Staff Report
PREPARED BY: LISA VELASCO
Human Resources Director
Reviewed by: Town Manager, Town Attorney, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 03/21/2017
ITEM NO: 7
DATE: MARCH 15, 2017
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: AUTHORIZE THE TOWN MANAGER TO EXECUTE A FOURTH AMENDMENT
TO THE PROFESSIONAL SERVICES AGREEMENT WITH MAGELLAN
BEHAVIORAL HEALTH, INC. EXTENDING THE TERM OF THE AGREEMENT
THROUGH AUGUST 31, 2017
RECOMMENDATION:
Authorize the Town Manager to execute a fourth amendment (Attachment 1) to the
professional services agreement with Magellan Behavioral Health, Inc. extending the term of
the agreement through August 31, 2017 to provide continuation of the Employee Assistance
Program (EAP) benefit to Town employees.
BACKGROUND:
The current agreement between the Town and Magellan Behavioral Health, Inc. has been in
place since September 1, 2005 to provide EAP benefits to Town employees and eligible
dependents, such as: in-person counseling sessions, health and wellness information, and
referral services for legal assistance, child/elder care, and financial planning . Magellan was
selected as a sole source provider for its specialized services.
The agreement was amended in 2012, 2014, and 2015 to extend the term. The premium rate
of $2.68 per employee per month has not changed since the agreement inception. The current
amendment expired on August 31, 2016. An amendment to extend the term is necessary to
compensate Magellan for services provided beginning September 1, 2016 and to continue
uninterrupted services of the employee benefit program. The stipulation to provide an
employer paid EAP benefit is contained in the Memoranda of Understanding between the Town
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SUBJECT: AUTHORIZE THE TOWN MANAGER TO EXECUTE A FOURTH AMENDMENT TO
THE PROFESSIONAL SERVICES AGREEMENT WITH MAGELLAN BEHAVIORAL
HEALTH, INC. EXTENDING THE TERM OF THE AGREEMENT THROUGH AUGUST
31, 2017
MARCH 15, 2017
S:\COUNCIL REPORTS\2017\03-21-17\Magellan\Staff Report Final.docx 3/16/2017 4:31 PM LV
and its bargaining units (Town Employees’ Association, Police Officers’ Association, and
American Federation of State, County and Municipal Employees).
DISCUSSION:
The Magellan agreement and subsequent amendments have not been submitted for Town
Council approval in the past because the annual premium cost of $7,000 was within the Town
Manager’s approval authority. While preparing the fourth amendment, staff identified that the
cumulative premiums paid since the inception of the agreement exceeds $50,000, which
initiates Council review and approval of the agreement.
Magellan Behavioral Health, Inc. is not included in the array of insurance benefit products
represented by the Town’s Insurance Broker, Wells Fargo. At the conclusion of the fourth
amendment term, the Town’s Human Resources Department will request Wells Fargo to
competitively bid the EAP benefit to remain compliant with the provision of the Town’s
purchasing policy requiring Request for Proposals.
CONCLUSION:
Under the existing agreement, Magellan Behavioral Health, Inc. has provided a consistent level
of EAP services to Town employees without an increase in cost in over ten (10) years. Staff
recommends approval of the fourth amendment to continue the benefit without interruption
and provide staff with the time required to engage the services of the Town’s insurance broker
to complete the competitive bid process.
FISCAL IMPACT:
Agreement amendment amount of $7,000 for FY 2016/17 is included in the Human Resources
operating budget.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Proposed Fourth Amendment to the Agreement