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HomeMy WebLinkAboutCAG1993-0089 - Original - Blue Cross of Washington and Alaska - Administrative Service Contract - 01/01/1993 BLUE CROSS OF WASHINGTON AND ALASKA CONTRACT ADMINISTRATION AGREEMENT This Agreement is effective this first day of January, 1993, by and between City of Kent (hereinafter referred to as the "Plan Sponsor"), and Blue Cross of Washington and Alaska (hereinafter referred to as the "Contract Administrator") . WHEREAS, the Plan Sponsor has established an employee benefit plan (hereinafter referred to as the "Plan") which provides for payment of certain welfare benefits to and for certain eligible individuals as defined by the Plan Document, such individuals being hereinafter referred to as "Participants, Dependents and Beneficiaries"; and, WHEREAS, the Plan Sponsor has chosen to self-insure the benefit program(s) provided under the Plan; and WHEREAS, the Plan Sponsor desires to engage the services of the Contract Administrator to provide administrative services for the Plan; NOW THEREFORE, in consideration of the mutual covenants and conditions as contained herein the parties hereto agree as follows: SECTION I DUTIES AND RESPONSIBILITIES OF THE PLAN SPONSOR 1.01 The Plan Sponsor shall provide the Contract Administrator with a copy of the Plan Document and any other documents describing the benefit program(s) which the Contract Administrator may rely upon in performing its responsibilities under this Agreement. 1.02 The Plan Sponsor shall have final discretionary authority to determine the benefit provisions and to construe and interpret the terms of the Plan. 1.03 The Plan Sponsor shall have final discretionary authority to determine eligibility for benefits and the amount to be paid by the benefit program(s) . 1.04 Unless specifically delegated to the Contract Administrator by this Agreement, the Plan Sponsor shall be responsible for the proper administration of the Plan including: a. providing the Contract Administrator a complete and accurate list of all individuals eligible for benefits under the benefit program(s) upon which the Contract Administrator shall be entitled to rely until it receives documentation of any change thereto; b. notifying the Contract Administrator on a monthly basis of changes in eligibility; 7486T - 1 C. distributing to all eligible Participants, Dependents and Beneficiaries all appropriate and necessary materials and documents, including but not limited to benefit program booklets, summary plan descriptions, material modifications, the Plan Document, amendments to the Plan Document, identification cards, enrollment applications and notice forms necessary for the operation of the Plan; d. providing the Contract Administrator with any additional information necessary to perform its functions under this Agreement as may be requested by the Contract Administrator from time to time; e. maintaining adequate funds from which the total cost of all claims for each proceeding week will be paid to the Contract Administrator by wire transfer. Funds must be provided within forty-eight (48) hours of phone notification by the Contract Administrator to a person designated by the Plan Sponsor. 1.05 The Plan Sponsor shall be responsible for all taxes, assessments and fees levied by any local, state or federal authority in connection with the Contract Administrator's duties pursuant to this Agreement. 1.06 The Plan Sponsor shall be responsible for the Plan's continuing compliance with federal, state and local laws and regulations, including but not limited to the Internal Revenue Code, the Employee Retirement Income Security Act of 1974 (ERISA), and the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) . The Plan Sponsor, and not the Contract Administrator, is the "plan administrator" for purposes of 29 USC Section 1002(16) (a) and 26 USC Section 4980B(g) (3) and the "plan sponsor" for purposes of 29 USC Section 1161, et seq. The Plan Sponsor shall be responsible for determining whether it is subject to COBRA and for notifying Participants, Dependents and Beneficiaries of their COBRA rights both initially and upon the occurrence of a qualifying event, for calculating and collecting premiums for COBRA continuation of coverage and for promptly notifying the Contract Administrator when an individual is no longer eligible for COBRA continuation of coverage. 1.07 The Plan Sponsor shall be responsible for defending any legal action brought against the Plan, including a claim for benefits by or on behalf of any individual or entity, including but not limited to any Participant or former Participant, Dependent, Beneficiary, any fiduciary or other party. This responsibility includes the selection and payment of counsel. The Plan Sponsor shall not settle any legal action or claim without the prior consent of the Contract Administrator if the action or claim could result in the Contract Administrator being liable, including for example, any liability for contribution to or indemnification of the Plan Sponsor or other third party either directly or indirectly. 