As two insurance brokers appealed a bid awarded by Council in September, tensions among council members dominated the discussion at Tuesday’s meeting.
Glenn/Davis & Associates and Capstone Benefits Consulting both filed appeals with City Manager Randy Wetmore after Council voted to award the insurance brokerage contract to Shaw Hankins at the last meeting. Wetmore denied the appeals and, per the City Charter, both firms appealed to Council for review.
The bid was for the pricey service of insurance brokerage and originally presented as follows:
1. Capstone Benefits Consulting, LLC — $6,000.00/month
2. Shaw Hankins — $5,376.00/month
3. Glenn Davis and Associates $1,024.00/month
The September Meeting
Though the vote in September was 4-0, (Councilman John Riggs was absent), Councilman Travis Chance had been vocal in his concerns over the cost-savings presented by Shaw Hankins. Chance also challenged city staff’s procedure for bidding the services without first going to Council and for, what appeared to be, grading firms on different criteria. Chance was assured by staff and Shawn Hankins the information provided was accurate, but given the concern ahead of the vote, the appeals filed were not unexpected.
Ahead of the presentations by the appealing parties, Wetmore told council that an RFQ was placed in the newspaper and four proposals were submitted, of which three were selected for the final interview – Shaw Hankins, Capstone Benefits Consulting, and Glenn/Davis & Associates. Wetmore said the applicants were evaluated on services that could be provided like ‘experience, software platform, and things of that nature.’ The three were ranked by a committee of city employees. Wetmore also clarified ahead of the interviews, no firm had submitted information on cost savings. With regard to the award to Shaw Hankins, he said, “We realize there are some upfront costs to this proposal,…during budget time, we raised the cost to employees by $20 per month to cover the costs. We believe the services provided by Shaw Hankins are comprehensive, it seemed appropriate to bring the recommendation to council.”
Glenn/Davis & Associates presented their appeal first, with Bryan Glenn and John Taylor representing the firm, which has provided brokerage services for the last 9 years. “It gives me no pleasure at all to stand up here and appeal this, but I feel right is right and wrong is wrong.,” he began. Glenn referenced documentation provided by Shaw Hankins during the September meeting, saying the firm misrepresented Glenn/Davis by saying the city was only receiving a 30% discount, when in fact, the average was 48-50% discount each year. In 2017, the PPO discount for the City, as brokered by Glenn/Davis was 49.5%, in 2016 it was 47.9%, and in 2015 it was 49.2%.
“I feel strongly that the decision the City Council made was based on grossly misrepresented numbers and I would ask that you reconsider.”
Taylor also refuted Shaw Hankins presentations saying it is untrue that different carriers permit different charges. “Providers have to bill everyone the same – whether you have Medicare, self-funded, a fully-insured plan. There would be gross discrimination issues if the provider did not do that.” Instead, he said, the costs are based on the discount after the bill is issued.
HR Director Jeff Grant addressed Council to interject that city employees challenged the insurance provider in 2013 and in 2016 about ‘money almost left on the table.’
Councilman Boyum asked when the RFQ went out, to which Grant replied it was issued on July 23, 2017 and due August 18. Boyum asked when the interviews were conducted, to which Grant replied ‘the next week,’ but Ben Watkins said he presented on September 7.
Ben Watkins represented Capstone Benefits Consulting in his presentation and took to task the criteria for the RFQ. “No where in here will you find ‘How much will you save us?’ It does ask ‘What tools will you use to help us save money,” he said. Watkins said it was clear the decision was made based on the savings and said part of the problem is the health care market Statesboro sits in, referring to the costs of the providers in the area. “East Georgia outpatient is 900% of medicare. If you pay 50% of 900%, you’re still paying more than you would elsewhere.”
Shaw Hankins defends their proposal
Scott Hankins had the opportunity to defend his own proposal, saying his firm took the initiative to go onto the City website, look at the budget and apply what they felt was ‘reasonable’ discounts.
But that’s what sparked the conversation among council members.
Councilman Travis Chance ask Hankins about the projected 70% discount. Hankins defended the use of the budgeted amount over the actual amount, which promoted Mayor Jan Moore to interject that the ‘Claims versus PPO Discount’ sheet is what proposals should be based upon.
