Item Coversheet

Action Item - 77.

Title: Contract with Highmark Insurance Group for Stop Loss Insurance ($2,110,432) - Added 5.19.23

Board of Education Meeting Date:

Action under consideration

 The Administration recommends that the Board of Education authorize The School District of Philadelphia, through the Superintendent or his designee, to execute and perform a contract, subject to funding, as follows: 

Highmark Insurance Group  

Stop Loss Insurance policy to protect the School District from high cost medical claims in excess of $1.25 million.

 Start date: 7/1/2023

 End date: 6/30/2024
 Compensation not to exceed: $2,110,432 

All Schools; Administrative Office(s)

 Renewal Options:  No


Why is this contract needed?

The School District has been responsible for all medical claims it incurs and pays under its self-funded arrangement with Independence Blue Cross since 2011. Stop loss insurance is purchased to protect against catastrophic claims, such as premature births with associated complications or treatments involving high cost specialty drugs. Stop loss insurance provides a cap to the maximum out-of-pocket claims for which the District is responsible. This stop loss policy caps the District’s exposure for any individual claim to $1.25 million with the stop loss provider paying the costs beyond that. This arrangement greatly aids in budgetary planning.  

How is this work connected to the District’s plan to achieve Goals & Guardrails?

This contract works to ensure the District's fiscal responsibility and sustainability of our self-insured Health Fund so that resources are best utilized to support our students and our progress towards achieving Goals & Guardrails.

How will the success of this contract be measured?

The District monitors the usage of the stop loss insurance on a monthly basis and reviews the trend over the year to make any adjustments in the design and coverage of the stop loss insurance. The current vendor has effectively provided the coverage when needed. From July 1, 2022 through April 2023, the District has been reimbursed $7.7 million from the current vendor. 

Stop loss insurance is a common approach for self-funded medical plans.  We periodically consult with our Benefits Consultant to understand any changes in the market and best practices. 

This action item was originally slated for the Jun 29, 2023 Board meeting because the contract was not set to begin until July 1, 2023. On May 15, 2023, the District was notified of another high dollar claimant and Highmark, which had submitted their proposal based on stop loss claims through March, indicated that they would need to revise their proposal if the original one was not accepted by June 3, 2023. Given the additional high dollar claim, it is expected that a revised proposal from Highmark would be significantly higher. Therefore, the action item was expedited for the May 25, 2023 Board meeting.

 Related resolution(s)/approval(s): 
June 24, 2021; No. 17
 Funding Source(s): 

FY24 Health Fund 

 Office Originating Request: Talent