7486T - 2 SECTION II DUTIES AND RESPONSIBILITIES OF THE CONTRACT ADMINISTRATOR 2.01 The Contract Administrator agrees to perform the following administrative services for the Plan Sponsor: a. assist in the preparation and printing of the Plan Document, benefit program booklets, identification cards, and other materials necessary for the operation of the Plan; b. process all eligible claims incurred after the effective date of this Agreement which are properly submitted in accordance with the procedures set forth in the Plan Document. Checks will be issued on the contract Administrator's check stock, but the responsibility for funding benefits is the Plan Sponsor's and the Contract Administrator is not acting as an insurer. The Contract Administrator shall make reasonable efforts to determine that a claim is covered under the terms of the benefit program(s), to apply the coordination of benefits provisions, identify subrogation claims, and make reasonable efforts to recover subrogated amounts administratively, and prepare and distribute benefit payments to Participants, Dependents and Beneficiaries and/or service providers; C. perform reasonable internal audits; d. answer inquiries from the Plan Sponsor, Participants, Dependents and Beneficiaries, and service providers regarding the terms of the Plan, although final authority for construing the terms of the Plan's eligibility and benefit provisions is the Plan Sponsors; e. prepare and provide to the Plan Sponsor monthly reports of claims paid under the Plan in accordance with Attachment B; f. prepare and provide the Plan Sponsor with an annual report of the operations of the Plan in accordance with Attachment B; g. provide information to the Plan Sponsor for preparing Form 55001s; however, the Plan Sponsor shall be solely responsible for insuring timely filing of the Form 5500's; h. coordinate with any stop-loss insurance carrier; i. when "preferred provider" benefits are provided, maintain a network of hospital and professional providers; paid claims will reflect any negotiated provider discounts; j . perform utilization management services including, preadmission review, admission review, length of stay assignment, focused concurrent review, discharge planning, individual case management and retrospective review. 7486T - 3 SECTION III LIMITS OF THE CONTRACT ADMINISTRATOR'S RESPONSIBILITY 3.01 It is recognized and understood by the Plan Sponsor that the Contract Administrator is not an insurer and that the Contract Administrator's sole function is to provide claims administration services and the Contract Administrator shall have no liability for the funding of benefits. 3.02 If during the course of an audit performed internally by the Contract Administrator pursuant to Section 2.Ol,c. or by the Plan Sponsor pursuant to Section V of this Agreement any error is discovered, the Contract Administrator shall use reasonable efforts to recover any loss resulting from such error. 3.03 The Contract Administrator is an performed indentpurs contracant to tor with respect to the services being Agreement and shall not for any purpose be deemed an employee of the Plan Sponsor. 3.04 This Agreement is between the Contract Administrator and the Plan Sponsor and does not create any legal relationship between the Contract Administrator and any Participant, Dependent, Beneficiary or any other individual. 3.05 It is recognized by the parties that errors may occur and it is agreed that the Contract Administrator will not be held liable for such errors unless they resulted from its gross negligence or willful misconduct. The Plan Sponsor agrees to defend, indemnify, and hold harmless the Contract Administrator from all claims, damages, liabilities, losses, and expenses arising out of the Contract Administrator's performance of administration services under the terms of this Agreement, so long as they did not arise out of the Contract Administrator's gross negligence or willful misconduct. SECTION IV FEES OF THE CONTRACT ADMINISTRATOR 4.01 By the first of each month, The Plan Sponsor shall pay the Contract Administrator in accordance with the fee schedule set forth in Attachment C which is incorporated herein by reference. 4.02 LATE PAYMENTS a. If, for any reason whatsoever, the Plan Sponsor fails to make a timely payment required under this Agreement, the Contract Administrator may suspend performance of and services to the Plan Sponsor, including processing payment of claims, until such time as the Plan Sponsor makes the required payment, including interest as set forth in b. below. 