Milford expects to save $200,000 with new employee benefits consultant

The Milford Board of Aldermen recently approved switching to a new employee benefits consulting firm, a move expected to save the city at least $200,000 over three years.
For a number of years the city has contracted with a company called Aon Hewittt to advise on employee health care benefits for city and school employees.
Based on advice from City Finance Director Peter Erodici, the aldermen agreed to switch to Milliman, Inc. to provide those consulting services.
The aldermen agreed to a three-year contract with Milliman, and will pay $80,000 the first two years and $85,000 the third year. The city currently pays Aon Hewitt about $150,000 per year.
At their April board meeting, several aldermen questioned the logic of changing consulting firms. Republicans recalled that in 2012 Mayor Ben Blake tried to switch health care providers from Anthem Blue Cross to Cigna, but city employees argued vehemently that even though the city might be saving money, they didn't want to change providers.
In the end, Mayor Blake reversed the decision and renegotiated a contract with Anthem.
“I'd have liked to see the RFP [request for proposals],” said Alderman Ray Vitali. “So really, we're voting in the dark. Help me understand why we should be voting.”
Erodici said the city has been using Aon Hewitt for at least 10 years, and he suggested the company hasn't been responsive to the city's needs.
“I do commend the city for taking a fresh look,” Erodici said. “I thought it was about time to take a look at other firms. Sometimes dealing with the same firm for a long time can be good, but sometimes you need a fresh perspective.”
The finance director pointed out that Milliman will charge less than Aon Hewitt on a yearly basis.
“I welcome the reduced fees,” Erodici said. “We'll be paying less, and we might be getting more. They're enthusiastic and want to do more than what Aon was doing.”
The city is self insured, and spends about $40 million a year on health and dental benefits, city officials pointed out during the meeting.
“It's almost a no-brainer,” said Erodici, explaining that it is standard operations for a municipality to have an agent of record to help make decisions about health care contracts. He said the finance department has the power to make the decision to switch consulting firms based on the proposals submitted, but needed the aldermen's approval because the agreement is for a three-year period.
Vitali pushed Erodici, asking for more detailed reports and analysis of what Milliman would be providing. Erodici said the city's purchasing department has a thick report based on the proposals submitted to the city, and he said the aldermen could review those documents.
Vitali said that was a lot to expect of the city's aldermen, and asked Erodici for spreadsheets outlining the key differences between Milliman and the previous provider. He tried to postpone the board's vote until Erodici could provide spread sheets, but the motion to stall a vote failed 9-6.
Ultimately, the board voted to approve the contract with Milliman by a vote of 9-6.
Milliman is scheduled to take over for Aon on July 1, but has already started gathering information and working with the city in preparation for union negotiations, Erodici said.
The consulting firm’s job is to act as an intermediary between the health care companies and the city, but Erodici said the firm does more than that, including providing the following services:
• Yearly renewal analysis and negotiations with health care company
• Budget projections using sound underwriting methodologies and actuarially derived assumptions
• Support for the collective bargaining process
• Initial and ongoing education and enrollment support for the health plan(s)
• Implementation of wellness and disease management programs
• Helps the city understand healthcare reform and regulatory changes; provides training and material resources
• Would fully support and help the city conduct any applicable request for proposal
• Support operational staff with day-to-day issues and transitional issues
• Data analytics and reporting including cost containment management, claims audit and trouble shooting
According to Erodici, Milliman has suggested ways the city can save money on its health care. “The wheels are turning,” Erodici said, “but we haven't talked about exact dollars amounts of savings.”