25. 03-24-14 EMP BEN ESTABLISH TWO ADMIN ACCTS UHG AGENDA SUPPORT.PDF

Maricopa County
Department of Employee Benefits and Health
301 West Jefferson, Suite 3200 TO: Administrative Bank Account Committee:
Phoenix, AZ 85003-2143
Phone: 602 506-1771 Sandi Wilson, Deputy County Manager
www.maricopa.gov Royce Flora, Chief Deputy Treasurer
Shelby Scharbach, Assistant County Manager & CFO
Charles "Hos" Hoskins, Treasurer
FROM: Dave Hansen, Employee Benefits Finance Manager
DATE: March 17, 2014
SUBJECT: Request to Establish two Administrative Bank Accounts
This memo and application package is to request the establishment of two
Administrative Bank Accounts (Accounts) for processing electronic
payments to the new health care provider, United Healthcare Group, for
two of the County's medical plans.
The Accounts will be consistent and in compliance with the County's
Establishing Administrative Bank Accounts Policy (A2504), legal,
operating, reporting, and internal control requirements. The Accounts will
be established at the County's servicing bank JP Morgan Chase branch
located at 201 N Central Avenue — 21 st Fl., Phoenix, AZ 85004.
Electronic access to the Accounts will be granted to the Employee
Benefits Finance Department, Treasurer's Office and Department of
Finance. The Department of Finance will work with Employee Benefits
Finance Department to ensure proper cash handling procedures are used
to manage the bank account.
Please refer to the attached forms for additional Account information.
Attachments
c: Chris Bradley, Director — Department of Employee Benefits and Health

Description of why and Administrative Bank Account is needed for servicing United Health
Group Health Savings Account Contributions:
Maricopa County's High Deductible Health Plan requires that Health Savings Account Bank
Accounts be set up for each employee subscriber. An administrative bank account needs to be
set up by Maricopa County to facilitate reverse ACH Transfers to Optum Bank for crediting
Employee's Health Savings Bank Accounts at Optum Bank. There will be an initial funding to all
employee accounts prior to 7/1/14 and funding every pay period thereafter. Optum Bank is a
subsidiary of United Health Group. This Account will be owned by Maricopa County and is
expected to have a $200,000 to $300,000 balance on average. This Bank Account will be
funded via ACH transfers from Maricopa County.
There are two alternative solutions, but both would require doing wire transfers from the
Treasurer's Servicing Bank Account on the day of funding at a cost of $8.00 per transfer.
Neither of these options is recommended by United Health Group.
This request along with the other request is for two separate accounts which would be
accessible by UHG. It would be possible to have the two functions 1) Claims Processing and 2)
Health Savings Account funding flow through the same outside bank account. This is not
recommended because Health Savings Account funding is highly predicable and thus requires
lower excess balances than claims processing. The risk of not being able to fund employees H S
A bank accounts when scheduled could potentially create many problems for employees. This
would more likely occur if unpredictable claims were higher than anticipated.
It is also not recommended to have two vendors with rights to pull funds from the same bank
account. If questionable transactions hit the bank account, it would be more difficult to resolve
if two vendors were involved.
The cost of this bank account will be lost interest income which at a rate of 1% would be about
$2,500 per year.