7486T - 4 b. The Contract Administrator will charge interest to the Plan Sponsor on all late payments, including amounts paid to reinstate this Agreement after termination pursuant to Section 8.05, at the average annual prime rate posted b Seattle First National Bank plus two (2) percent amount of the late payments for the number of days late. Interest will be in addition to any other amounts payable under this Agreement. C. In the event of late payment, the Contract Administrator may terminate this Agreement pursuant to Section 8.05. Acceptance of late payments by the Contract Administrator shall not constitute a waiver of its right to of fees. this Agreement due to delinquent or nonpayment SECTION V AUDIT 5.01 Within thirty (30) days of written notice from the Plan Sponsor, the Contract Administrator shall allow an authorized agent of the Plan Sponsor to inspect or audit all records and files maintained by the Contract Administrator which are directly pertinent to the administration of the Plan. Such documents shall be made available at the administrative office of the Contract Administrator during normal business hours. The Plan Sponsor shall be liable for any and all fees charged by the auditor. Any agent or auditor that has access to the records and files maintained by the Contract Administrator shall agree not to disclose any proprietary or confidential information used in the business of the Contract Administrator. SECTION VI SUBROGATION 6.01 The Contract Administrator shall make reasonable efforts to pursue subrogation claims administratively on behalf of the Plan. However, the Contract Administrator shall have no affirmative duty to pursue subrogation claims beyond those specified in section 2.0l,b. The Plan Sponsor shall have the sole discretion to bring any legal claim or action to enforce the Plan's subrogation provisions. The Contract Administrator will cooperate with the Plan Sponsor in the event the Plan Sponsor brings any legal action to enforce the subrogation provisions of the Plan. Any costs and attorneys' fees incurred in pursuing such subrogation claims shall be the responsibility of the Plan Sponsor. SECTION VII TERM OF AGREEMENT 7.01 This term of this Agreement shall be the period from 12:01 a.m. on January 1, 1993, to midnight on December 31, 1993 (hereinafter referred to as the "Agreement Period") . 7486T - 5 7.02 Except as stated otherwise in section 8.03 below, the terms and conditions of this Agreement and the fee schedule set forth in Attachment C are established for the Agreement Period. 7.03 The Plan Sponsor acknowledges that the fee schedule set forth in Attachment C and the services provided for in this Agreement are based upon the terms of the Plan and the enrollment as they exist on the effective date of this Agreement. Any substantial change, whether required by law or otherwise, in the terms and provisions of the Plan or in enrollment may require that the Contract Administrator incur additional expenses. The parties agree that any substantial change, as determined by the Contract Administrator, shall result in the alteration of the fee schedule, even if the alteration is during the Agreement Period. The phrase "any substantial change" shall include, but not be limited to: a. a fluctuation of ten (10) percent or more in the number of Participants, Dependents and Beneficiaries as set forth on the census information included in Attachment A which is herein incorporated by reference and made a part of this Agreement; b. the addition of benefit program(s) or any change in the terms of the Plan's eligibility rules, benefit provisions or record keeping rules that would increase administration costs by more than $2,000; C. any change in claims administrative services, benefits or eligibility required by law; d. any change in administrative procedures from those in force at the inception of this Agreement which is agreed upon by the parties; e. any additional services which the Contract Administrator undertakes to perform at the request of the Plan Sponsor which are not specified in this Agreement such as the handling of mailings or preparation of statistical reports and surveys not specified in this Agreement. SECTION VIII TERMINATION 8.01 The Plan Sponsor may terminate this Agreement at any time by giving the Contract Administrator thirty (30) days written notice. 8.02 This Agreement will terminate on the last day of the Agreement Period or the last day of any extension of the Agreement Period granted by the Plan Administrator. 7486T - 6 8.03 Either party may terminate this Agreement effective immediately by giving written notice to the other if a party becomes insolvent, makes a general assignment for the benefit of creditors, files a voluntary petition of bankruptcy, suffers or permits the appointment of a receiver for its business or assets, or becomes subject to any proceeding under any bankruptcy or insolvency law, whether foreign or domestic. A party is insolvent if it has ceased to pay its debts in the ordinary course of business; cannot pay its debts as they become due; or the sum of its debts is greater than the value of its property at a fair valuation. 