and their eligible dependents as a flexible option within their benefits plan. Retired employees may also voluntarily participate in the dental program with an estimated amount of $2.3 million per year. The term of this contract is three years, beginning January 1, 2018 and ending December 31, 2020, with the option to renew for two additional one year periods, subject to and contingent upon funding by City Council.
BACKGROUND INFORMATION:
Voluntary dental benefits are offered to the City’s civilian, full-time, active employees and their eligible dependents as a flexible option within their benefits plan. Active civilian employees have the choice between two options; self-funded dental PPO and fully-funded dental HMO. There are 6,884 eligible civilian employees. Currently, retired employees of the City may choose to enroll in the dental HMO plan at time of retirement. There are 1,500 retired employees eligible to participate in the voluntary dental program.
For the PPO plan, enrolled employees pay a monthly premium which is determined by the City each year and is used to reimburse the City for administration fee and cost of claims. Active employees may also participate in a fully-insured dental HMO plan. The participating employees pay the full cost of the premium. Retired employees are eligible to participate in the DHMO plan and are responsible for the entire premium. Premium is set by negotiation with the vendor during the RFP process.
The contract for dental services will end on December 31, 2017. The Human Resources Department conducted a search for a vendor with broad knowledge and experience as a dental third party administrator and/or carrier that offers sophisticated and innovative tools and resources for the administration of the City’s dental program. The City requested options to provide a fully insured DHMO for civilian and retired employees alongside a PPO plan on either a self-funded or fully insured basis offered to civilian employees with a separate quote to include retirees.
The Finance Department, Purchasing Division on behalf of the Human Resources Department released a Request for Proposal (RFP) on January 26, 2017 seeking proposals for a qualified Respondents interested in providing Voluntary Dental Insurance and TPA Services. The RFP was advertised in the San Antonio Express-News on January 26, 2017. A pre-submittal conference was held on February 1, 2017, to allow for Respondent questions and clarification to the RFP. Five (5) proposals were received by the March 2, 2017 deadline. Three (3) proposals were deemed non-responsive. One failed to provide DHMO plan design and the others failed to provide pricing for option years. The Evaluation Committee included representatives from Human Resources and the Retired Employees of the City of San Antonio.
The evaluation of each proposal response was based on a total of 100 points; 25 points allotted for experience, background, qualifications; 40 points allotted for proposed plan and 20 points allotted for Respondent’s price schedule. Local Preference Program was allotted 10 points and 5 points were allotted for the Veteran-Owned Small Business Preference Program.
The Evaluation Committee conducted Interviews of the two remaining firms on June 5, 2017 with evaluation and scoring immediately after. The Evaluation Committee recommended Delta Dental Insurance Company / Alpha Dental Program, Inc. for award as the firm receiving the highest collective score from the evaluation categories.
The Small Business Economic Development Advocacy (SBEDA) Program was not applied to this evaluation process.
The Local Preference Program was applied in the evaluation of responses received for this contract; however, neither firm met the local business requirement.
The Veteran-Owned Small Business Preference Program was applied in the evaluation of responses received for this contract; however, neither firm met the Veteran Owned Small Business Preference Program requirement.
ISSUE:
Award of this contract will allow the City to provide voluntary dental insurance for the City’s civilian, full-time active employees, retirees and their eligible dependents.
ALTERNATIVES:
Due to the fact that the current contract, including extension options expires on December 31, 2017, the alternative to execution of this contract would result in delay in dental benefits for impacted employees and retirees and jeopardize continuation of care.
FISCAL IMPACT:
This ordinance authorizes a contract with Delta Dental to provide voluntary dental insurance for the City’s civilian, full-time active employees and their eligible dependents. It is estimated that the annual cost of the contract will be $2.3 million, of which $1.7 million is included in the Employee Benefits Fund FY 2018 Proposed Budget as a direct pass through of employee payroll deductions to the vendor. Appropriations for future years of this contract are subject to City Council approval of the current budget.
RECOMMENDATION:
Staff recommends approval of this ordinance to execute a contract with Delta Dental Insurance Company/Alpha Dental Program, Inc. to provide voluntary fully funded PPO and DHMO Dental Insurance plans for current active civilian and retired employees beginning January 1, 2018 and ending December 31, 2020, with the option to renew for two (2) additional one (1) year periods, subject to and contingent upon funding by City Council.
This contract is procured by means of Request for Proposals and a Contract Disclosure Form is attached.