Employees A S H Bank Accounts JPMorgan Employees H A S Bank Accounts Bank Optum accounts
At accounts At 1,700 Online exceptions County.
7/1/2014 exceptions the accts.
employee submitted for pulls A S the to
effective to for 7/1/2014 Bank online Cigna H Cigna. back to Bank
6/30/2014 Morgan deposits money contributon money while employee within money
Process JP transfers effective Optum for to funds revert Optum
through at initiates at account transfers account funds client can allow
UHG Accounts Cigna Manually Process Accounts Manually Bank transfer different Cigna to and
the and Process to FTPd Finance - auto-debit's to and of only County;
Savings file Savings Finance Administrative County balance.
6/30/2014 Current Benefits Contributions Bank commingling deposited, Maricopa
- Health Reserve Owned OKH0039a Health Account** A S H Account Chase Optum Benefits County Maricopa are from $300,000
through to Cigna Maricopa County Account 397011434081 Cigna to Maricopa County Sweep (New) Morgan Maricopa from avoid to monies transfers to
Contributions Accounts **New P J a cash name once Bank. $200,000
HSAs Deposits Deposits from Morgan. of as ACH Optum a
of Savings JP transfers County's Account receive at have to
funding Accounts County's Week Health County's Week contributions at Account ACH Maricopa (New). to Account expected
a Once of a Once A S maintained hold in Reserve Account County Bank is
Cigna Savings Maricopa Funded Maricopa Funded H the account Bank Account to maintained the of Sweep Maricopa Employee's and
Current Health pay Funding pay pull will Cigna Servicing disbursements Cigna by but control A S by to County
of to Fr'? - to UHG a Treasurer's for Reserve controlled Cigna full have H controlled money Maricopa
the Cash Group Cash that from County by not County by
of Funding of County Health of County is Contributions County Account and up owned does Maricopa and up transfer owned
Comparison - Movement Treasurer's Servicing Bank Account Movement Treasurer's Servicing Bank Account difference Bank Cigna/Maricopa set is County - set ACH is
CIGNA Maricopa United Maricopa Main A S Maricopa Central Account Account The UHG Account reverse Account
H

Maricopa County Title: Establishing Number: A2504
Internal Policy Administrative Bank Issue Date: May 2000
Accounts
Policy Category: Finance Initiating Department: Revision No: 2
Department of Finance Revision Date: June 20, 2012
Attachment A
REQUEST FOR ADMINISTRATIVE BANK ACCOUNT
Department Name Employee Benefits Low Org # 3950 Date 3/19/2014
Account Contact Name Dave Hansen Phone Number 506-2828
Description of why an Administrative Bank Account is needed:
A new bank account is required for the funding process of the High Deductible Health Plan (H S A).
Our cut tent bank account for ttils process Is owned by Cigna not by the County. Cigna will no longer
administer the H S A medical plan effective July 1, 2014.
Type of Administrative Bank Account being requested (based on the definitions in
Section II.A) and reason the account type is needed:
Third-Party Administrative Processing Account — to facilitate the process of funding Employees' H S A accounts
Name of Maricopa County/Special District Employees to be authorized signers
(minimum of 2 required):
Chris Bradley and Dave Hansen
Name of Maricopa County/Special District Employee to act as Custodian:
Lisa Tso
Type of Account Requested: Anticipated Account Activity:
Checking Account x Number of Deposits per Month 4
Savings Account Average Monthly Deposit $ 480,000.
Investment Account Number of Withdrawals/Checks per Month 8
Interest Bearing (Y/N) Average Monthly Withdrawals/Checks $ 480,000.
Explanation of Source of Funds (e.g., fines, fees, charges for services, bonds,
restitution/wards/inmates/probationers monies held in trust, etc.):
Employee and Employer Health Savings Account Contributions held in Trust Fund.
8

Maricopa County Title: Establishing Number: A2504
Internal Policy Administrative Bank Issue Date: May 2000
Accounts
Policy Category: Finance Initiating Department: Revision No: 2 •
_Department of Finance Revision Date: June 20, 2012
,
For Department of Finance Use Only
Financial reporting of deposits & investments held in Administrative Bank Account
Fund classification:
Special Revenue[ ] Debt Service[ ] Capital Project[ ] Enterprisel ]
Internal Service[ ] Agency[ ]
Advantage Fund Number (N/A for Agency Funds)
Balance Sheet Account 0006/0013 (N/A for Agency Funds)
See attached Memo for additional information.
REQUIRED APPROVALS
Depart ant or 0 a App val
Appointing Authority Approval Date
Completed by County Manager (or signees)
, /2451/
County Manager Approval Date 3
Completed County Treasur T
/ . /
County Treasurer Approv '71,4-1. - Date
Completed by Clerk of the Board of Supervisors/Board of Directors
Date of Board of Supervisors/Directors Approval Agenda #
9

