The all Blue, currently. I thought that the ad on the 10th of September related specifically to third-party administrators. Are you telling me it did not?
No. I am saying that we released an RFP that asked for responses to provide coverage either through a TPA or a self-insured plan for the City.
And was that the content of this September 10th -- that was not my understanding of the content.
I don't know what your 84 9/20/01 LAW & GOV'T RES. 00476 understanding is.
Well, my understanding was that it was specifically for a third-party administrator, like this company that you referred to before.
Third-party administrators have the ability to propose a self-insured plan for the City.
Which means that it is fully reimbursed by the City and it is not based on a per-member capitation rate. It is a fee-for-service plan.
What we are not going to be considering -- perhaps this will clarify it. We -- evidently for some reason this time, some interest was generated on the part of brokers for TPAs, and we are not considering proposals from 85 9/20/01 LAW & GOV'T RES. 00476 brokers.
Why was the response to go to someone who is -- or till recently was, to my knowledge, I may not have had the knowledge, associated with the City? Why was this person named in the article assigned to be the one to whom the replies should be sent? Why weren't they sent to you or to somebody else in the City?
Councilman, my office does not have the capacity to deal with the responses in terms of getting the paper. If I can -- please let me just finish.
Because I'm going to try to explain to you the relationship with Mr. Katz, why we are employing Mr. Katz, and what his role is. In looking at --
He's been very discourteous, you know, to this committee. He was invited to be here so that he could tell us what his assignment is, and he's not here, leaving this committee very little option except to do what Councilman Ortiz said before.
Councilman Cohen, 86 9/20/01 LAW & GOV'T RES. 00476 Mr. Katz -- let me answer that question first.
Mr. Katz, it is my understanding, was called on Rosh Hashanah, which is a religious holiday for him, and asked out of the blue by a member of your staff to attend this hearing.
Mr. Katz knows nothing about the proceedings -- these hearings, he knows nothing about the subject. The message, as I understand it, that was left was that this committee wanted him to come to talk about the City's bidding procedures. Mr. Katz is not an expert on the City's bidding procedures; and, in fact we are not engaged in a bidding process, because under the City Charter, a bidding has a particular and very specific meaning. It is not an RFP process. Bid process and RFP process are not one in the same. Mr. Katz, I -- on my way into work, after I took off Tuesday also for the religious holiday, 87 9/20/01 LAW & GOV'T RES. 00476 listened to my voice mail, I received a voice mail from Mr. Katz, evidently after he had heard his, saying that -- he left a voice mail for me a few minutes after p.m. when he got the voice mail 6 from the member of your staff, asking me what this 7 was all about and explaining to me that that was 8 extremely short notice, he had no idea what any of 9 this was about, and he was not free to appear. 10
That was because -- 11 (Unintelligible, parties talking over each other.)
Councilman Cohen, may I please finish responding to your question?
Please don't respond that way. I'm telling you the reason he got that short notice was because you had failed to notify the committee about that, and we were surprised --
We got word from someone late that afternoon, and for the first time we know about it, we thought that what was courteous to do was to let Mr. Katz know of the hearing at least by voice mail if no other way -- 88 9/20/01 LAW & GOV'T RES. 00476
-- and asked him to appear. We had no way of contacting him prior to today.
Well, your office could have contacted me. And since he is working as a consultant for the City --
Well, we had no idea who he was except his name appeared in the paper.
Well, since I have been coming here every hearing since May, June, and been responding to questions about the City-administered plan, I would think it might have been a logical conclusion for a member of your staff to have made that I might know something about this.
I'll tell you frankly, I did not think you had anything to do with it. I thought it came directly, if it came from anywhere, from either the Mayor or from the Chief of Staff of the Mayor.
Well, then that -- then I'm sorry if we have not made it sufficiently clear previous to this.
It never occurred to me 89 9/20/01 LAW & GOV'T RES. 00476 that you were involved in it.
