12 Staff Report - Innovative Claims Solutions IncSOWN 0 MEETING DATE: June 19, 2006
! t- ITEM NO:
tos ca~os COUNCIL AGENDA REPORT
DATE: June 12, 2006
TO: MAYOR AND TOWN COUNCIL
FROM: DEBRA J. FIGONE, TOWN MANAGER
SUBJECT: ADOPT RESOLUTION AUTHORIZING THE TOWN MANAGER TO
EXECUTE A SECOND AMENDMENT TO THE PROFESSIONAL
SERVICES AGREEMENT WITH INNOVATIVE CLAIMS
SOLUTIONS, INC., TO EXTEND THE CONTRACT FOR THREE
YEARS TO PERFORM COMPENSATION CLAIMS
ADMINISTRATION
RECOMMENDATION:
It is recommended that Council adopt a resolution authorizing the Town Manager to
execute a second amendment to the Professional Services Agreement with Innovative
Claims Solutions, Inc., to extend the contract for three years to perform workers'
compensation claims administration.
BACKGROUND:
The Town uses an administrator for its self-funded workers compensation program. ICS
was selected from a competitive bid process conducted in 2002 to serve as the third-party
administrator for the Town's Workers' Compensation program. The original agreement
with ICS was established through June 30, 2005. The agreement was extended from
July 1, 2005 through June 30, 2006. A second amendment is necessary for ICS to
continue for an additional three years as the Town's third party administrator.
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PREPARED BY: RUMI PORTILLO
Human Resources Director
N,APSL\Rumi\Current\Workers Comp\ICS Contract 2006-09\Council Memo ICS Amendment June 2006_doo
Reviewed by: Assistant Town Manager own Attorney
Clerk Administrator --Finance Community Development
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PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION AUTHORIZING THE TOWN MANAGER TO
EXECUTE AN AMENDMENT TO THE PROFESSIONAL SERVICES
AGREEMENT WITH INNOVATIVE CLAIMS SOLUTIONS, INC., TO
EXTEND THE CONTRACT FOR THREE YEARS TO PERFORM
COMPENSATION CLAIMS ADMINISTRATION
DATE: JUNE 12, 2006
DISCUSSION:
The Town has realized cost savings in the Workers' Compensation program since ICS
began administering claims for the Town in 2002. For the current fiscal year through
May 31, 2006, the following performance was reported: estimated future liability
reduced by $171,679; temporary disability payments reduced by $11,024; medical
treatments reduced by $67,589; and 195 medical bills adjusted to save $146,609. ICS
has also successfully implemented new legislation related to workers' compensation
reform and has communicated effectively with Town staff regarding claim activity.
CONCLUSION:
ICS has demonstrated effective case management and has produced cost savings in the
Towns Workers' Compensation program. It is recommended that ICS continue to serve as
the Town's third party administrator for an additional three years, under substantially the
same terms as the original contract. This continuation will minimize disruption in the
management of claims and will allow ICS and Town staff to continue their efforts in
process improvement and cost containment.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
The Town is currently paying $3,357 a month in professional service fees to ICS to serve
as the Town's Workers' Compensation third party administrator, for a total annual cost of
$40,284. ICS has proposed minimal cost increases for the three year term as follows:
Period
Increase
Annual Fee
FY 2006-07
0% increase
$40,284
FY 2007-08
2% increase
$41,090
FY 2008-09
2% increase
$41,912
TOTAL
$123,286
Funding to support this agreement is provided as follows:
Department: Administrative Services Department
Program: 6610 Workers' Compensation
Account: 61021 Insurance Administration (Operating Expenses)
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION AUTHORIZING THE TOWN MANAGER TO
EXECUTE AN AMENDMENT TO THE PROFESSIONAL SERVICES
AGREEMENT WITH INNOVATIVE CLAIMS SOLUTIONS, INC., TO
EXTEND THE CONTRACT FOR THREE YEARS TO PERFORM
COMPENSATION CLAIMS ADMINISTRATION
DATE: JUNE 12, 2006
Attachments:
Resolution Authorizing the Town Manager to Execute an Amendment to the Professional
Services Agreement with Innovative Claims Solutions, Inc., to Extend the Contract for
Three Years to Perform Workers Compensation Claims Administration Services.
Distribution: Cheryl Westernen, Innovative Claims Solutions, Inc., PO Box 5128, San
Ramon, CA 94583
F
~4 : v
RESOLUTION
ADOPT RESOLUTION AUTHORIZING THE TOWN MANAGER TO EXECUTE A
SECOND AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT WITH
INNOVATIVE CLAIMS SOLUTIONS, INC., TO EXTEND THE CONTRACT FOR THREE
YEARS TO PERFORM COMPENSATION CLAIMS ADMINISTRATION
WHEREAS, on September 30, 2002, the Town of Los Gatos entered into an
agreement with Innovative Claims Solutions, Inc., to serve as the third party administrator for the
Town's Workers' Compensation program.
WHEREAS, on June 20, 2005, the Town of Los Gatos extended the agreement with
Innovative Claims Solutions, Inc., to serve as the third party administrator for the Town's
Workers' Compensation program for an additional year.
WHEREAS, a second Amendment to the Agreement is necessary to extend the
agreement for another three years to continue services related to Workers' Compensation
administration services.
WHEREAS, the Town is currently paying $40,284 in professional Service fees
annually to ICS to serve as the Town's Workers' Compensation third party administrator.
WHEREAS, a second amendment to extend the agreement would result in an
annual fee in FY 2006-07 of $40,284; FY 2007-08 of $41,090; and FY 2008-09 of $41,912, for a
total not to exceed amount of $123,286 for the three year period.
NOW THEREFORE BE IT RESOLVED, by the Town Council of the Town of
Los Gatos, County of Santa Clara, State of California, that the Town Manager is authorized, in
the name and on behalf of the Town of Los Gatos, to execute an Amendment to the Agreement
discussed above, with substantially the same terms as the original agreement, with the exception
of the terms specified hereinabove, for another three years with Innovative Claims Solutions,
Inc., for Workers' Compensation administration services.
ABSTAIN RESOLUTION OF THE TOWN OF LOS GATOS
AUTHORIZING THE TOWN MANAGER TO EXECUTE AN AMENDMENT TO THE
PROFESSIONAL SERVICES AGREEMENT WITH INNOVATIVE CLAIMS SOLUTIONS,
INC., TO EXTEND THE CONTRACT FOR THREE YEARS TO PERFORM WORKERS'
COMPENSATION CLAIMS ADMINISTRATION
(continued)
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos, California, held on the day of , 2006 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR
LOS GATOS, CALIFORNIA