City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council approve a five-year professional services
agreement, not to exceed the amounts indicated in the fiscal analysis section of this
report, with Southern California Risk Management Associates (SCRMA) to provide
workers’ compensation claims administration, bill review, and utilization review
services.
BACKGROUND:
As part of the 2006-07 budget process, staff was directed to conduct a Request for
Proposal (RFP) for workers’ compensation third party administration services prior to
the adoption of the 2007-08 budget. Subsequently, City Council authorized staff to
release an RFP for claims administration services on January 8, 2007. The RFP
solicited proposals for third party claims administration, medical bill review services,
and utilization review services. The RFP was structured in such a way that these
services could either be offered bundled by a full service third party administrator
(i.e. all three services offered by the same firm) or unbundled by a firm that
specializes in one or two of the three component areas.
Staff received proposals from twenty four (24) firms; of which ten (10) responses
were from full service third party administrators (TPA) and fourteen (14) responses
were from firms that specialize in one of the three component areas. With the
assistance of a risk management consultant from Aon Risk Services, staff from Risk
Management and the Controller’s Office evaluated each proposal and selected three
Meeting Date: 05/14/07 Item Number: A-6
AGENDA ITEM: Approval of a Professional Services Agreement with Southern
California Risk Management Associates (SCRMA) to Provide Workers’
Compensation Claims Administration, Bill Review, and Utilization Review
Services.
Contact Person/Dept.: Marlee Chang,
Nick Kimball, Budget & Finance, Sherri
Venegas, Risk Management
Phone Number: (310) 253-6013
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification:
Master Notification List 05/09/07; All respondents to Request For Proposal Bid #1344
on 5/10/07
Department Approval:
Marlee Chang (05/03/07)
City Attorney Approval:
Carol Schwab (by H. Iker) (05/07/09)
City Controller Approval:
Marlee Chang (05/03/07)
City Manager Approval:
Jerry B. Fulwood (05/09/07) City of Culver City, California
City Council Agenda Item Report
firms to give an oral presentation to a panel of Department Heads and City staff,
followed by a question and answer period.
All firms were evaluated based on the following criteria:
1. Thoroughness and clarity of response;
2. Technical understanding of the requested service;
3. Firm’s experience providing claims administration services to full-service
Municipalities;
4. Overall expertise/experience and availability of staff assigned to the account;
5. Computer system and capability to generate various reports and analysis in
an acceptable format;
6. Client references; and
7. Cost of service.
The panel of City staff at the presentation and interview consisted of the Personnel
Director, Chief of Police, Parks, Recreation and Community Services Director,
Interim Risk Manager, City Controller, Safety and Claims Coordinator, and Senior
Management Analyst in the Budget & Finance Division.
DISCUSSION:
Based on the evaluation of proposals, the following three full service TPA firms were
invited to the presentation and interview:
• AdminSure (formerly Colen & Lee);
• Hazelrigg Risk Management Services; and
• Southern California Risk Management Associates (SCRMA).
The three firms selected are all full service TPAs; that is to say they provide all
requested services in-house as opposed to selecting different firms to perform
ancillary services related to the claims administration process (i.e. bill review and
utilization review). After carefully evaluating all responses, it was the consensus that
these three full service TPAs offered comparable medical review and utilization
review services with the added operational and economic efficiency of providing
these services in-house.
Immediately following the interviews, Risk Management staff and the consultant
carefully considered input from the panel on each of the three finalists. Based on
the evaluation, presentation to staff, and client references, staff recommends that
SCRMA be selected to provide claims administration services. City of Culver City, California
City Council Agenda Item Report
Southern California Risk Management Associates (SCRMA)
Qualification
SCRMA is a highly qualified firm with extensive experience in claims administration
services for municipalities in California. SCRMA stood out as a firm that could
provide the City with superior multi-dimensional claims administration service.
SCRMA has extensive experience administering claims for California municipalities
with more than 100 municipal and special district clients; almost 50% of which have
Police, Fire and/or Transit services.
