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7 - Innovative Claim Solutions.~pW N OF !ps °G A.~pS COUNCIL AGENDA REPORT DATE: June 7, 2010 TO: .MAYOR AND TOWN COUNCIL MEETING DATE:. ~06/21~10 ITEM NO: FROM: GREG CARSON, TOWN MANAGER ,.~~~ ~~ SUBJECT: ADOPT RESOLUTION AUTHORIZING THE TOWN MANAGER TO EXECUTE A CONTRACT WITH INNOVATIVE CLAIMS SOLUTIONS, INC. TO PROVIDE WORKERS' COMPENSATION THIRD PARTY ADMINISTRATIVE SERVICES RECOMMENDATION: It is recommended that Council adopt a resolution authorizing the Town Manager to execute a contract with Innovative Claims Solutions, Inc. to provide workers' compensation third party administrative services effective July 1, 2010 through June 30, 2013. BACKGROUND: The Town has contracted with Innovative Claim Solutions, Inc. (ICS) since July 2002 to serve as the Third Party Administrator (TPA) for the Town's Workers' Compensation program. .ICS has demonstrated effective case management prompting Council to approve several contract extensions with the last due to expire on June 30, 2010. On March 8, 2010, the Town issued a Request for Proposal (RFP) that was sent to a number of firms who performed this type of service as well as posted the document on various websites. Human Resources staff reviewed the proposals, from four (4) vendors who responded to the RFP, based on objective selection criteria and determined that it would be in the Town's best interest to appoint ICS as the Town's workers' compensation TPA. Therefore, staff recommends that Council adopt a resolution authorizing the Town Manager to execute a contract with ICS as the Town's workers' compensation TPA for a three-year term, from July 1, 2010 through June 30, 2013 with an option to renew for one or more years. PREPARED BY: RUMI PORTILLO &~~ Human Resources hector ~ C:\Users\MBERMU~I\AppData\Local\Temp\XPgrpwise\RTC_ ICS Contract Juue 2010.doc Reviewed by ~~, Assist n Manager own Attorney Clerk Administrator Finance Community Developrrzent 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 7, 2010 DISCUSSION: Third Party Administrator is a service provider who not only handles Town's claims, but also serves as a business partner in :contributing toward the overall success of Town's worker's compensation program and in reducing claim costs. The best way to reduce workers compensation costs is to build a strong relationship, enabling the TPA to know the preferences and claim handling philosophy of the Town. This typically tapes at least a year of actual experience in administering Town's workers' compensation program before the TPA is comfortable in the assignment. Town staff has worked with ICS since the inception of the original contract in 2002, and there is a clear understanding between the parties of expectations. Further, Town staff s objective is to secure competitive administrative costs with minimal disruption in the administration of workers' compensation claims services, to Town employees. ICS has proposed a fixed. fee of $42,000 per year for fiscal years 2010 through 20.13, for a total .administrative cost of $126,000. The proposed contract will result in a decrease in annual costs from $44,000 to $42,000 for an estimated savings of $6,000 over the life of the contract. The Town also avoids paying a conversion fee providing for an additional savings of approximately $5;000. Staff believes that ICS is doing a satisfactory job in providing workers' compensation third party administrative services and recommends that Council adopt a resolution authorizing the Town Manager to execute a contract with ICS as the Town's workers' compensation TPA for athree-year term, from July 1, 2010 through June 30,.2013,. with an option to renew for one or more years. CONCLUSION: ICS's proposal will result in a decrease in annual. administrative costs in the Town's workers' compensation program. The services provided by ICS have also been satisfactory. Therefore, staff recommends that. ICS continue to serve as the Town's TPA under the terms of the proposed 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: The RFP for a Workers' Compensation TPA is not a project defined under CEQA, and no further action is required: 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 7, 2010 FISCAL IMPACT: The Town is currently paying $3,667.33 a •month in professional service fees to ICS to serve as the Town's workers' compensation TPA. ICS has proposed, for the new contract, a monthly fee at $3,500 for the duration of the three-year contract, resulting in a decrease in annual costs from $44;000 to $42,000, for an estimated savings of $6,000 over the life of the contract. Sufficient funds .are available in the adopted FY 2010/11 budget for this agreement. Attachments: Resolution authorizing the Town Manager to execute a contract with Innovative Claims Solutions, Inc. to provide workers' compensation third party administrative services effective July 1, 2010-through June 30, .2013. Distribution: Gary Archibald ,Innovative Claims Solutions, Inc., 11030 White Rock Road, Suite 210, Rancho Cordova, CA 95670 THIS PAGE INTENTIONALLY LEFT BLANK RESOLUTION NO. ADOPT RESOLUTION AUTHORIZING THE TOWN MANAGER TO EXECUTE A CONTRACT WITH INNOVATIVE CLAIMS SOLUTIONS, INC. TO PROVIDE WORKERS' COMPENSATION THIRD PARTY ADMINISTRATIVE SERVICES WHEREAS, on March 8, 2010, the Town of Los Gatos issued a Request for Proposal for the administration of Town's self-insured workers' compensation program. WHEREAS, Innovative Claim Solutions, Inc. responded to Request for Proposal and proposed a fixed fee of$42,000 per year for fiscal years 2010 through 2013, for a total administrative cost of $126,000. WHEREAS, Innovative Claim Solutions, Inc. has served as Town's workers' compensation Third Party Administrator since 2002 and has demonstrated effective case management. WHEREAS, the Town has selected Innovative Claim Solutions, Inc. to continue to serve as the Town's workers' compensation Third Party Administrator TPA for athree-year term, from July 1, 2010 through June 30, 2013, with an option to renew for one or more years. . 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, and is hereby directed to execute the contract with Innovative Claim Solutions Inc. to provide worker's' compensation third party administrative services. PASSED AND ADOPTED at a regular meeting to the Town Council of Los Gatos, California, held on the 21St day of June, 2010 by the following vote: COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAIN: SIGNED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA N:\MGR\AdminWorkFiles\2010 Council Reports\6.21.1Q ICS Reso.doc THIS PAGE INTENTIONALLY LEFT BLANK