Description of why and Administrative Bank Account is needed for servicing United Health
Group Claims payments:
Employee Benefit's Contract with United Health Group (UHG) requires the County to pay UHG
the same day that the PPO and HDHP (High Deductible Health Plan) medical claims processed
by UHG clear the UHG claim processing bank account. Failure to comply gives UHG the option
of terminating the benefits administration contract.
The first and preferred funding process for claims paid would involve the UHG claim processing
bank account pulling funds from the UHG Direct Deposit Account in Maricopa's name, which
would then pull funds from Maricopa County's Administrative Bank account. These
transactions would be facilitated via reverse ACH. There would be no Imprest bank account
required, however the Employee Benefits staff would need to insure that enough funds were
maintained in the administrative bank account based on expected future activity.
An alternative process is available which would not require an administrative bank account but
an Imprest bank account would be maintained by UHG. This process would involve wiring
money from the Treasurer's Servicing Bank Account to the UHG demand deposit account on a
weekly basis based upon a calculated lmprest amount based on 7 days claims payments. The
imprest amount is estimated to be $1,500,000 to $1,800,000. This is not desirable because it
would essentially transfer a large amount of cash on a prepayment basis to UHG. The transfer
could be done ACH with a 48 hour turnaround time.
This request along with the other request is for two separate accounts which would be
accessible by UHG. It would be possible to have the two functions 1) Claims Processing and 2)
Health Savings Account funding flow through the same outside bank account. This is not
recommended because Health Savings Account funding is highly predicable and thus requires
lower excess balances than claims processing. The risk of not being able to fund employees H S
A bank accounts when scheduled could potentially create many problems for employees. This
would more likely occur if unpredictable claims were higher than anticipated.
It is also not recommended to have two vendors with rights to pull funds from the same bank
account. If questionable transactions hit the bank account, it would be more difficult to resolve
if two vendors were involved.
The first alternative above would involve maintaining an average of $400,000 in a Maricopa
County administrative bank account. At an interest rate of 1% per year, this would cost the
County $4,000 in interest annually. Furthermore, this would require the County to allow UHG
to open a UHG Direct Deposit Account (i.e., a separate bank account) controlled by UHG, but in
Maricopa County's name and EIN, to avoid commingling of different client funds within UHG.
The second alternative of wiring money from the Treasurer's Servicing Bank Account to an UHG
Imprest account would involve turning approximately $1,650,000 over to UHG in advance of
claims being paid. At an interest rate of 1% per year, this would cost the County $16,500 in loss
of interest annually.

