1. What to Look for in Bidding and Buying Health Insurance Presented By Tom LoPizzo & Darlene Simmons

2. To Bid or Not To Bid All the time… “Preparing things is my life” Every other year… “Get a handle on where we are” Never, never, never… “And if you want to get a bid ‘go to heck’”

3. Going Out to Bid

4. Informal vs. Formal Go it alone or hire a consultant (several good ones in NH) Additional cost involved Choosing a consultant may require another RFP Evaluate consultant based upon “teaching the client to go it alone” “Be careful what you wish for…” dollar decision- making When? Give yourself plenty of time Give those proposing plenty of time Give your employees plenty of time

5. Preparing Your RFP (Request for Proposal)

6. Overview of your city, town, school district/SAU Objectives of the RFP To evaluate potential administrators/insurers To provide the widest provider network possible Select appropriate medical, Rx, ancillary coverages Select appropriate retiree benefits (if needed) Evaluate all of the above for cost effectiveness

7. Scope of work Request proposals for specific medical plans, Rx benefits, ancillary benefits Indicate if proposal is for self-insured or fully-insured benefits Ask for breakdown of administrative expenses Need to know how much of each premium dollar is spent on medical care

8. Important vendor questions: How long has your company/pool provided medical benefits in NH? Who will work on account: daily administration vs. salesperson (embellished how things will actually work) Request any and all wellness/educational programming available and at what cost Ask for specific costs relating to COBRA administration, retiree billing, etc. Does TPA/Insurer pay commissions to consultants or brokers? How much?

9. What to include: Plan benefit summaries Census data showing active employees on the current plans, retirees and COBRA Claims data for the past two calendar/fiscal years Break-down by medical claims, Rx claims, and # participants on a monthly basis Large claim report, claims >$60,000 w/diagnosis for same period

10. What to include (cont.): Copy of latest monthly bill(s) needed to compare premium to claims Specific format requirements, due date and time Changes/addendums in writing Number of copies required – paper and electronic Contact person address and telephone numbers Always include “disclaimer” Three references with permission to call/contact

11. How to Evaluate Your Bids What are you trying to find?

12. Cost Are the rates sufficient to cover the costs (administration plus claims)? Commissions and other fees Coverage Is coverage the same or different and to what degree? Comparable provider network Employee preference Probable union issues

13. SAU XXX – January, 2009 Renewal Traditional Rating A.Reported Medical Claims, 7/1/07-6/30/08, paid through 8/31/08 $2,409,145 B.Reported Caremark Prescription Drug Claims, 7/1/07-6/30/08 $544,786 C.Total Reported Claims $2,953,931 D.Claims in Excess of $100K ($397,466) E.Net Reported Claims $2,556,465 F.Plus Medical & Prescription Drug IBNR Estimate $30,678 G.Total Rating Claims $2,587,143 H.Medical Trend $336,774 I.Pooled Claims Fee $175,435 J.LGC HealthTrust Risk Fee $73,098 K.Board Approved Return of Undesignated Members’ Balance ($78,653) L.Anthem BCBS Administrative Fee $125,728 M.LGC HealthTrust Administrative Fee $90,641 N.Projected Member Contributions (2009) $3,310,166 O.Current Rating Contributions (2008) $3,040,427 P.Group Experience 8.9% Q.Credibility 39.6% R.Overall LGC HealthTrust Cycle Rate Change 0.0% S.Credible Rate Change 3.5% T.Reconciled Rate Change 3.9% U.Capped Rate Change 3.9%

14. How rates were determined (request response in writing) Medical trend utilized All or part of individual experience Administrative cost breakdown: Insurer administration Reinsurance cost Profit/risk margin Third party administrative cost i.e. TPA, LGC, Primex, and SchoolCare Amount of provider discounts with insurer vs. pure self-insured with TPA

15. Discounts available for participation in other programs/risk pools Consider dealing direct with insurer or a pool

16. Making the Selection

17. Keep open your lines of communication with those proposing – ask questions and never assume Notify winners and losers – expect to explain why you made the decision Be prepared to make copies – formal proposals are in the public domain

18. Sit back, relax, and have a few beers (at home, of course)