Title
RESOLUTION NO. 2017-108 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND INTERCARE HOLDINGS INSURANCE SERVICES, INC., TO SERVE AS A THIRD PARTY ADMINISTRATOR AND ADMINISTER THE CITY’S WORKERS’ COMPENSATION PROGRAM
Body
RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
Body
SUMMARY
The City, in compliance with its workers compensation obligations, has a self-insurance workers compensation program. On July 26, 2016, Resolution 2016-150, authorized the City to extend the current contract with Tristar Risk Management to provide third party administrator (“Third Party Administrator”) services for eleven months and allow staff to complete a request for proposals (“RFP”). This extended contract expires on June 30, 2017.
The City conducted the aforementioned RFP for a Third Party Administrator and Staff recommends that the City Council authorize the City Manager to execute a contract with Intercare Holdings Insurance Services, Inc., to serve as the City of Chula Vista’s Workers’ Compensation Third Party Administrator beginning July 1, 2017 for a one-year term, with the option of renewing for five additional years, in one year increments.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Body
Environmental Determination
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is required.
BOARD/COMMISSION RECOMMENDATION
Not Applicable
DISCUSSION
California employers, including the cities, are required to provide for workers’ compensation benefits when employees are injured on the job. The City of Chula Vista, in compliance with its workers’ compensation obligations, has a self-insurance workers’ compensation program. To administer City of Chula Vista’s workers’ compensation program, the City requires a qualified workers’ compensation claims management service company (commonly called “third party administrators” or “TPA”) to supervise and administer the workers’ compensation claims made upon the City’s self-insurance program.
On March 3, 2017, the City issued a Request for Proposal (RFP P15-16/17) and sought proposals from qualified organizations to perform Workers’ Compensation Third-Party Administration Services.
Six proposals, including the current TPA, TriStar, were received by the City from firms with varying levels of experience, expertise and pricing. Based on the RFP evaluation selection criteria, six vendors, including TriStar, whose proposals best met the criteria for the City’s scope of services, were invited to make a presentation on May 4, 2017 to a selection panel.
The selection panel was comprised of the City’s Sr. Risk Management Specialist responsible for Disability Management, Risk Manager for Padre Dam, and an outside Risk Consultant. Also present was the City’s Human Resources Director. The panel evaluated six vendors based on the selection criteria contained in the RFP. Criteria included, but were not limited to: Response to RFP and Scope of Work; Other city-clients with similar complex claims (including public safety); Pricing; TPA’s responsiveness commitment to involvement, and communication with Chula Vista employees and staff; and TPA staffing levels.
Of the six TPA’s interviewed, the initial selection panel recommended three finalists to further evaluate details regarding administrative service and bill review fees. On May 4, 2017 the Director of Human Resources, provided three finalists with a sample of injured worker medical invoices for a variety of medical services.
Based on the results of the administrative fee, medical fee evaluation, and overall services, the Director of Human Resources and Sr. Risk Management Specialist conducted background/reference checks with the prospective TPA’s current and past clients to determine if the TPA was consistently able to meet customer satisfaction and responsiveness for employees and staff, professionalism, and overall claim administration services. Staff’s reference checking included phone calls to other Cities who currently contract with the two TPA’s as well as other Cities who have left their TPA firms.
The finalist’s overall responses (including pricing), customer service requirements, and references were compared to the City’s current vendor, TriStar.
Based on the information provided in the Request for Proposal, oral presentations, recommendations by the selection panel, pricing details, customer service levels, and reference checks, it has been determined to be in the City’s best interest to appoint Intercare Holdings Insurance Services, Inc., for the City of Chula Vista Workers’ Compensation Third Party Administrator.
DECISION-MAKER CONFLICT
Staff has determined that the action contemplated by this item is ministerial, secretarial, manual, or clerical in nature and, as such, does not require the City Council members to make or participate in making a governmental decision, pursuant to California Code of Regulations Title 2, section 18704(d)(1). Consequently, this item does not present a conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Councilmember, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This agreement supports the goal of Operational Excellence by providing increased services to employees and overall decreased claims administration fees when including bill review fees when compared to the current vendor.
CURRENT YEAR FISCAL IMPACT
There is no FY 16/17 Fiscal Impact as the contract begins 7/1/2017.
ONGOING FISCAL IMPACT
The new contract is anticipated to save the City approximately $1 Million over the cost of its current vendor over a six-year period. Intercare Holdings Insurance Services, Inc. FY administrative costs are:
FY 17/18 $418,000 FY 20/21 $456,759
FY 18/19 $430,540 FY 21/22 $470,462
FY 19/20 $443,456 FY 22/23 $484,576
Note: Bill Review expenses and other claim expenses are allocated to individual workers’ compensation claims. These expenses vary by year and are impacted by individual employee workers’ compensation claims.
ATTACHMENTS
Intercare Contract
Staff Contact: Courtney Chase, Director of Human Resources