FAQ for the HITA Sealed Bid Process
The following contains frequently asked questions (FAQs) on the roles and responsibilities of school
districts under the Health Insurance Transparency Act (HITA). MSBA has drafted these FAQs in
consultation with insurance professionals and legal counsel. This content of this FAQ is for informational
purposes only and are not to be construed as legal advice. If legal advice is needed, please contact legal
counsel.
Q-1
When must bids submitted in response to the request for proposal (RFP), as required by the
HITA, be opened?
A-1
Each RFP will specify a date by which sealed bids must be received. All bids should be opened at
the same time on or following that date. The latest date that bids may be opened for schools with July
1, 2015 renewals is Thursday, April 2, 2015 (90 days from the date of renewal).
Q-2
Are the HITA bid openings public meetings?
A-2
Generally no, but if school districts include school board members as part of the school district
representation at the bid opening, it may be a public meeting. This creates a conflict with the HITA’s
confidentiality rules. MSBA recommends that only school district administrative staff represent the
school district at bid openings.
Q-3
Who must attend?
A-3
Sealed bids must be opened in the presence of “up to” three representatives selected by the
exclusive representative of the largest group of employees. This means that the union may send
anywhere between one and three representatives. The HITA does not require that school districts send
more than one employee or agent.
Q-4
Can a school district utilize an existing insurance committee to review the submitted bids at the
bid opening and at subsequent meetings?
A-4
If the school district utilizes an insurance committee to review submitted bids, MSBA suggests
that they continue to do so but must operate within the confines of the data practices law (see question
below). The insurance committee cannot be a substitute for the three representatives selected by the
exclusive representative of the largest group of employees, but it is possible that the three
representatives are also members of the insurance committee. MSBA also reminds school districts that
insurance committees have advisory roles only (see question below).
Q-5
Does The HITA require school districts to negotiate with unions over which vendor to select for
the provision of group health benefits?
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A-5
No, the selection of a carrier is not a term or condition of employment and therefore not a
mandatory subject of bargaining. The selection of any vendor to provide services to a school district is
an executive, fiduciary decision of the school district. School district administration should provide a
group health and hospitalization insurance vendor recommendation to the school board.
Q-6
What role do unions play in the bid opening under the HITA?
A-6
Bids must be opened “in the presence” of up to three union representatives. That is the
beginning and end of their role in the bid opening. Union representatives should not receive copies of
any bids. The bids may be passed around during the meeting, but should be collected when the
meeting ends. To avoid disputes, the meeting should be scheduled in advance for a specific amount of
time (one hour should be enough time). School district administration should remind union
representatives to not discuss any information other than the name of the bidders with any third parties
(see following question relative to data privacy).
Q-7
What data practices laws apply to the HITA bids?
A-7
When the initial bids are opened, the information must be maintained in accordance with data
practices requirements in M.S. 13.591, Subd. 3(b). This statute provides that the only information that is
public data when bids are opened is the name of the bidder. The HITA, M.S. 471.6161, Subd. 8., provides
that following the opening of the final proposals, all the proposals, including any made in the initial bid,
and other data submitted in connection with the proposals are public data. At that time, the school
district may provide such information per an appropriate public data request and should charge a fee for
copies of such information in the same manner as other public data requests.
Q-8
What happens if someone shares specific information about a vendor’s bid before it becomes
public data?
A-8
Anyone who improperly discloses private data may be required to pay actual damages,
exemplary damages, attorney fees, and penalties if they violate these statutes. They are also guilty of a
misdemeanor.
Q-9
What is the timeline for carrier negotiations?
A-9
The HITA provides that a school district “may” continue to negotiate with any entity that
submitted a proposal. A school district may also decide to select a vendor based on the initial bids. If
negotiations occur, carriers must submit final bids on the date designated by the school district (in most
cases, two weeks after initial bids are opened). In no event may final bids be provided later than 75 days
before the renewal date. Friday, April 17 would be the latest date for schools that renew on July 1,
2015. Final bids must follow the same sealed bids procedure. Again, once all final bids are opened, all of
the information becomes public.
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Q-10
What is the role of the union in carrier negotiations?
A-10 The school district is responsible for negotiations with entities that have submitted bids. The
HITA provides that school districts, “in consultation with the same representatives,” may continue to
negotiate with any entity that submits a proposal. The phrase “in consultation with” indicates that the
school district is required to keep the appointed union representatives informed of efforts and progress,
if any, during negotiations. MSBA suggests that union representatives should not participate in any
facet of negotiations or share any decision-making authority, or they may assert that such authority has
been delegated to the union.
Q-11 Did the HITA eliminate or modify the Minnesota law prohibiting reduction in the “aggregate
value” of benefits?
A-11
No, the HITA expressly incorporates the aggregate value rule.
Q-12 Does a school district comply with the aggregate value rule if it chooses a plan that matches its
existing benefits and networks?
A-12
Yes, and this component should be specifically addressed in the review of the submitted bids.
Q-13 Does a school district comply with the aggregate value rule if they choose a plan that offers equal
or greater tangible monetary benefits?
A-13 Not necessarily; if a school district chooses a plan that limits access to providers relative to the
plan that is currently in place, the Minnesota Court of Appeals has indicated that such a change may
violate the prohibition on reduction of aggregate value. See West St. Paul Federation of Teachers vs.
Independent School District No. 197, 713 N.W.2d 366 (Minn.App. 2006).
Q-14
What are the risks of moving to a plan with narrow or restrictive provider networks?
A-14 The court in West St. Paul upheld damages based on the savings realized by the school district
from the plan design changes. But the court did not preclude the possibility of other damages. If an
employee is undergoing treatment at the Mayo Clinic in Rochester, for example, and the employer
moves to a plan that does not include the Mayo Clinic, an employee who chooses not to change
physicians may incur large out-of-pocket expenses. Whether he or she could sue for these damages has
not been determined by the courts but appears likely.
Q-15 Can a school district move to a plan that provides for a reduction in aggregate benefits without
violating the law?
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A-15 Yes, if the school district negotiates the reduction in benefits with all of its unions. MSBA
suggests that benefit plans – including group health insurance plans – remain outside of the Master
Agreement(s) between the school district and the union(s). Plan designs can be fluid and may need
modification while Master Agreements are negotiated for specific time periods and, in the case of a
teachers’ Master Agreement, cannot be reopened if the change addresses compensation. Relative to
health insurance, the Master Agreement should contain, at a minimum, the school district’s financial
responsibility, the employees’ responsibility, and eligibility of employees.
Q-16
Did the HITA limit the right of a union to unilaterally move to PEIP?
A-16
Unions may still unilaterally move to PEIP.
Q-17
What is the step-by-step process to follow for the bid opening?
A-17 At the assigned time and date, the bids are opened with the appropriate representatives. At this
meeting, the school district should begin the process of comparing the bid detail and use the MSBA
comparative tool or a similar tool. If the school district chooses to engage in negotiations with the RFP
responders, only the name of the responders is public at this time. When the final bids have been
received, all data included in the bids becomes public. The school district must wait 15 days after
receiving the final bids before it selects the winning bid. The selection must be in writing and contain
written rationale. MSBA suggests that the school district utilize the comparative tool as the basis for this
written rationale and include a cover memo with commentary on the decision points. If the school
district does not negotiate with responders after the initial bids are received, then the initial bids are
considered the final bids, and the 15-day waiting period starts at that time and all data is public.
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