Presentation
During their presentation and interview, SCRMA staff projected a great deal of
enthusiasm and knowledge of all aspects of claims administration. They projected
and emphasized a very proactive philosophy towards claims management. SCRMA
has a strong record of delivering all statutorily-entitled benefits mandated by the
California Labor Code to injured workers while concurrently assuming their role as
gate-keeper to ensure that benefits delivered do not exceed Labor Code
requirements. SCRMA’s approach is to provide the best treatment to those
employees that are truly injured and genuinely want to get back to work in a timely
manner; however, they will take an assertive stance on claims that they view as
questionable by investigating claims, taking a more exacting approach towards
litigated claims, and providing the City with their professional
recommendation/solution.
In terms of claims administration philosophy, SCRMA staff exhibited and described
various control methods to minimize costs during the course of a workers’
compensation claim. Suggestions included continued support/assistance in the
administration of the City’s Return to Work program. SCRMA also stressed the
importance of proactive litigation management in terms of participating in consistent
file reviews with our attorneys, the adjustor and in-house staff.
Staffing Service Level
SCRMA will assign highly experienced claims staff dedicated specifically to Culver
City’s account. A highly experienced TPA staff is crucial because they will be deeply
involved in the day to day management of the City’s claims and will constantly
communicate and collaborate with the City’s Risk Management and Personnel staff
to continually monitor and improve the program. In essence, the TPA account
manager and claims staff will become an extension of the City’s current Risk
Management staff.
City of Culver City, California
City Council Agenda Item Report
References
All of SCRMA’s client references were extremely positive. The references had all
been with SCRMA for more than ten years and spoke very highly of SCRMA’s
customer service and claims handling abilities. One reference was also impressed
with SCRMA’s full disclosure of all costs. They indicated that SCRMA is clear, up-
front, and transparent about their costs.
In addition to current clients, staff also contacted two of SCRMA’s former clients that
had recently left SCRMA for another TPA. The former clients that were contacted
expressed no major concerns with SCRMA’s claims management service. Their
reason for moving to a new TPA had more to do with the clients’ internal operations
or management and not claims processing.
Medical Provider Network (MPN)
Another service that sets SCRMA apart from the other finalists is their established
Medical Provider Network (MPN). A
MPN is a network of medical providers and specialists who are familiar with workers’
compensation practices and reporting requirements to which an employer sends
injured employees. Similar to a Preferred Provider Organization (PPO), the medical
providers and specialists in a MPN have a contractual agreement to provide medical
services at a somewhat discounted rate.
The most effective MPN is one that is dynamic enough to offer injured workers and
employers a choice in treating physicians/specialists while containing medical costs.
This can be achieved by constant monitoring of the providers in the MPN by the
claims administrator.
The City’s current MPN, Concentra, is a large network with tens of thousands of
members. Historically, it has been very difficult for the City to screen medical
providers and exclude those that may not provide quality medical treatment and/or
share the City’s philosophy to return employees to work in a timely manner while
delivering excellent medical care.
Alternately, SCRMA has developed their own MPN – Wellcomp – which provides fair
compensation to medical providers to attract and retain loyal, high quality providers
who have the goal of successful patient recovery. Before medical providers are
added to the Wellcomp network, they are screened and credentialed to ensure that
they provide high quality medical treatment and have a proven track record that will
add value to an employers’ risk management program.
City of Culver City, California
City Council Agenda Item Report
Conclusion
SCRMA is slightly more expensive than one of the other finalists (approximately
$31,500 per year over the five year period); however, staff feels that SCRMA’s high
quality of service, proactive philosophy and diligent claims process can lower the
City’s average claims cost significantly and thereby reduce total workers’
compensation expenses in the long run. In addition, SCRMA has a reputation for
closing claims that have been open for long periods of time. The quicker claims are
resolved and closed, the greater the cost savings and reduction in future liability
exposure.
The benefit of a more proactive approach to claims management has been apparent
in the City’s own operations over the past few years. A change in Risk Management
staff brought a change in philosophy and a more structured approach to claims
management. Risk Management staff actively facilitates quality treatment for injured
employee’s that are eager to recover and return to work while taking a stance that
protects the City against questionable claims.
Changing TPA services will further strengthen and support the City’s claims
management philosophy, which will help to continue the City’s current trend of
reducing claims related expenses as well as the salary continuance costs for injured
employees. The end result for the City is not only establishing a healthier work
environment but also boosting employee moral.
