The Indian River County School District is not soliciting open public bids for health insurance services worth about $1.2 million. Instead, the district had its insurance consultant, Aon Hewitt, write a “request for proposals” and hand pick which companies would be allowed to pitch their services to the district.
Aon Hewitt will be paid commissions from the insurance company that is chosen, making its involvement in the selection process dubious, although the School Board theoretically will make the final decision about who is hired.
The School Board, however, was not even aware that Aon Hewitt had issued a “Request for Proposals” on the district’s behalf until Homestead Insurance agent Bob Galbraith came to the last board meeting to complain about the selection process.
What the school district is looking for is a third-party administrator to process claims for those covered by its health self-insurance fund. The last time the service was bid in 2002, Blue Cross Blue Shield was hired. Currently Blue Cross Blue Shield charges $50.50 for each member-employee per month for this service, for a total of about $1.2 million a year.
The school district has renewed its contract with Blue Cross Blue Shield every three years since 2002. Now, it has put the contract out for bid.
Galbraith said he had been trying for months to pitch his company’s services. “I had trouble finding out about the competitive bid process,” Galbraith said.
The bid process for the million-dollar-plus contract was not publicly advertised in a local paper, and it’s not on the procurement page on the school district website. Normally, RFPs for services and products over $50,000 are publicly advertised.
How Aon chose companies allowed to bid is a mystery. School district public information officer Flynn Fidgeon would not answer questions or send a copy of the RFP to Vero Beach 32963. “The RFP is an Aon document,” Fidgeon said. “The district is not the custodian of that document.”
Aon did not return calls for information.
“My company is not allowed to submit a proposal,” Galbraith told board members after seeing the RFP. Only companies that service 2 million people or more are allowed to compete, he said.
“You are only shopping giant carriers, which might be part of the problem in getting costs down,” said Galbraith, referring to the district’s $7 million deficit in the self-insured insurance fund at the end of last school year.
Galbraith asked Assistant Superintendent William Fritz, the school district’s risk manager, why only big companies were being allowed to compete for district business.
“He said he wanted to make sure retired teachers would have a service provider in every state. I said that’s what should be in the RFP,” Galbraith said. “We don’t have 2 million ‘lives,’ but we do have service providers in every state. We represent 20 school districts in New York. We know how to do the hand-holding to keep district costs down.”
“This process reeks,” Galbraith told the School Board. “But it’s not your fault, you weren’t aware of it.”
In an effort to clean up the process, School Board Member Laura Zorc has made sure Galbraith can bid. She is also forming a committee to review the proposals. It will include school employees on the health insurance advisory board. Their recommendations will then come before the board.
Zorc said the district’s contract with Blue Cross Blue Shield doesn’t expire until 2018, so the evaluation process will not be rushed.
Zorc sidestepped the question whether Aon’s RFP should have been advertised. “The medical is being directly negotiated with several companies by Aon,” she said, paraphrasing the school board policy of allowing public-bid exemptions for insurance services.