3. Meeting of the ERS Board of Trustees March 6, 2019 Public Agenda - PowerPoint PPT Presentation

3. Meeting of the ERS Board of Trustees March 6, 2019

Public Agenda Item # 1.1 Call M Mee eeting of t the e ER ERS Board of T Trustees ees to Or Order March 6, 2019

Public Agenda Item # 2.1 Review and A Approval of the M e Minutes es to t the D e Dec ecem ember er 1 11, 2018 ER ERS B Board o of T Trustees ees M Mee eeting - (Act ctio ion) March 6, 2019

Questions? Action Item

Public Agenda Item # 3.1 Revie iew, Dis iscu cussio ion a and Consid ideratio ion of t the Contract ct Award Recommendati tion for th the De Dental P PPO and DH DHMO C Contr tracts ts – (Act ctio ion) March 6, 2019 Diana Kongevick, Director of Group Benefits Georgina Bouton, Assistant Director of Group Benefits Blaise Duran, ASA, MAAA, Actuarial and Reporting Services, Group Benefits Gabrielle Schreiber, Director of Procurement and Contract Oversight

Dental PPO and DHMO Background On September 1, 2014, ERS contracted with HumanaDental Insurance Company/DentiCare, Inc. (Humana) as ERS’ Dental Preferred Provider Organization (PPO) and Dental Health Maintenance Organization (DHMO) plans provider. Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Request for Proposal (RFP)  ERS issued the RFP on May 25, 2018 for a contract term of six (6) years.  Requested services are providing one or both of the following: (a) a self-funded Dental PPO (b) a fully-insured DHMO throughout Texas Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Request for Proposal (RFP) (Continued)  17 companies requested access to the RFP.  Responses were due July 19, 2018.  ERS received proposals from 6 entities:  Aetna Life Insurance Company (Aetna) (PPO only);  Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve company (BCBSTX)(PPO Only);  Delta Dental Insurance Company/Alpha Delta Programs, Inc. (Delta Dental) (PPO and DHMO, respectively);  HumanaDental Insurance Company/DentiCare, Inc. (Humana) (PPO and DHMO, respectively);  Metropolitan Life Insurance Company/SafeGuard Health Plans, Inc. (MetLife) (PPO and DHMO, respectively) and  United Concordia Companies, Inc. (United Concordia) (PPO Only). Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Preliminary Review Phase ERS’ Office of Procurement and Contract Oversight (OPCO) evaluated the following criteria on a pass/fail basis:  Responsiveness  Compliance with the RFP  All other vendor performance checks required by the Texas Comptroller of Public Accounts One Respondent was found non-responsive. Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Preliminary Review Phase (Continued)  OPCO also verified the Minimum Requirements by ensuring each respondent:  Holds all required business and professional Licenses and Certifications  Has the requisite experience  Has the minimum stated dental provider network  Has sufficient net worth, as defined One Respondent failed to meet the minimum requirements Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Proposal Review Phase Two main categories scored:  Network, Operational Specifications and Requirements - PPO: 60% - DHMO: 70%  Price Proposal - PPO: 40% - DHMO: 30% Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Pass/Fail Items Pass/Fail Items (initially reviewed in this phase)  Contractibility  Legal Requirements and Regulatory Compliance  Assessment of Controls Effectiveness  Financial Stability One Respondent failed Assessment of Controls Effectiveness and was found non-responsive. Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Finalists Review Phase Based on the Pass/Fail Items and the scoring of Pricing and Network, Operational Specifications, and Requirements, the Proposal Review Phase culled down the list to two finalists for both services:  Delta Dental Insurance Company  HumanaDental Insurance Company Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Finalists Review Phase  Site Visits  Delta Dental on November 12-13, 2018  HumanaDental on November 14, 2018  Face-to-Face Interviews  Delta Dental on January 15, 2019  HumanaDental on January 16, 2019  BAFOs  Past Performance  Contractibility and Legal Requirements and Compliance (finalized) Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO Finalists Phase: Provider Network and Access Humana Delta The RFP access General Dentists 7,211 8,365 standards: Endodontists 224 252 • 1 primary care dentist Orthodontists 459 569 within 30 miles Oral Surgeon 297 403 Periodontists • 1 specialty care 171 213 dentists within 75 Other 629 705 miles Total 8,991 10,507 % of Members with Access 98.4% 98.5% Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO Finalist Phase: Price Proposal Evaluation PPO price proposals were evaluated on the basis of projected total cost (PTC). The PTC evaluation considers:  Administrative fee analysis  Provider reimbursement analysis Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO Finalist Phase: Price Proposal Evaluation Administrative Fee Analysis is based on a monthly fee per member, which is guaranteed over the 6-year contract term. Projected Administrative Fees FY20 - FY25 Current Humana Delta Total Administrative Fees $22.5 million $22.5 million $24.4 million Cost compared to current contract N/A $0.0 million $1.9 million Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO Finalist Phase: Price Proposal Evaluation Provider Reimbursement Analysis When comparting network reimbursements, Delta’s network is expected to save $120 million over 6 years compared to Humana’s network.  Each respondent provided the average allowable charge for the top 100 most utilized CDT codes by 3-digit zip code.  Data was used to develop the projected provider reimbursements over the term of the contract. Projected Provider Reimbursements FY20 - FY25 Humana Delta Provider Reimbursements $1,069.0 million $949.0 million Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO Finalist Phase: Price Proposal Evaluation Delta’s PPO financial proposal is projected to save $118.1 million over the life of the contract when compared to the Humana financial proposal. Projected Total Cost FY20 - FY25 Humana Delta Administrative Fees $ 22.5 million $24.4 million Provider Reimbursement $1,069.0 million $949.0 million Total $1,091.5 million $973.4 million Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

