Health RFP – Information for All Pensioners
RFP's for Retiree Health, Dental, and Vision Plans
ARTICLE UPDATE: On June 16, 2022, the Board of Fire and Police Pension Commissioners was presented with the recommendation to publish requests for proposals for retiree health, dental, and vision insurance plans and/or third-party administrator services. The Board approved a motion to table this item and the release of the requests for proposals was not approved at this meeting. The Board will form a sub-committee to review the draft requests for proposals and determine how to proceed. We will continue to keep all pensioners informed of the Board’s actions related to this issue.
On June 16, 2022, the Board of Fire and Police Pension Commissioners will consider a recommendation to publish requests for proposals for retiree health, dental, and vision insurance plans and/or third-party administrator services, during its regular Board meeting.
IT IS IMPORTANT THAT YOU KNOW THE BOARD WILL NOT MAKE ANY CHANGES TO THE CURRENT RETIREE HEALTH, DENTAL, AND VISION INSURANCE PLANS AT THIS MEETING.
Request for Proposals (RFP) is the standard government process that LAFPP, and all other City departments, use to advertise for proposals from qualified organizations to contract for professional services. Conducting an RFP is simply about ensuring a transparent and competitive process to prepare the Board to make informed decisions about new contracts for these important services. At this meeting, the Board will discuss the reasons for releasing the RFPs, along with the RFP process and timetable.
The City of Los Angeles Charter and Administrative Code, and the Board’s fiduciary responsibilities of prudence and loyalty to LAFPP members, require LAFPP to conduct an RFP for contracting opportunities above a small dollar value ($25,000) as soon as the Board has the necessary information to do so.
The Board has now obtained the minimum necessary information under the current health/dental plan administration contracts to conduct an RFP process for LAFPP’s $150 million health program. Conducting this RFP will allow the Board to:
- validate the competitiveness of the current menu of plan options
- determine what other health/dental insurance options may be available to serve the diverse needs of all LAFPP members and their families
Providers of the current health and dental plan options are encouraged to submit proposals in response to the RFPs, and their long history of providing plans to LAFPP members has prepared them to submit strong, competitive proposals in this process.
The current retiree health and dental plans will continue to be in effect through June 30, 2023. The selected plans (possibly incumbent plans) would then be available to members for the plan year beginning July 1, 2023.
Please visit the Board Meetings page regarding the June 16, 2022 Board meeting agenda and the RFP report. We will continue to keep all pensioners informed of the Board’s actions and the status of the RFP process.
Please direct any inquiries or comments regarding this matter to HealthRFP@lafpp.com.
FREQUENTLY ASKED QUESTIONS
Q. What is an RFP?
A. RFP is short for “Request for Proposals.” It is the standard government process by which LAFPP (and all other City departments) solicits proposals from qualified organizations to enter into a contract for professional services. LAFPP uses RFPs for all its contracting needs above a small dollar amount ($25,000), including investment managers, website design, actuarial consultants, pension administration system services, and many others. The RFP is also the document that provides the guidelines and requirements for organizations to bid for a contracting opportunity.
Q. Why is LAFPP considering the release of health, dental, and vision insurance plan RFPs?
A. LAFPP is considering the release of the RFPs because the City Attorney has advised LAFPP that RFPs are required by law, as detailed in the Board report. In short, the City Charter and Administrative Code and the Board’s fiduciary duties to LAFPP members require a competitive process to be completed for these important healthcare contracts.
Conducting the RFPs ensures that the health and dental plans and rates offered to our retirees are competitive with the plans offered by other insurance providers, and plan options available to LAFPP retirees serve the diverse needs of all members and their families.
Q. Is the Board considering changes to the benefits or costs to members of the current health and dental subsidy program?
A. No, the Board’s consideration of the recommendation to release RFPs does not involve any recommended changes to the current health and dental subsidy program or current retiree health and dental providers.
Conducting an RFP simply ensures that the contracting process complies with the law. The RFP process is designed to allow the current service providers (Los Angeles Police Relief Association, Los Angeles Firemen’s Relief Association, Los Angeles Police Protective League, and United Firefighters of Los Angeles City; collectively referred to as the “Associations”), as well as other qualified insurance providers, to respond to the RFP and compete for the opportunity to serve LAFPP and its members.
The Associations are strongly encouraged to respond with a proposal should the release of the RFPs be approved by the Board of Fire and Police Pension Commissioners.
Q. I remember past quotes from some insurance providers for health and dental plans being declined by LAFPP because they would have resulted in higher premiums for retirees. If the Associations are offering the least expensive plans for the level of benefits provided, why is LAFPP considering the release of RFPs now, given that history?
A. When quotes have been sought in the past, providers lacked the necessary information to submit competitive proposals. That has changed. As detailed in the Board report under the terms of the existing contracts with the Associations, LAFPP now has access to more information than in past years, which should allow for a productive competitive bidding process.
When the results of the RFPs are presented to the Board (expected in late November/early December 2022), the Board could determine that the Association plans offer the best combination of plan benefits and cost-effectiveness, or might determine that other plans would offer valuable additional or different benefits for LAFPP retirees. The RFP is simply about conducting a legally compliant process and provides the Board with the best information to make an informed decision about plans.
Q. If there’s no guarantee that a competitive bidding process will result in a menu of better plan options, are RFPs a good use of LAFPP’s money?
A. Yes, the RFP process is a prudent use of LAFPP’s funds because it is needed to comply with the law and the Board’s fiduciary duties. A competitive, transparent contracting process is worth the cost given the importance of providing the best value plans to LAFPP members and the overall size of these healthcare contracts.
LAFPP is budgeting almost $150 million for the upcoming fiscal year (July 1, 2022 to June 30, 2023) to provide subsidy payments for retiree health, dental, and vision insurance plans. The Board has a fiduciary duty to conduct a competitive bidding process before awarding new contracts to any provider for this $150 million program, to ensure that the current menu of plan options is competitive with other available options and serves the needs of all members. This competitive process ensures that the Board complies with the City’s Charter and Administrative Code contracting requirements.
Q. If retirees are satisfied with their current health and dental plan benefits and premiums, why does LAFPP need to conduct RFPs?
A. Providers of the current health and dental plan options are encouraged to submit proposals in response to the RFPs, and their long history of providing plans to LAFPP members has prepared them to submit strong, competitive proposals in this process.
While many retirees are satisfied with their current benefits and premiums, conducting this competitive process will provide the Board with a broad, informed perspective on the plans available to serve the diverse needs of all of LAFPP’s retired members and their families.
For example, many retirees have recently expressed concern over their out-of-pocket premium deductions as a result of the decrease in the 2022 Medicare subsidy and increases to health plan premiums effective July 1, 2022. Retirees who are subject to the subsidy freeze may be interested in considering plan options with lower out of pocket costs. A competitive bidding process allows all qualified organizations to propose plan options/premiums that might better satisfy retirees participating in the retiree health care program.
Q. Shouldn’t the annual review of the Association plans by the Board’s healthcare consultant be sufficient to verify the Association plans and rates are competitive?
A. The Board’s healthcare consultant reviews the annual premium changes for reasonableness and if they can be validated. The Board’s healthcare consultant does not review on an annual basis that the premiums for each Association plan are competitive for the level of benefits provided. As previously stated, the City Charter and Administrative Code and the Board’s fiduciary duties to LAFPP members, require a competitive process to be completed for these important healthcare contracts.
Q. Who can I contact if I have any questions?
A. Please direct any inquiries or comments regarding this matter to HealthRFP@lafpp.com