FISCAL ANALYSIS:
Claims Administration: The contract amount for administering the City’s self insured
workers’ compensation program includes acting as a liaison between employees,
doctors, attorneys, and the City; generating and mailing statutorily required notices
to employees; processing and filing required forms with the appropriate parties;
reviewing medical treatment to ensure that it is appropriate; setting initial claim
reserve amounts; consulting with Risk Management staff to provide recommended
courses of action; paying claims related costs on behalf of the City; and generating
and providing reports to Risk Management staff for use in analysis and enhanced
program management.
City of Culver City, California
City Council Agenda Item Report
Over the five-year contract period,
SCRMA is an average of $31,500
higher than Hazelrigg and $73,400
lower than AdminSure.
Medical Bill Review: This service is to ensure that the City is being billed accurately
for the medical treatment provided to injured workers and to make sure that the City
is taking advantage of treatment discounts provided by medical provider network
doctors.
Service Fee
SCRMA 15% of net savings, less duplicates
AdminSure 4% of net savings, less duplicates
Hazelrigg 15% of net savings, less duplicates
SCRMA and Hazelrigg have very similar pricing for this service. AdminSure is
significantly less expensive; however, this is offset somewhat by their higher claims
administration expense.
Utilization Review: This service is to pay medical professionals to review requests
for medical services by treating facilities. This additional review by medical
professionals ensures that the requested treatment is necessary and within ACOEM
(American College of Occupational and Environmental Medicine) treatment
guidelines.
Approximate charge
on a $500 Medical Bill
SCRMA 5% of net medical charges $25
AdminSure 4% of net medical charges $20
Hazelrigg $95-$150 per claim
plus Physician Asst. fees
$95+
As noted above, SCRMA and AdminSure charge on a percentage basis while
Hazelrigg charges a flat fee. Charges on a percentage bases are more
advantageous if a majority of the bills that go through utilization review are smaller
bills (i.e. >$2,000). A flat fee is more advantageous if a majority of the bills are for
larger more serious treatments (e.g. surgery). Historically, a majority of Culver City’s
utilization review bills are smaller; therefore, paying on a percentage basis is more
advantageous.
SCRMA AdminSure Hazelrigg
Year 1: $274,890 $329,280 $235,000
Year 2: 274,890 342,451 242,050
Year 3: 274,890 356,149 249,311
Year 4: 288,635 370,395 256,791
Year 5: 303,070 385,211 264,495
TOTAL $1,416,375 $1,783,486 $1,258,647 City of Culver City, California
City Council Agenda Item Report
One-time fees (Data conversion cost and MPN application fee): In addition to the
annual contract cost, a change in third party administrators will require one-time fees
for data conversion and MPN application costs, not to exceed $11,200.
Annual website access charge: There is also a per user charge for access to
SCRMA’s web based claims administration information system of $1,400 per user
per year. Staff recommends that three City users have access to SCRMA’s system
($1,400 X 3 = $4,200).
Although the direct contract costs are not the lowest, staff believes that SCRMA is
the best fit for the City and will save the City money in the long run. Sufficient
funds for the claims administration contract will be included in the fiscal years 2007-
08 and 2008-09 Proposed Budget.
ATTACHMENTS:
1. List of Responding Firms
2. Response Summary and Evaluation Matrix for Finalists
3. Executive Summary from SCRMA’s Proposal
MOTION:
That the City Council:
1. Approve a professional services agreement with Southern California Risk
Management Associates (SCRMA) to provide workers’ compensation claims
administration services for an amount not to exceed $279,090 per year for the
first three years of the contract, an amount not to exceed $292,835 in the fourth
year of the contract, and an amount not to exceed $307,270 in the fifth year of
the contract (each year includes an additional $4,200 for access to SCRMA’s
claims system for three City users); and
2. Authorize staff to pay an additional amount to Southern California Risk
Management Associates not to exceed $11,200 for one-time data conversion
costs and Medical Provider Network application fees; and
3. Authorize the City Attorney to prepare the necessary documents; and
4. Authorize the City Manager to execute the agreement on behalf of the City.
05/14/07
Approval of a Professional Services Agreement with Southern California
Risk Management Associates (SCRMA) to Provide Workers'
Compensation Claims Administration, Bill Review, and Utilization Review
Services.
