Staff recommends new medical, pharmacy and ancillary carriers in benefits RFP; city projects ~$2.6M savings
Loading...
Summary
City staff presented a recommendation to award multiple lines in a benefits RFP including continuing Aetna for medical and switching pharmacy administration to Rx Benefits/OptumRx; council praised projected savings; formal action scheduled for a future meeting.
City staff on Sept. 16 briefed the Amarillo City Council on the results of a request for proposals (RFP) covering major medical, pharmacy and ancillary employee benefits and said staff will present formal contract recommendations at an upcoming meeting.
Mitch Norman, presenting for benefits staff, said the RFP process produced 28 carrier responses and that the evaluation committee and the city's benefits consultant (HUB International) scored bidders on price, administrative flexibility, quality of service, reporting and references. The committee recommended continuing medical administration with Aetna Life Insurance and moving pharmacy benefit administration to Rx Benefits Inc., administered through OptumRx. Staff also recommended changes for dental (to Delta Dental) and for several ancillary lines while retaining some current vendors for life, disability and ACA/FMLA administration.
Norman said some lines (short-term disability, FMLA administration and stop-loss insurance) required separate procurement attention; short-term disability had no successful bidder under RFP constraints and staff expects to reissue an RFP in 2026. Stop-loss insurance will be rebid near its 12/31 renewal date.
Council members praised staff and HUB for the evaluation work. A councilmember summarized expected savings from the recommended vendor mix as about $2.6 million (comment was framed as an estimate by council after seeing the repricing exercise). Norman cautioned that claims experience and rebates vary year to year; he said Amarillo's medical claims through July 2025 were roughly $9 million year-to-date and pharmacy claims roughly $6.4 million (gross, before rebates). Norman said administrative per-employee-per-month costs are lower in the recommended proposals and that changes would take effect Jan. 1, 2026, with open enrollment and vendor integration to follow.
Next steps: staff will post the item for council action at an upcoming meeting (the presentation anticipated a council action item on the Sept. 23 agenda), notify current vendors of nonrenewal, and proceed with open enrollment and technological integrations if council approves the recommendations.
Why it matters: The city's medical and pharmacy plans are variable-cost items that materially affect the fiscal outlook and employee benefits. Staff said the repricing exercise and vendor proposals indicate potential multi-million-dollar savings while maintaining benefits, but actual results will depend on claims and rebate performance.
