CITY OF POMONA
COUNCIL REPORT
May 16, 2022
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Linda Matthews, Human Resources/Risk Management Director SUBJECT: Approve the Award of a Three-Year Contract with Two One-Year Extension Options to AdminSure for Workers’ Compensation Third Party Claims Administration Services at a Cost of $260,000 for the First Year of the Agreement RECOMMENDATION:
It is recommended that the City Council take the following actions:
Approve the award of a contract to AdminSure for workers’ compensation claims administration services for an initial three-year term with two, one-year extension options in an amount not to exceed $260,000 for the first year and increasing by 3% for each successive year; and Authorize the City Manager to execute the agreement documents and any necessary amendments, subject to review by the City Attorney.
EXECUTIVE SUMMARY: Approval of this action will result in the City entering into an agreement for workers’ compensation third party claims administration (TPA) services with AdminSure effective June 1, 2022. The proposed agreement is for three years with two one-year extensions.
FISCAL IMPACT: Currently, the City is paying $205,800 per year for workers’ compensation claims services. Should the City Council approve the proposed agreement, the annual cost for these services would increase to $260,000 for the first year of the agreement, which is an approximate fee increase of 26.33%. It should be noted that the first year of the agreement will actually be for a period of thirteen (13) months so that each successive year of the agreement renews on July 1. Thereafter, the cost for these services will increase 3% each year for the remaining four (4) years of the agreement. Payment for this service is included in the FY 2021-22 Operating Budget and FY 2022-23 Proposed Operating Budget for Self Insurance Admin Fund account 668-1351-52928-00000.
PREVIOUS RELATED ACTION:
April 24, 2014 – Approved a three-year contract with AdminSure for the providing of workers’ compensation claims administration services.
May 1, 2017 – Approved a three-year contract with two, one-year renewal options with AdminSure for the providing of workers’ compensation claims administration services.
DISCUSSION: California Labor Code Section 3600 imposes liability on an employer, regardless of fault or negligence, for an injury sustained by an employee arising out of and in the course and scope of that employee’s employment. Among the benefits that are required to be provided to the injured workers are medical treatment; temporary disability payments; and when applicable, permanent disability payments and future medical care.
In anticipation of the expiring agreement, a new Request for Proposal was issued on March 10, 2022 seeking Third Party Administration (TPA) services for workers’ compensation claims. 36 potential proposers were notified of the bid posting, nine (9) potential proposers downloaded the bid resulting in five (5) firms submitting responses to the RFP. Consistent with City requirements for professional services contracts, each of these responses was evaluated by staff based upon the Scope of Services as outlined in the RFP. At the conclusion of the evaluation process, AdminSure was determined to be the most qualified bidder. For comparison purposes, the following chart reflects the overall scores earned by each bidder:
Combined Scores Workers Compensation Claim Services (RFP 2022-13) Rank
Firm
Total Possible Points
Total Score
1 AdminSure
240
220
2 Innovative Claim Solutions
240
173
3 Pegasus Risk Management
240
167
4 Elite Claims Management
240
165
5 Innovative Claim Strategies LLC
240
52 As the above chart reflects, AdminSure was scored as the most qualified bidder to administer the City’s workers’ compensation claims program. The proposed fee to be charged by AdminSure for the first year of the contract is $260,000 which is an increase of $54,200 or 26.33% over the current annual fee charged by AdminSure for the expiring agreement. Even with that increase, the negotiated price also represents the lowest cost of the relevant bids received from the RFP process. The current agreement with AdminSure is for the period June 1, 2021 through May 31, 2022. It is staff’s intent to adjust the new agreement with AdminSure so that it renews each fiscal year on July 1. In order to accomplish that, the first year of the agreement will be for the period of June 1, 2022 to June 30, 2023. Thereafter, the agreement will renew on July 1 for each successive year of the agreement with a negotiated yearly increase of of 3% per year. The above noted cost proposal reflects the basic claims administration fees however, there are additional costs charged to the individual claim files such as medical bill review fees, utilization review fees, photocopy costs, legal fees, nurse case management fees and medical treatment costs among others.
Staff recommends that AdminSure be selected as the City’s workers’ compensation TPA. As a result of the RFP process, AdminSure was selected as the most qualified bidder out of the five (5) responses to the RFP for workers’ compensation claims services the City received.
Prepared by: Chris Millard, Risk Manager
Workers’ Compensation TPA services with AdminSure