MEETING DATE:
AGENDA ITEM:
ATTACHMENTS
Pages
1. List of Responding Firms 1
2. Response Summary and Evaluation Matrix for Finalists 2
3. Executive Summary from SCRMA's Proposal 3 - 6Claims Administration RFP
List of Responding Firms
Responding Firms
1) Acclamation Insurance Mgmt. Services
2) AdminSure (Colen & Lee)
3) Bragg Claims & Risk Mgmt. Services
4) Buckeye Claims Administrators
5) Cambridge
6) Claims Management Inc.
7) Compiq Corp. & RWI
8) CompPartners Inc.
9) Corvel
10) Cost Containment Solutions
11) Francis Claims Services
12) Gallagher Bassett Services Inc.
13) Hazelrigg Risk Mgmt. Services
14) Integrated Claims Administrators/MJM/A
15) Intercare Insurance Services
16) JT2 Integrated Resources
17) Monitor Integrated Healthcare
18) Murphy & Beane
19) Oasis Claims
20) Professional Dynamics Inc.
21) SCRMA
22) Sedgwick CMS
23) Total Healthcare Management
24) Tristar Risk ManagementClaims Administration RFP
Summary of Proposals
Summary of Evaluation Categories
Operating Since:
Experience Servicing Office Location:
# of Municipal Clients*:
AdminSure
(fka Colen & Lee)
1983 (WC)
Diamond Bar, CA
34
Hazelrigg Risk Mgmt. SCRMA
1988 (WC)
Valencia, CA
58
1991 (WC)
Chino, CA
17
System:
Risk Management
Information System Cost for System Access:
One-Time Data Conversion
Costs:
Valley Oaks System**
N/A
N/A
Valley Oaks System
$1,500 per year, per user
$11,000
Renaissance
$1,400 per yr, per user
$10,000
Claims Admin. Costs (Year 1):
Claims Admin. Costs (Year 2):
Claims Administration Claims Admin. Costs (Year 3):
Claims Admin. Costs (Year 4):
Claims Admin. Costs (Year 5):
$329,280***
$342,451
$356,149
$370,395
$385,211
$235,000
$242,050
$249,311
$256,791
$264,495
$274,890
$274,890
$274,890
not to exceed $288,635
not to exceed $303,070
Total 5 Year Contract:
$1,454,206 $1,258,647 $1,416,375
Bill Review Bill Review Service Cost: $4 per bill/4°/0 of savings $6.50 per bill/15% of savings $6 per bill/15% of net savings
Utilization Review UR Services (Per Claim):
UR Services (Dr's Review):
4% of net medical charges, not to
exceed $750 per claim
$200 per hr
$150 plus PA fees for Inpatient
Hospital Review
$250 per hour
5% of net medical charges
$200 per hr
Medical Provider Network:
Network
Cost for MPN:
Concentra
N/A
HRMS Customized
$175 per claim transferred into
MPN
Well Comp
$48 per claim - One time $1,200
application fee
Estimated Total Cost"' $329,280 $250,500 $290,290
* Clients with Police, Fire, and/or Transit only.
** AdminSure does not currently operate using the Valley Oaks System. They have purchased the system and expect to be up and running within the next 6 months.
*** AdminSure extended the offer to continue to handle the City's Program "Status Quo" under the existing contract, with the current price structure ($195,000 per yr).
staffing level and service standards for one more year in lieu of their 5-year contract quote.
**** Equals Year 1 contract cost plus one-time data conversion plus access for three users plus MPN application fees.SCRMA
Southern California
Risk Management Associates
presents
A Proposal
for
WORKERS' COMPENSATION CLAIMS
ADMINISTRATION AND MANAGED CARE
SERVICES
February 15, 2007SCRWA)
Southern California
Risk Management Associates
February 15, 2007
City of Culver City
ATTN: Ela Valladares, Deputy City Clerk
9770 Culver Blvd.
Culver City, CA 990232
RE: Request for Proposals Workers' Compensation Claims Administration, Utilization Review,
and Medical Bill Review Services
Dear Ms. Valladares:
On behalf of Southern California Risk Management Associates, Inc. ("SCRMA"), the workers'
compensation division of York Insurance Services Group, Inc. ("York"), we would like to thank the
City of Culver City ("City") for the opportunity to participate in this proposal process. We would be
privileged if afforded the opportunity to provide the City with our effective and cost-efficient
workers' compensation cost containment solutions including workers' compensation claims
administration, utilization review ("UR") and medical bill review ("BR") services.
