July Column

CTA’s New Medical Cost Savings Plan

In the spring of 2008, during his first meeting with the Officers Council as the 2008 President of CTA, Bob Ramorino challenged this group to come up with several “Big Ideas” that would provide additional benefits to CTA’s members.  A number of ideas that came out of that meeting (including establishing a southern California resource (currently provided by Matt Schrap) and the CTA Fuel Plan) have been put in place.

One of these “Big Ideas” was to research the possibility of members receiving medical services at lower costs.  Over the ensuring months, CTA staff met will several medical service providers and brokers and developed a basic business model under which these services could be provided.  On November 17, 2009, 2009 President Val Liese formed the Medical Plan Ad Hoc Committee that would review this basic plan and develop a specific business plan for these potential services.  The members of the Committee are:  Al Garcia, Chairperson; Scott Blevins; Dick Coyle; Josh Owen; and Bill Smerber.  The Ex Officio members are Val Liese (2009 President) and Denny Wyatt (2010 President).

The purpose of the Medical Plan Ad Hoc Committee was to develop a Medical Cost Savings Business Plan for members.  To achieve this purpose, the Committee developed an RFP for the medical services identified in the Business Plan; solicited responses to the RFP; evaluated the responses; selected the vendor(s) that had the experience, capability, capacity and resources to provide the requested services on a statewide basis; and directed staff to contract with the selected vendor(s).

The Business Plan and RFP were completed in December 2009 and presented to the Membership Services Policy Committee and the Board of Directors at their January 2010 meetings at the AMC.  The RFP was sent to 105 firms the first week of February and 16 firms replied that they intended to submit a bid.  Of the 10 bids submitted, 8 were selected to make formal presentations, and, of those, 4 were selected to make follow-up presentations.

On June 22, the Medical Plan Ad Hoc Committee selected two firms (RSI Insurance Brokers and Andreini & Company) to provide medical services under the Medical Cost Savings Plan for CTA members.

During the course of its review of the many Medical plans submitted, it became obvious to Committee members that there was not one plan that would fit the needs of CTA’s diverse membership, thus the selection of two firms.

RSI will be offering a CTA sponsored plan that will provide CTA members with medical cost savings due to the purchasing power of the group as a whole.  The CTA plan will be established through an ERISA Health and Welfare Trust.  For this plan to work at the lowest cost possible, at least 1,000 employees must be covered.  A statewide network of local insurance agencies will be utilized to provide fully insured HMO and PPO plans offering health, dental, vision and life insurance.

Andreini & Company will be offering a CTA sponsored plan that will provide CTA members with medical cost savings through a group captive program.  This program includes individual risk retention (through a preset initial amount of self insurance); limited risk sharing (through sharing in a pool of a portion of all premiums paid by group members); and risk transfer (through the purchase of stop loss coverage over a specified level).  This program combines the advantages of self-funding with the budgetability of a fully-insured program.  This program leverages group buying power and provides for individual company customized benefit plan design.

Both of these plans have the potential to offer significant cost saving to CTA members.  Once CTA staff has completed the contracts with both firms, more detailed information will be provided to members.  And, both firms plan to travel to each Unit to provide a presentation and answer questions on each plan.

CTA looks forward to working with these two firms to bring an additional benefit to CTA member companies.  These services have been added to a long list of benefit services realized on a daily basis by members.

Recently CTA has offered many new cost saving services to its members, including the CTA Fuel Plan, the CTA Printing Coop, and the recent significant increase in the Sprint/Nextel discounts and the Staples discounts.  Please let know if there are other cost savings programs that you would like CTA to pursue on behalf of the membership.