Current Process for all Medical Claims. Process and Accounts will remain the same for the HMO Plan
CIGNA -Funding of Claims Process using Maricopa County's Imprest Account
Movement of Cash to pay Maricopa County Self-Insured Medical Claims to Cigna Accounts
(Cigna maintains control of our cash with this process)
Maricopa Account A Cigna Account in County's name
Maricopa County Maricopa County Cigna Cigna Medical
Treasurer's Benefits Catalyst Maricopa County Providers
Servicing Imprest Sweep Bank Account Benefit Plan
Bank Bank (Medical) Agent Bank Account
Account Account #475732626 #601849573
Chase#982585648 (Med-California)
#475732960
Funded Once a Daily Sweeps by Daily Sweeps by Normally
Week 2:00:00 PM EST 2:00:00 PM EST Weekly
Maricopa County Treasurer's Servicing Bank Account
Central Bank Account for disbursements
Maricopa County Benefits Imprest Sweep Bank Account
Imprest to approximately $2,600,000, Owned by the County, but allows Cigna the rights to sweep the account for payment of Claims
However, effective 7/1/2014 the Imprest amount will drop to approximately $1,300,000 as it will cover only HMO claims
Cigna Catalyst Bank Account (Medical) #475732626. #47573296 (Subject to Qualified Public Depository guidelines for municipal accounts)
Account set up and controlled by Cigna to receive either Wire Transfers or sweeps of cash from Maricopa County to reimburse paid claims
This account is not a stand alone account but rather a sub-account of Cigna's catalyst omnibus account. Accounts are maintained in
clients' names (Maricopa County) in order to not comingle claims paying funds.
Cigna Maricopa County Benefit Plan Agent Bank Account #601849573
Account set up and controlled by Cigna to pay Maricopa Medical claims and to receive sweeps from "Catalyst Bank Account"
FY14 New Process-United Health Group (UHG) -Funding of Claims Process using Maricopa County's Imprest Account
Movement of Cash to pay Maricopa County Self-Insured Medical Claims to United Health Care
(Maricopa County retains control of our cash with this process)
Maricopa Account UHG Account in County's name
**New Account** **New Account**
Maricopa County RA C.•.-),^*I7/ UHG UHG Medical
Treasurer's Demand Deposit common zero Providers
Servicing IIII Api Bank Account balance check
Bank (DDA) writing Account
Account Account At Bankof
America
1)ACH Wire used by Benefits Staff to fund this Weekly 3) 2 AM ACH sweeps to cover cleared checks Daily
2)Daily Reverse sweeps to cover 2 am nightly sweeps to zero balance account
Maricopa County Treasurer's Servicing Bank Account
Central Bank Account for disbursements
Maricopa County Benefits Sweep Bank Account
"Pro Forma" Imprest to about $1,500,000, Owned by the County, but allows Uh6 the rights to sweep the account for payment of Claims
UHG/ Demand Deposit Account (Subject to Qualified Public Depository guidelines for municipal accounts)
Account set up and controlled by UHG to receive reverse ACH sweeps of cash from Maricopa County to reimburse paid claims
Account is owned by UHG but maintained in Maricopa County's name and EIN to avoid commingling of different client funds within UHG.
The County does not have full control of this account as once monies are deposited, only UHG can revert back to the County.
Account is similar to Cigna's Catalyst Bank Account.
UHG common zero balance check writing Bank Account
Account set up and controlled by UHG to pay Maricopa Medical claims and to receive sweeps from UHG DDA.
Alternatives
1) Daily sweeps from Maricopa's Administrative Bank Account to UHG DDA. This method keeps the maximum amount of cash in Maricopa's Possession.
There would be essentially a one day's worth of claims in this account on a daily basis which are cleared to zero with the 2 AM ACH sweep.
This process is depicted above.
2) Weekly sweeps from Maricopa Administrative Bank Account to UHG DDA. This would require a 6 day imprest amount in the UHG Account to be
topped off weekly. This is essentially what we are doing now and is probably the worst choice for Maricopa as an administrative bank account is
still required and the vendor is in control of a large amount of cash.
3) Direct Funding into UHG Account from Treasurer's Servicing Account. Would require 7 day imprest balance of approximately
$1,500,000-$1,800,000to account for 48 hour ACH lag.
Maricopa would receive a request for Funding on Monday morning to be ACH'ed on Wednesday, thus causing a larger imprest amount.
Recommendation
The recommended option is option #1 above as it provides UHG with the smallest amount of free cash.
The disadvantage of options 2) and 3) is that an imprest cash amount is maintained with UHG, but the advantage of this option is that UHG
Is OK with that account going periodically into a deficit position (due to the nature of an imprest system.)
Claim Patterns
Spikes in daily claims activity will be caused by 1) Pharmacy claims clearing twice a month; 2) Large claims; 3) Large providers within alphabet
Grouping as claims are paid daily using the first letter of the alphabet to group payments.

Maricopa County Title: Establishing Number: A2504
Internal Policy Administrative Bank Issue Date: May 2000
Accounts
Policy Category: Finance Initiating Department: Revision No: 2
Department of Finance Revision Date: June 20, 2012
Attachment A
REQUEST FOR ADMINISTRATIVE BANK ACCOUNT
Department Name Employee Benefits Low Org # 3950 Date 3/19/2014
Account Contact Name Dave Hansen Phone Number 506-2828
Description of why an Administrative Bank Account is needed:
A .,,, new ,. bank „ account is requested , , due . to , , United ,.,.,. HealthCare , being added for . the County's PPO and HDHP
ivieuiLdi plans. We would ince like LU dVOIU LINU miler ern. vend ors horn cu..Lessing the same ti dnik du..uunit to
proccss daily sweeps to pay Medical claims.
Type of Administrative Bank Account being requested (based on the definitions in
Section II.A) and reason the account type is needed:
Third-Party Administrative Processing Account —this bank account will be used to facilitate the processing
of ddily sweeps to the U nited HedlUiLdie deuldild deposit du..oupl
Name of Maricopa County/Special District Employees to be authorized signers
(minimum of 2 required):
Chris Bradley and Dave Hansen
Name of Maricopa County/Special District Employee to act as Custodian:
Lisa Tso
Type of Account Requested: Anticipated Account Activity:
Checking Account x Number of Deposits per Month 4
Savings Account Average Monthly Deposit $ 4,500,000.
Investment Account Number of Withdrawals/Checks per Month 22
Interest Bearing (YIN) Average Monthly Withdrawals/Checks $ 4,500,000.
Explanation of Source of Funds (e.g., fines, fees, charges for services, bonds,
restitution/wards/inmates/probationers monies held in trust, etc.):
Employee and Employer premiums held in Trust Fund.
8