Since I am the one who has been talking to your staff and Council technical staff and since I have been the one talking to you, that there might have been a good chance that I might know something about it. So unfortunately, the call was not made to me, and if you would like, I --
Because of the Jewish holiday; that's why the call was not made to you. We got the information, I was not in the office, I received a phone message while away from the office because of the Jewish holiday that this had occurred. I couldn't believe it. I said, The holiday exists Tuesday and Wednesday, our hearing is Thursday; at least we owe the gentleman of having a day or two's notice, call him, he probably won't be at work but he'll probably have a voice mail, so you can leave the message, and he very likely will call in and we'll have some information in advance of Thursday. It was the only way of reaching him except on the very day of the hearing, and it was out of courtesy for -- and respect for his 90 9/20/01 LAW & GOV'T RES. 00476 observance of the Jewish holidays that the call was made to him on the voice mail. And the call -- no one would have thought of calling you; I assumed you were not at work, but people observe differently and maybe you were.
But it never occurred to me that you had a thing to do with that ad, but I did think it came from the City somewhere.
May I -- as I expressed to you, I said that I would be very happy to explain who Mr. Katz is and what his relationship to the City is if I could be permitted to do that.
May I suggest a short recess? The chair has to take a telephone call from 91 9/20/01 LAW & GOV'T RES. 00476 my family. And I would ask for about a three-minute recess because I want to hear your statement. I was going to ask the majority leader to take the chair but I did want personally to hear yours, your segment. So we'll be in a very short recess. I'm just going over there to make a call, and hopefully, I'll be right back. (Break taken.) (Proceedings resume.) - - -
Okay, the committee will resume. I'm sorry for the need for the recess. Miss Berkowitz, I -- may we have order in the chambers. During the recess period, Councilman Nutter was here and I'm hoping he'll be back. UNIDENTIFIED SPEAKER: He's still here.
He's still here? Where is he? Good. And Councilman Rizzo was here and Councilwoman Blackwell. Miss Berkowitz, I wanted to hear your answer directly and that's the reason I ... Would you proceed. 92 9/20/01 LAW & GOV'T RES. 00476
Sure. And, Councilman Cohen, if I can just clarify one thing.
There was some discussion before we took the break about the fact that potential respondents only had one week to respond; that was regarding their intent to propose.
Not in terms of how long they actually had for the proposal process. So I just wanted to clarify that.
(Inaudible) -- announce within that week? Say somebody now had not been in touch at all; would that person still have the ability to --
I understand, but an RFP process, by its very nature, can't be open-ended. It has parameters around it. And this is -- what we did here is not unusual from what we do with many 93 9/20/01 LAW & GOV'T RES. 00476 other RFPs in the City.
It just seems unreasonable to preclude someone -- if there are people who might be of use to the City, it seems unfair to preclude them by that short announcement, but let's see how many people oppose that.
In the past, it is my understanding that the negotiations -- all of the negotiations regarding the medical portion of the City-administered health plan was handled soley by the City's personnel department. The health care environment is extremely volatile. Costs are increasing nationally and in order to assure ourselves that we are getting the best possible benefits at the lowest possible cost, we felt it very important to go out and get technical expertise this round, this RFP round. And that is why we engaged Brokerage Concepts, Inc, which has a great deal of expertise in health benefits, to assist us.
How did you pick that company? 94 9/20/01 LAW & GOV'T RES. 00476
Because I am not an expert in health benefits, I asked around to other people in the government, including the Mayor's Office, if someone could be recommended to me, and Brokerage Concepts was recommended to me.
Yes, I have, and he already has already begun his duties. Mr. Katz is -- 95 9/20/01 LAW & GOV'T RES. 00476
He has an office on Walnut Street and an office in King of Prussia. He does not work for the City; he runs his own firm.
Mr. Katz's firm has drafted -- is handling the RFP process for the City. He drafted the RFP, which the City reviewed, is handling all of the logistics for getting the responses, will evaluate the responses, discuss its evaluation with a committee made up of people within the Administration, and will make recommendations to us, and he will assist in helping us negotiate the contract, the agreement.
Now, when you say -- just one question, then I'll yield to Councilman Nutter.
When you say the 96 9/20/01 LAW & GOV'T RES. 00476 Mayor's Office recommended, was there anybody in particular in the Mayor's Office? You say, "the Mayor's Office"; it could be almost anybody. And I raise the question 'cause I'd like to know on what basis he was chosen.
I cannot tell you on what basis he was chosen except that he does have expertise in this area.
