DISCLAIMER

05-0615R


RESOLUTION AUTHORIZING THE EXECUTION OF ENGAGEMENT LETTER WITH MERCER TO PROVIDE A MEDICAL CLAIM AUDIT OF BLUE CROSS AND BLUE SHIELD OF MINNESOTA AS PART OF A CLAIM AUDIT COALITION.

BY COUNCILOR STEWART:

     RESOLVED, that the city is hereby authorized to execute a medical claim audit engagement letter with Mercer Human Resources Consulting to perform a medical claims audit of Blue Cross and Blue Shield of Minnesota for an amount not to exceed $11,000, which shall be paid from the group health fund.


STATEMENT OF PURPOSE: This resolution authorizes the city of Duluth to execute agreements with Mercer to perform a claims audit of Blue Cross and Blue Shield of Minnesota. The city will be a participant in the audit as a member of an audit coalition. No audit of the city’s third party hospital/medical plan administrator has ever been undertaken. This audit will: determine whether medical claims are being processed in compliance with the employer’s self-funded plans; satisfy plan fiduciary due diligence obligations; verify the accuracy of network provider discounts applied to claims; measure the quality and timeliness of the vendors’ performance against best practices; evaluate procedures and controls in key operational areas in comparison to industry best practices; identify opportunities for cost savings and process improvements; determine root causes of problems requiring corrective actions; develop an improvement plan based on issues uncovered in the audit; reduce the cost of the claim audit by amortizing the expenses among multiple plan sponsors. Specific results for audited city claims will be reported, as will the generalized findings from all other coalition participants. The health insurance labor/management committee voted in favor of undertaking this audit at its August 9, 2005, meeting.