DHMO Finalists Phase: Provider Network and Access Humana Delta The RFP access standards: General Dentists 984 1,529 • 1 primary care dentist Endodontists 94 92 within 30 miles Orthodontists 156 154 • 1 specialty care dentists Oral Surgeon 62 56 within 75 miles Periodontists 107 87 Note: The DHMO requires a general Other 58 61 dentist be selected, who will refer to a specialist if needed. Total 1,461 1,979 % of Members with Access 77.1% 73.5% Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

DHMO Finalist Phase: Price Proposal Evaluation DHMO price proposals were evaluated on the basis of projected total cost (PTC) considering:  Proposed Premiums guaranteed for 3 years  Projected Plan Enrollment Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

DHMO Finalist Phase: Price Proposal Evaluation Delta’s proposed premium rates are projected to save $259,000 over the 3 year guaranteed period when compared to Humana’s proposed premium rates. Projected Total Cost (PTC) FY20 - FY25 Current Humana Delta $38.917 million $39,183 million $38.924 million PTC Cost compared to current Contract N/A $266,400 $7,500 Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Finalists Review Phase (Continued)  Staff met with Executive Office and reviewed RFP evaluation team findings.  A best-value determination was made. Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Dental PPO and DHMO Staff Recommendation Staff recommends, pursuant to a contract which will cover a six year term beginning on or after September 1, 2019, that the Board of Trustees of the Employees Retirement System of Texas award the Dental Preferred Provider Organization (PPO) Plan to [________________]; and Staff recommends, pursuant to a contract which will cover a six year term beginning on or after September 1, 2019, that the Board of Trustees of the Employees Retirement System of Texas award the fully-insured Dental Health Maintenance Organization (DHMO) Plan to [_______________]. Agenda Item 3.1 – Board of Trustees Meeting, March 6, 2019

Questions? Action Item

Public Agenda Item # 3.2 Revie iew, Dis iscu cussio ion a and Consid ideratio ion of t the Contract ct Award Reco commendatio ion for the Benefit its A Admin inis istratio ion Service ices ( (BAS) – (Act ctio ion) March 6, 2019 Robin Hardaway, Director of Customer Benefits Chuck Turner, Chief Information officer Gabrielle Schreiber, Director of Procurement and Contract Oversight