8.04 If loss of services is caused by, or either party is unable to perform any of its obligations under this Agreement, or to enjoy any of its benefits because of natural disaster, action or decrees of governmental bodies or communication failure not the fault of the affected party, such loss or inability to perform shall not be deemed a breach. The party who has been so affected shall immediately give notice to the other party and shall do everything possible to resume performance. Upon receipt of such notice, all obligations under this Agreement shall be immediately suspended. If the period of nonperformance exceeds thirty (30) days from the receipt of such notice, the party whose performance has not been so affected may, as its sole remedy, terminate this Agreement by written notice to the other party effective immediately. In the event of such termination, the Plan Sponsor shall remain liable to the Contract Administrator for all payments due, together with interest thereon as provided for in Section 4.02. 8.05 The Contract Administrator may, in its sole discretion, terminate this Agreement effective as of a missed payment due date in the event that the Plan Sponsor fails to make a timely payment required under this Agreement. 8.06 In the event this Agreement is terminated prior to the end of the Agreement Period, the Plan Sponsor shall remain liable to the Contract Administrator for all delinquent sums together with interest thereon as provided for in section 4.02 above. Furthermore, because the Contract Administrator will have incurred fixed costs which, but for the termination, would have been recouped over the course of the Agreement Period, as liquidated damages, and not as a penalty, the Plan Sponsor shall pay the Contract Administrator an amount equal to two (2) months administration fee at the rate set forth in Attachment C multiplied by the average number of Participants, Dependents and Beneficiaries covered by the Plan for the immediately preceding six (6) month period or such shorter period if this Agreement has not been in effect for a period of six (6) months. The Plan Sponsor shall remain liable for claims incurred during the Agreement Period but not paid during the Agreement Period and for the claims run-out processing fee set forth in subsection C of Attachment C. 7486T - 7 8.07 Within one hundred twenty (120) days of termination by either party, the Contract Administrator shall deliver to the Plan Sponsor an interim accounting. Within fifteen (15) months of termination the Contract Administrator shall deliver to the Plan Sponsor a complete and final accounting of the status of the Plan. At the expense of the Plan Sponsor, the Contract Administrator shall make available a record of deductibles and coinsurance levels for each Participant, Dependent and Beneficiary and deliver this information to the Plan Sponsor or its authorized agent. 8.08 For the twelve (12) month period following termination of this Agreement, the Contract Administrator shall continue to process eligible claims incurred prior to termination at the claims run-out processing fee rate set forth in Attachment C. SECTION IX DISCLOSURE 9.01 It is recognized and understood by the Plan Sponsor that the Contract Administrator is subject to all laws and regulations applicable to contract administrators and health care service contractors. 9.02 It is recognized and understood by the Plan Sponsor that the Contract Administrator is not acting as an insurer and also is not providing stop-loss insurance. SECTION X OTHER PROVISIONS 10.01 Choice of Law The validity, interpretation, and performance of this Agreement shall be controlled by and construed under the laws of the State of Washington, unless federal law applies. Any and all disputes concerning this Agreement shall be resolved in King County Superior Court. The party substantially prevailing shall be entitled to recover its reasonable costs, including attorneys' fees. 10.02 Trademarks The Contract Administrator reserves the right to, the control of, and the use of the words "Blue Cross of Washington and Alaska" and all symbols, trademarks and service marks existing or hereafter established. The Plan Sponsor shall not use such words, symbols, trademarks or service marks in advertising, promotional materials, materials supplied to Participants, Dependents and Beneficiaries or otherwise without the Contract Administrator's prior written consent which shall not be unreasonably withheld. 7486T - 8 10.03 Notice Except for the notice given pursuant to section 1.04,e. , any notice required or permitted to be given by this Agreement shall be in writing and shall be deemed delivered three (3) days after deposit in the United States mail, postage fully prepaid, return receipt requested, and addressed to the other party at the address as shown below. 