_ _
Maricopa County Title: Establishing Number: A2504
Internal Policy Administrative Bank Issue Date: May 2000
Accounts
Policy Category: Finance Initiating Department: Revision No: 2 •
Department of Finance Revision Date: June 20, 2012
For Department of Finance Use Only
Financial reporting of deposits & investments held in Administrative Bank Account
Fund classification:
Special Revenue[ ] Debt Service[ I Capital Project[ ] Enterprise[ ]
Internal Service[ ] Agency[ ]
Advantage Fund Number (N/A for Agency Funds)
Balance Sheet Account 0006/0013 (N/A for Agency Funds)
See attached Memo for additional information.
REQUIRED APPROVALS
Appointing Authority Approval Date
County Manager Approval Date 3/20/ty
Compl 6d,y County Treasuyer
County Treasurer Approval Date 3'2° "(
Completed by Clerk of the Board of Supervisors/Board of Directors
Date of Board of Supervisors/Directors Approval Agenda #
9

12146 EXHIBIT B
Section 7— Process For Providing Funds For Benefits
7.1 Providing Funds for Benefits. The Plan is Self-Funded. County is solely responsible for providing funds for
payment for all Plan benefits payable to Participants, Network Providers, or non-Network Providers.
7.2 Bank Account. Contractor, on County's behalf, will open and maintain a Bank Account at the Bank to provide
Contractor the means to access County's funds for the sole purpose of payment of Plan benefits, Plan expenses (such
as state surcharges or assessments) and, when authorized by County, service fees. The Bank Account will be a part
of the network of accounts that have been established at the Bank for Contractor's self-funded customers. The funds
in the Bank Account are County's and will not be comingled with any other customer funds.
7.3 Balance In Account. County will maintain a minimum balance in the Bank Account in an amount equal to not
less than I day of expected Bank Account activity. Contractor will establish this amount based on expected Plan
benefit payments, with appropriate adjustments for anticipated non-daily activity (e.g., prescription drug benefits
and service fee payments) as determined by Contractor. Contractor will determine if circumstances warrant
increasing this minimum balance, and will notify County if and when the required balance or the amount identified
above changes.
The required minimum balance is based on County's financial condition as assessed by Contractor. In the event
Contractor determines, based on reasonable information and belief, that County's financial condition has
deteriorated or County continues to fail to comply with the material financial obligations specified in this
Agreement, Contractor may revise the required balance subject to providing five (5) days written notice to County.
7.4 Issuing and Providing Funds for Checks and Non-Draft Payments. The checks and/or non-draft payments
Contractor writes and issues to pay Plan benefits under this Agreement will be written and/or issued from one or
more common accounts that are a part of the network of accounts maintained at the Bank for Contractor's self-
funded customers. When the checks for Plan benefits are presented to the Bank, the Bank will notify Contractor and
Contractor will direct the Bank to either reject the checks or to withdraw funds from the Bank Account to fund the
checks that are cashed.
7.5 Transfers of Funds. Funds will also be withdrawn from the Bank Account when a transfer of funds Contractor
made to pay Plan benefits is completed, such as when an electronic funds transfer has been made to a health care
provider to pay benefits under the Plan. Contractor will direct the Bank to withdraw funds from the Bank Account
to fund the non-draft payments as they are issued.
7.6 Calls for Funds. The withdrawals for Plan benefits and service fees are paid for by the balance County
maintains in the Bank Account. This balance will be drawn down each banking day to satisfy the previous day's
liability.
County will authorize Contractor to initiate wire transfers from County's designated benefit funding bank account to
the Bank Account for the amount needed to pay claims processed and fees that are due. Every I business day(s),
Contractor will notify County of the amount due and Contractor will immediately, via wire, initiate transfers from
County's designated funding bank account to the Bank Account in an amount necessary to pay Plan benefits.
7.7 Underfunding. If County does not provide the amounts sufficient to maintain the required minimum balance in
the Bank Account, or to cover Bank Account withdrawals: (1) County must immediately correct the deficiency and
provide prompt notice to Contractor. (2) If Contractor learns of the funding deficiency, Contractor will notify
County within one business day so County can correct the deficiency. (3) Contractor may stop issuing checks and
non-draft payments and suspend any of its other services under this Agreement for the period of time County does
not provide the required funding. (4) If County does not correct the funding deficiency within five business days of
Contractor's notice to County, Contractor may terminate this Agreement as otherwise set forth in the Contract, such
termination to be effective the first day such claims funding deficiency began. County will pay interest on the
amount of underfunding at the standard rate that Contractor charges to its self-funded customers for underfunding of
bank accounts.