A California corporation headquartered in Upland, California, SCRMA is a recognized leader in
the provision of workers' compensation solutions. We administer claims for some of the most
complex entities in California including over 100 cities and, as indicated in our Executive
Summary, 41 of which are located in Los Angeles County.
As a result, we are familiar with the coordination of various City salary continuation programs and
workers' compensation benefits. In addition, we have developed expertise in the area of safety
officers and the coordination of PERS disability retirement issues. All of our city and fire district
clients are members of PERS. Our clear understanding of the PERS disability retirement process
is a key element of our successful program.
Starting with a just a hand full of Southern California entities in 1988, we now provide claims
administration for over 350 Northern and Southern California employers representing 240,000
lives and 17,000 injured workers.
Our proposal elaborates on SCRMA's demonstrated capacity to provide the third party claims
administration ("TPA"), UR and BR services requested.
If any questions should arise, please do not hesitate to contact me directly as follows:
Jody A. Gray, President
Southern California Risk Management
313 East Foothill Blvd., Upland, CA 91786
jody.gray@SCRMA.com / 909-608-7171 / Fax: 909-608-7165EXECUTIVE SUMMARYSCRMA
Southern Cafornia
Risk Management Associates|1010|EXECUTIVE SUMMARY
CONFIDENTIAL
The Company Founded in 1988, SCRMA is a leading provider of workers' compensation claims
management and cost containment services to California self-insured employers.
Our integrated service offering is comprised of claims administration and a suite of
managed care services, including bill review ("BR"), utilization review ("UR"), and a
proprietary medical provider network ("MPN"). Utilized in concert, SCRMA's suite
of integrated services significantly reduce our clients' overall cost of workers'
compensation by enabling us to offer our 350+ clients a comprehensive, self-
insured workers' compensation claims solution.
SCRMA has extensive experience successfully managing claims for complex,
California public and private entities including the Los Angeles County Cities of
Artesia, Bell Gardens, Bellflower, Cerritos, Claremont, Commerce, Cudahy, Duarte,
El Segundo, Hawaiian Gardens, Hermosa Beach, Irwindale, La Canada-Flintridge,
La Habra Heights, La Mirada, La Palma, La Puente, La Verne, Lakewood,
Lawndale, Lomita, Maywood, Malibu, Norwalk, Palos Verdes Estates, Paramount,
Pico Rivera, Rancho Palos Verdes, Rolling Hills Estates, Rosemead, San Dimas,
San Gabriel, Santa Fe Springs, Seal Beach, Sierra Madre, Signal Hill, South El
Monte, South Pasadena, Temple City, Walnut, West Hollywood, and Westlake
Village.
In addition to the public entities listed above, SCRMA also successfully handles
workers' compensation claims for the Housing Authority of the City of Los Angeles
and the Los Angeles Community College District, the largest community college
district in the state.
Distinctive SCRMA's only focus is workers' compensation. We believe that the workers'
Competency compensation climate is one of the most difficult and ever-changing markets in the
country. SCRMA believes that a firm must be focused on workers' compensation in
order to deliver quality service and maximize financial results for clients.
Our service philosophy is based on a set of highly effective best practices, the
nucleus of which includes ongoing communication with the injured employee and
employer. While highly subjective, these qualitative protocols result in less margin
for error and a synergistic approach to claims management, which in turn results in
quantifiable cost savings. As a result, we have achieved the following:
• Less than 3% annual client turnover
• Unique insight and analysis into pending and new regulatory change
• Ability to significantly reduce our clients' cost of risk
We are familiar with the coordination of various salary continuation programs and
workers' compensation benefits. In addition, we have developed expertise in the
area of safety officers and coordination of PERS disability retirement issues. All of
the cities and fire districts that we serve are members of PERS. A clear
understanding of the PERS disability retirement process is a key element of our
program.
Our proposal substantiates our capacity to perform all services required to
supervise and administer the City's program and to act as your representative in
matters related to your obligations under the workers' compensation laws of the
State of California. We will effectively and cost efficiently manage your program in
accordance with the rules and regulations promulgated by the Department of Self-
Insurance Plans and the Division of Workers' Compensation Audit Unit.