Specific stop loss insurance

The City of Tucson is soliciting proposals for specific stop loss insurance coverage for its self-funded municipal health plan covering approximately 4,508 employees and retirees, effective July 1, 2026. This procurement seeks individual specific stop loss coverage with a requested incurred contract deductible of $1.1 million, with alternate deductibles of $1.25 million and $1.5 million also being requested. The City is transitioning from its current self-funded plan administered by Cigna (in place since July 1, 2019) to Blue Cross Blue Shield of Arizona for medical third-party administration and network services, with OptumRx serving as the pharmacy benefit manager. The stop loss insurance will cover both medical and prescription drug claims, with recent plan experience showing approximately $43.5 million in paid claims over the most recent 12-month period through March 2026. Qualified offerors must demonstrate a minimum of five years of business experience performing stop loss insurance services, current full-service membership of at least 10,000 covered members, and references from a minimum of three municipal clients with 10,000 or more members each, preferably in Arizona, along with no bankruptcy filings in the past five years and compliance with all applicable regulations including HIPAA. Additional requirements include maintenance of a financial strength rating of BBB or higher from Standard and Poor's or equivalent agency, proper state licensure, advanced funding capabilities, monthly reporting on submitted, pended, denied, and paid claims, preliminary renewal proposals 120 days in advance and firm renewals 60 to 90 days before the effective date, and comprehensive insurance coverage including commercial general liability, commercial automobile liability, workers' compensation, professional liability, and network security/cyber and privacy liability with specified minimum limits. Proposals will be evaluated based on three criteria in relative order of importance: pricing proposal, method of approach, and qualifications and experience. The proposal submission deadline is Tuesday, May 19, 2026, at 2:00 p.m. Arizona time, with questions due by May 5, 2026, at 2:00 p.m. Arizona time through the City's online procurement system. The contract will be awarded for an initial one-year term with the City retaining options to extend for up to six additional one-year periods.

This procurement is subject to multiple federal compliance requirements including those imposed by the American Rescue Plan Act, the Federal Transit Administration, and HUD funding provisions, which mandate compliance with provisions related to equal employment opportunity, nondiscrimination protections, prevailing wage standards where applicable, Section 3 requirements for low- and very low-income workers, Buy America preferences, and restrictions on telecommunications equipment from prohibited manufacturers. Offerors must verify that neither they nor their principals are suspended or debarred under 2 CFR Part 180 and Part 3000 and must comply with Executive Order 11246 regarding equal employment opportunity and affirmative action for minority and women-owned business enterprises. The current incumbent vendor is Cigna Health and Life Insurance Company, which administers the City's self-funded plan, though Cigna's role will transition to Blue Cross Blue Shield of Arizona as the medical TPA effective July 1, 2026, with OptumRx taking over pharmacy benefit management functions. Offerors seeking access to confidential census data, historical claims information, and enrollment details must execute a Confidentiality Agreement with McGriff/MMA, the City's Benefits Consultant. While specific award values are not explicitly stated in the procurement documents, the insurance costs can be estimated based on the City's recent annual claims of approximately $43.5 million and the current monthly premium rate of $20.91 per covered employee reported under the existing Cigna policy, suggesting annual stop loss insurance costs in the range of several hundred thousand dollars depending on the selected deductible level and final underwriting. Payment terms allow for discounts of 21 calendar days or more to be deducted from the proposed price.