“Variable costs are impossible to predict because you were basing it on numbers that weren’t exactly accurate. You’re basing it off the budget, not the paid numbers so the whole thing was flawed. I mean, you can’t make the decision based on information that is incorrect, inaccurate at best. My opinion is, I don’t know how we proceed in this direction,” Chance said.
Hankins defended the firm’s presentation once again, noting that a great deal of information was provided for city staffers to make a decision. “But not our decision. And our decision is what counts, not theirs,” Chance said. “We’re given the information. We are a part-time body given the information from a full-time staff that we expect to be up-to-date, accurate, and real-time information.”
Councilman Jeff Yawn disagreed, “I don’t think that’s fair. Not based on what I’ve heard the representatives from the city. I don’t think that sole decision was based on that [cost savings.]”
Chance brought up that Councilman Phil Boyum led the conversation on the million dollar savings Shaw Hankins proposed., but Yawn reiterated that the decision by staff was made on materials presented and the savings were “gravy,” or extra.
City Manager Wetmore refuted that the city didn’t have to conduct interviews, that a decision could have been made solely on the ranking of the paper applications, which would again award to Shaw Hankins.
Mayor Moore was adamant that a motion would be made for some kind of action because appeals were filed, but what the motion would mean was more complex.
Boyum: “Do you feel the process was incomplete, incorrect, or somehow flawed?”
Chance: “If I offended anyone earlier, I apologize. Your (city staff) decision does matter, but it’s our behinds that get crucified in the paper and on Facebook and everywhere else when something goes wrong, so when fit hits the shan, who gets it? Let’s jus clarify that. So it was not the decision that was irrelevant, it was the fact that at the end of the day, we have to make a decision based on information we’re given. I don’t feel I would have made the same decision today that I made last week.”
Chance pressed the Council to devise a way to fix the situation, provided a better process and separate feelings from the decision-making. “I can tell there’s a lot of contentious feelings in this room, with staff towards current vendors, etc.”
Boyum: “I’m not sure that answered my question, which was, you see a flaw in the process. Where is the flaw?”
Chance: “I don’t know how else I can answer it….”
At one point, Boyum alleged that the insurance brokers are all making more money than what they collect as their fee, which upset all three firms present, leading their respective representatives to stand and refute Boyum’s comments. Moore quickly restored order and asked the Council what they want to do.
Eventually, Chance made a motion to rescind the vote from the September meeting, which was seconded by Councilman Sam Jones.
Ultimately, Chance, Jones, and Riggs voted to rescind the vote to award to proposal to Shaw Hankins while Yawn and Boyum voted NO.
Councilmen spar over going forward
The Council was still charged with what to do. Whether to extend the bidding period, reject the bids all together, or bring in a third party was not an easy consensus for Council to form, especially given the upcoming enrollment dates for next year’s plans. Disputes over who should come up with the idea for reviewing bids, however, dominated the conversation.
Chance: “So do we rush through it again just for the sake of time?”
Boyum: “I don’t know. You rescinded the vote. What’s your inclination?”
Chance: “It won’t be quite as snide as that comment.”
On more than one occasion, Mayor Moore had to ask council members to be respectful of each other and to consider the two options: authorize an extension with the current provider and re-evaluate with a third-party or re-bid the proposal all together.
After another lengthy discussion, Council ultimately decided that a third-party would review the three bids already narrowed down by staff. City Attorney Cain Smith confirmed the legality of this action, saying that no new information would be provided by the firms to the third-party evaluator unless the third-party has a question and it is posed to all three firms.
Moore appointed Yawn and Chance to agree upon a neutral third party, while moving to extend the current provider contract, Glenn/Davis, through March 31 for re-evaluation. The findings and recommendation will be brought before Council for April 1.
Statesboro City Council – Begins at 9:00 AM – alcohol license applications and Capstone Benefits and Glenn Davis are here to appeal a previous bid awarded by the city to another company
Posted by All On Georgia – Bulloch on Tuesday, October 3, 2017