10.04 Integration This Agreement, including any appendices or attachments incorporated herein by reference, embodies the entire Agreement and understanding of the parties and supersedes all prior oral and written communications between them. The terms hereof may be modified only by a writing signed by both parties hereto. 10.05 Assignment Neither party shall assign this Agreement or any of its duties or responsibilities hereunder without the prior written approval of the other. SECTION XI ATTACHMENTS TO THE ADMINISTRATION CONTRACT 11.01 The following attach to and become part of the body of this Agreement and they are herein incorporated by reference when selected by the Plan Sponsor as part of the administration services to be performed by the Contract Administrator. Census - Attachment A YES X NO Reporting - Attachment B YES X NO Fee Schedule - Attachment C YES X NO Right Of Conversion - Attachment D YES X NO 11.02 The following Plan Document and benefit program booklets attach to and become part of the body of this Agreement and are herein incorporated by reference: Plan Document No. 7486T Group Number 13595, -01, -99 Group Number 13596, -01, -99 Group Number 13597, -01 7486T - 9 The parties below have signed as duly authorized officers and have hereby executed this Agreement. If this Agreement is not signed and returned to the Contract Administrator within sixty (60) days of its delivery to the Plan Sponsor or its agent, the Contract Administrator will assume the Plan Sponsor's concurrence and the Plan Sponsor will be bound by its terms. IN WITNESS WHEREOF the parties hereto sign their names as duly authorized officers and have executed this Agreement. CITY OF NT DATE: BY: Title AA/ DATE: BY: Title Address: BLUE CROSS OF WASHINGTON AND ALASKA DATE: January 28 1993 BY4Title: ident anf Operating Officer Address: P.O. Box 327 Seattle Washington 98111-0327 7486T - 10 Attachment A Census Information Administration Fees effective January 1, 1993 are based on the following: Number of Active and Retired Enrollees: Employee Spouse Children 586 374 605 Number of COBRA Enrollees: 2 3 2 Other Carriers Offered: One HMO through Group Health Cooperative. 7486T - 11 Attachment B Reporting The following reports will be provided to the Plan Sponsor within the fees set forth in Attachment C: Report Title Frequency Weekly Claims Recap Weekly Detail Claim Runs Monthly Premium/Claims Report Monthly Large Claims Analysis Yearly 7486T - 12 Attachment C Fees of the Contract Administrator Pursuant to the Contract Administration Agreement, the Plan Sponsor shall pay the Contract Administrator a fee, as set forth below, for administrative services. A. Administration Fees: Employee Employee, Spouse Employee & Employee & Spouse & Children Children 13595, -01, -99 $16.42 $23.66 $28.14 $20.90 13596, -01, -99* $16.42 $23.66 $28.14 $20.90 13597, -01 $ 2.87 $ 4.52 $ 5.51 $ 3.86 *Includes a $1.75 per employee per month charge for the use of Prudent Buyer Network. B. Other Fees: $2.00 per booklet $0.50 per I.D. card Prescription drug charge - $1.00 per script Conversion Contract Fee - $1,000.00 per conversion C. Claims runout processing fee: 9.84% of runout claims processed 7486T - 13 Attachment D Right of Conversion for Terminated Plan Participants and their Dependents The Plan Sponsor requests that the Contract Administrator provide a conversion privilege to terminated Plan Participants and their dependents in consideration of the following: Responsibilities of the Contract Administrator The Contract Administrator shall make available to Plan Participants and their dependents an opportunity to obtain health care coverage (hereinafter referred to as Conversion Contract) when they are no longer eligible for coverage under the Plan due to: • A covered employee's termination of employment. • Termination of benefits for the class in which the Plan Participant or dependent belongs. • A covered dependents' attainment of the limiting age. • A covered spouses' legal separation or divorce. :ontract Death of a covered employee. The Administrator shall not be required to issue a Conversion Contract if the Plan Participant or dependent becomes covered under a group health insurance policy within 31 days after termination of his or her coverage under the Plan. Application and payment of the applicable rate for the Conversion Contract must be made by the Plan Participant or dependent within 31 days after such individual's conversion privilege of its group health coverage contracts. Rates for the Conversion Contract shall be determined by the Contract Administrator and be the same as those then in effect for coverage offered under the standard conversion privilege of its group health coverage contracts. Rates will not be guaranteed and the Contract Administrator will have the right to change the rate of any Conversion Contract. Compensation The Plan Sponsor authorizes the Contract Administrator to deduct from the Plan Sponsor's claim paying account upon the effective date of each conversion contract, a $1,000 conversion privilege fee for each conversion contract issued to a former Plan Participant or dependent. 