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City staff recommends keeping UMR for medical, switching pharmacy manager to control costs
Summary
Staff recommended retaining UMR for medical administration and moving pharmacy management to Serv U RX; HR projected an estimated $600,000 health‑fund increase for rising claims and stop‑loss premiums while showing some administrative savings under vendor proposals.
City staff presented an update on the employee medical and pharmacy RFP and recommended a vendor mix intended to control administrative and pharmacy costs while preserving benefit networks.
Human Resources Director Jeffrey Ross explained the city's self‑funded plan structure and enrollment levels, then described the RFP outcome: staff recommended retaining UMR (UnitedHealthcare/UMR) as the medical third‑party administrator and switching pharmacy management to Serv U RX, a UMR‑preferred pharmacy manager. Ross said pharmacy represents about 15% of the plan spend and that Serv U RX offered clinical programs and pricing that could reduce pharmacy expense.
Ross cautioned that actuarial trend modeling predicts increased medical and pharmacy claims and a likely $600,000 increase in the health fund to cover expected claims and stop‑loss premium growth; he noted administrative savings in the RFP estimates (roughly $52,700 annual reduction in administrative fees) but said claim trends drive the overall fund outlook.
Council members asked about member disruption (Ross said minimal for medical retention and modest information updates for pharmacy), in‑ and out‑of‑network implications, employee contribution questions (to be addressed in later plan‑design discussions), and the distinction between fixed administrative fee savings and projected claim increases. Staff said they would return with a resolution for vendor selection and additional details on design and contribution choices.
No final vendor contract was executed at the meeting; the presentation served as guidance for a future resolution and budget adjustments in the upcoming fiscal planning.