Thank you, Mr. Chairman. Good afternoon, Miss Berkowitz.
In that same vein, I have a couple of questions myself. You said on a couple occasions so I'm going to take it that there is a certain significance that you attach to it. You've used the phrase -- what's the -- the company's called what, "Brokerage Concepts"?
And I think you've used the phrase, "They have expertise in this particular area"? Is that what you said earlier, or 97 9/20/01 LAW & GOV'T RES. 00476 what's the phrase that you have been using?
I believe I said -- I said that we were looking for technical expertise.
I'm sorry? It is my understanding that this is based on negotiating health plans.
I have -- I have -- I have their information. We have spoken with the individual. In my judgment --
So you determined based on their information that they have expertise in this particular area?
Okay. Would you expect their material to say that they did not have expertise in this particular area? 98 9/20/01 LAW & GOV'T RES. 00476
I mean, if you have a company and you have materials, you're trying to promote your cause, right?
And you would say that you have expertise in a particular area, right?
I understand the difference between promotional material and --
Okay, so what was the judgment based on that you are now convinced that they have expertise in this particular area?
I am as convinced that they have expertise in this area as I am convinced that many other people who work as providers and consultants for the City have expertise in their area. They have experience, this organization does health benefit work for other municipalities and townships in Pennsylvania.
Okay, tell me a little bit about that. Who are some of their other clients?
I'll be happy to get you a list. 99 9/20/01 LAW & GOV'T RES. 00476
Can you give me two or three off the top of your head?
Councilman, I don't remember. I know -- I believe that Radnor is one, I think that Chester is another, but I would be happy to get you a complete list
I believe so. I believe that those are two of their clients.
Would they be their larger clients or their smaller clients?
That I -- I'm sorry that I don't recall their entire list of clients. We may be their biggest client in Pennsylvania, but I will get you a list.
Hmm. How big is the firm? 100 9/20/01 LAW & GOV'T RES. 00476
How long will it take to get the list, the client list?
I believe I could get a list by the beginning of next week. I think they know who their clients are.
Oh, I guess I assumed that you had a client list based on your review.
I mean, that's a part of your evaluation, to determine that they had expertise, right?
Councilman, if you are asking, did I do an in-depth analysis of their expertise? I did not.
Well, now, I mean Miss Berkowitz, your earlier statement was that you are convinced -- you didn't say this, but I'm left with the impression that you are convinced beyond a shadow of a doubt that they have expertise in this area --
-- which leads me to then think that based on your position and your 101 9/20/01 LAW & GOV'T RES. 00476 level of expertise, that you know a great deal about the company, that there's been a thorough examination of who these people are and what they do.
I talked to these people, I looked at their materials, and I have seen the RFP that they crafted, and based on the RFP, I would say that they reinforced my opinion.
Now, were they the only company that was asked to do this work?
I would be happy to send you -- I will be happy to send you their profile.
The gentleman that you are working with, what is his name?
He is the head of the firm; his name is Arnold Katz, K-A-T-Z.
And you've been dealing with him directly? 102 9/20/01 LAW & GOV'T RES. 00476
Yes, I have, as well as other individuals who work for him.
Okay, all right. But you're saying you don't have a sense of the size of the firm. I mean, is it 5 people, 50 people, 500 people?
I really don't recall how many people, but I will be happy to get you all of that information.
I -- I -- I really don't remember, Councilman. But I believe it's been for many years.
Now, in this world -- and you have a certain level of expertise in this particular area, so I'm going to ask that you not try to overwhelm me in this question and answer back and forth because you have more information than I do.
Councilman, if I can just say that I've made it very clear that I am -- that I do not have an extensive amount of experience or knowledge on health care and health plans. 103 9/20/01 LAW & GOV'T RES. 00476
Okay, all right. I'm at least a recipient of whatever your decision-making is. In these arrangements, you said the person, obviously, they have their own company, they don't work -- they're not public employees, but they have a contract with the City?
They -- they -- again, they -- we have agreed on a scope of work. They will not receive payment from the City. There will be an agreement between the City and Brokerage Concepts, Inc.