12146 EXHIBIT B
7.8 Stop Payments on Outstanding Checks. At County's expense, Contractor may place stop payments on checks
if Contractor determines that County has insufficient funds in its designated benefits funding bank account to honor
such checks. Contractor will send a search letter to the payee on all checks that have not been cashed within six (6)
months. Contractor will automatically stop payment on all checks that have not been cashed within twelve (12)
months and provide County with reports County needs for the purposes of performing escheat. County is solely
responsible for determining to file and/or filing unclaimed property once notified, or for making unclaimed payee
payments directly.
7.9 Funding After Termination. When the Contract terminates, the funding method for Plan benefits will remain in
place for the length of the run-out period. After the run-out period has ended, that funding method will cease and
County will deposit and maintain in the Bank Account enough funds to cover all checks for Plan benefits that have
been issued but not cashed. This balance will remain in the Bank Account for a limited period of time to fund the
outstanding checks. This period will be reasonable, as determined by Contractor. Contractor will stop payment on all
checks that remain uncashed at the end of this period and County will request in writing to close the Bank Account
and recover any funds remaining in it. Contractor will provide bank statements and Bank Account reconciliation
reports, including reports County needs for the purposes of performing escheat.
Section 8 — Services Begin and End
8.1 Services Begin and End. Contractor will begin providing County services under the Contract and this
Agreement on the Services Effective Date. These services apply only to claims for Plan benefits that are incurred on
or after the Services Effective Date.
Contractor's services under this Agreement stops on the date the Contract or this Agreement terminates, regardless
of the date that claims are incurred. However, Contractor may agree to continue providing certain run-out claims
administration services beyond the termination date, as provided in Exhibit B-1 to this Agreement.
Section 9 — Records, Information, Audits
9.1 Records. Contractor will keep records relating to the services it provides under this Agreement for six (6) years
or as long as Contractor is required to do so by law, whichever is latest.
9.2 Access to Information. If County needs information in Contractor's possession for purposes other than an audit,
but in order to administer the Plan, Contractor will provide County access to that information, if it is legally
permissible, the information relates to Contractor's services under this Agreement, and County gives Contractor
reasonable advance notice and an explanation of the need for such information.
County represents that it has reasonable procedures in place for handling PHI, as required by law. County will only
use or disclose PHI to administer the Plan, to perform under this Agreement or as otherwise permitted under this
Agreement or required by law.
Contractor will provide information only while this Agreement is in effect and for a period of six (6) months after
the Agreement terminates, unless County demonstrates that the information is required by law or for Plan
administration purposes.
Contractor also will provide reasonable access to information to an entity providing Plan administrative services to
County, such as a consultant or vendor, if County requests it. Before Contractor provides PHI to that entity, the
parties must sign a mutually agreed-upon confidentiality agreement and adhere to all obligations under Exhibit C
(the HIPAA Business Associate Agreement) to the Contract, and the parties must agree as to what information is
minimally necessary to accomplish the Plan administrative service.
9.3 Audits. During the term of the Agreement, and at any time within six (6) months following its termination,
County or a mutually agreeable entity may audit Contractor once each calendar year to determine whether
Contractor is fulfilling the terms of this Agreement. Prior to the commencement of this audit, Contractor must
receive a signed, mutually agreeable confidentiality agreement.
Without limiting the foregoing, with respect to audits regarding the payment of Rebates by pharmaceutical
manufacturers, the audit must be conducted solely by a mutually agreeable public accounting firm that maintains a
separate and stand-alone audit department and is not providing support in conjunction with any litigation pending
against Contractor or its affiliates.