7486T - 14 CITY OF KENT (Plan Sponsor) PLAN DOCUMENT The employee benefit programs set forth in this Plan Document are available to certain eligible individuals as defined within the benefit programs. All benefits of this Plan Document are subject to the terms and conditions stated herein and any endorsements or riders included or issued thereafter. The City of Kent has the discretionary authority to determine eligibility for benefits and to construe the terms used in this Plan Document. Blue Cross of Washington and Alaska has been selected by the City of Kent to administer the benefits of this Plan Document. Blue Cross of Washington and Alaska is not the underwriter of this Plan Document. The City of Kent is solely and totally responsible for: funding benefits under the benefit programs; compliance with all applicable laws and regulations affecting the benefit programs; and fiduciary liability for the benefit programs. If, for any reason, the Contract Administration Agreement between Blue Cross of Washington and Alaska and the City of Kent terminates, Blue Cross of Washington and Alaska shall be relieved of its administrative duties under this Plan Document, except as otherwise provided in the Contract Administration Agreement. This Plan Document attaches to and becomes a part of the Contract Administration Agreement effective January 1, 1993. PLAN DOCUMENT EFFECTIVE DATE: January 1, 1993 PLAN DOCUMENT NUMBER: 7486T CITY OF NT By: Date: Title By: Date: Title STANDARD PROVISIONS PLAN DOCUMENT The entire Plan Document consists of the following: • The Plan Document face page and "Standard Provisions"; • The attached benefit booklets for • Program Number SW-13595, -01, -99 • Program Number SW-13596, -01, -99 • Program Number SW-13597, -01 • The enrollment applications of eligible persons on file with the City of Kent. • All attachments, endorsements, and riders included or issued hereafter. LATE ENROLLMENT This section explains the requirements that eligible individuals must meet if they wish to become covered under one of the Plan Document benefit programs but did not enroll when they were first eligible. If we pay 100 percent of the cost of the coverage under this Plan Document for employees and/or dependents, an eligible individual who is not enrolled when first eligible or who fails to maintain continuous coverage, may be retroactively enrolled at any later date provided application is made from the later of the following: • The date the individual was first eligible for coverage; or • Retroactively sixty (60) days. If we do not pay 100 percent of the cost of the coverage under this plan document for employees and/or dependents, an eligible individual who is not enrolled when first eligible or who fails to maintain continuous coverage may be enrolled only during an open enrollment period which is determined by us. Provided proper application has been made, coverage will begin on the effective date of our open enrollment. To enroll at any other time, the employee or dependent must submit proof of good health for our approval. Coverage will become effective on the first subscription charge due date that coincides with or next follows our approval of such proof. CHANGE IN FAMILY STATUS Other than at the annual open enrollment period, an employee may change an enrollment election (i.e. , add or delete dependents) only if there has been a change in family status. A new election may be permitted if one of the following events occurs: • The marriage or divorce of the employee. • The death of the employee's spouse or a dependent child. • The birth or adoption of a child of the employee. • The termination of employment (or the commencement of employment) of the employee's spouse. • The change in employment status of the employee or the employee's spouse from full-time to part-time status or from part-time to full-time status. • The termination of the employee's employment. • An unpaid leave of absence taken by the employee or employee's spouse. • A significant change in the health coverage of the employee or employee's spouse attributable to the spouse's employment. Enrollment changes will be limited to those that are consistent with the change in family status. (i.e. In case of marriage, the employee may add the spouse to the existing medical program, but may not choose a different medical program until the Group's open enrollment period.) Enrollment changes are subject to the other terms and limitations of this program.