You just -- you said that they will not be paid by the City, you said that there's an agreement between Brokerage Concepts and the City. That is a little counterintuitive to me. 104 9/20/01 LAW & GOV'T RES. 00476
No, it's not, Councilman. In fact, in the RFP -- and I believe that it's on the table -- I believe it's somewhere there now, I believe that Miss Bricklin has it. On , we discuss on the RFP the nature of the compensation for Brokerage Concepts, Inc. The City will not -- the agreement that the City -- that the City -- the terms that the City has agreed to with Brokerage Concepts, Inc. is they will perform a certain set of services for the City, but their compensation will not come from the City.
And let's take that a couple steps further. I don't understand that. You mean whoever ends up providing the health-care services --
Similar to the way -- similar to the compensation for Capital Management, which does dental, optical, prescription, and life. We've --
Again, Miss Berkowitz, this is not what I do on a regular basis, so the 105 9/20/01 LAW & GOV'T RES. 00476 intricacies of these various contracts is fairly foreign to me. Everything I know about the dental plan is: I go to my dentist, she does what she does, I leave, and that's the end of my involvement, so I don't what I know her contract is. What I know is that she doesn't ask me for any money So this is a situation where the City asks someone, by way of an RFP, We want you to do certain work for us and craft -- and what's their job?
No, I'm sorry, I'm sorry. I think it sounds like there may be a little confusion.
Mr. Katz did not respond to an RFP; Mr. Katz and his company developed the RFP for medical coverage for people enrolled in the City-administered plan.
Okay, I understand. You talked to the Mr. Katz and said, We need an RFP developed for us to be able to figure out who's going to provide health care for us. He says okay. At some point in time, unless he's running a charity, the conversation turns to, How am I going 106 9/20/01 LAW & GOV'T RES. 00476 to get paid? You say, Well, we're not going to pay you; whoever is the successful respondent bidder to the RFP, they're going to pay you.
We have not determined a price. And one of the reasons we have not determined the price is because we do not want that to predetermine the rates that are going to be proposed.
Why would a person do work for someone and they don't know how much they're going to get paid?
When you talk about the successful respondent, just so I understand the term, in the currents context, who is the last successful respondent? I mean, who might we be talking about, or what type of entity are we talking 107 9/20/01 LAW & GOV'T RES. 00476 about?
Well, you probably are aware that currently, the City -- the people enrolled in the City-administered health plan are covered for medical benefits by Independence Blue Cross.
Okay. So if we use that and we're not predetermining who's going to get it the next time -- again, just so I understand, when you use the phrase "successful respondent," you're talking about someone like an Independence Blue Cross, right?
An entity like Blue Cross or multiple entities like Blue Cross.
And so I want to make sure that there's a real name thing that goes with the box.
So you're saying that Brokerage Concepts will be paid based upon a negotiation between Brokerage Concepts, the City of 108 9/20/01 LAW & GOV'T RES. 00476 Philadelphia, and the successful respondent, which is an entity like an Independence Blue Cross.
Okay. And then how do you determine what their compensation should be for having developed an RFP? I mean, what's their job?
I don't -- I don't -- I don't want to mislead you, Councilman. There have been preliminary discussions with Brokerage Concepts on price, but we are not discussing price because we do not want that to impact on the rates that may be proposed.
Well, I understand that and that wasn't my question. My question was: How do you determine the price and what exactly are we paying for? Are we paying for the development of documents up here or for some additional services?
No. There will be -- there are additional services. They act as liaison, they perform -- they help us resolve problems. They will help us not just in the RFP but -- and perhaps I said this before you came in. They will be evaluating the responses, they will take the first cut at evaluating the responses. They will be -- 109 9/20/01 LAW & GOV'T RES. 00476 they will be assisting the City in evaluating the responses. They will be making recommendations to the City, they will be assisting the City in actually negotiating the agreement, or agreements.
And that's because the City feels that we're not capable of doing it ourselves?
I -- as I expressed, I felt very strongly that the City needed to bring in some assistance with technical expertise, because in the past, only the -- the negotiations had really been between potential providers and the personnel director for the City.
For medical coverage, we did not. We did for dental, optical, prescription, and life. And because medical benefits are the most costly of the benefits, I thought it was imperative and fiduciarily responsible on the Administration's part to seek outside assistance.