City of Santa Monica
California

Staff Report
2632

First Modification for Workers Compensation Medical Bill Review Services Contract

Information

Department:Finance Department, Risk Management AdministrationSponsors:
Category:03. Consent Calendar

Recommended Action

Recommended Action

Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to agreement #9650 with InterMed Cost Containment Services, a California-based company, for workers’ compensation medical bill review services. This modification will extend the agreement’s term by one year (and result in a six-year amended agreement); all other terms and conditions, including the total not to exceed amount of $750,000, will remain the same.

Staff Report Body

Executive Summary

Since 2012, the City has partnered with InterMed Cost Containment Services for workers’ compensation medical bill review services.  This service saves the City millions of dollars each year by accessing the State’s fee schedule for medical services.  The City’s Workers Compensation Program is in the process of converting to a new claims management system and requests to extend the existing contract with InterMed for one additional year to help keep operations as stable as possible during implementation of the new system.  All terms and conditions would remain the same.  Staff plan to competitively bid the service following implementation of the new system.

 

Background

On October 2, 2012, following a competitive selection process, the City Council approved a five-year contract with InterMed Cost Containment Services (InterMed) for workers’ compensation medical bill review services (Attachment A).  Staff is requesting to extend this agreement for one additional year to facilitate implementation of a new claims management system for the City’s Workers’ Compensation Program.  All other terms and conditions contained in the agreement, including a total compensation cap of $750,000, will remain the same.

 

Discussion

The City currently contracts with InterMed for workers’ compensation bill review services.  In this capacity, InterMed reviews, and adjusts as appropriate, every medical bill the City receives in connection with an injured worker’s claim (e.g., doctor visits, diagnostic tests, prescriptions, surgeries, etc.) to ensure that the charges comply with the State’s fee schedule for medical services.  This process saves the City several million dollars annually because the State’s fee schedule is substantially lower than medical providers’ usual and customary charges; as such, the process is critical to workers’ compensation cost containment efforts.  InterMed’s current five-year agreement is scheduled to expire in November 2017 and under normal circumstances, staff would issue a Request for Proposals (RFP) to comply with the City’s procurement policies.  Staff is requesting instead, however, to extend this agreement for one additional year (for a total of six years) to facilitate implementation of a new claims management software for the Workers’ Compensation Program.

 

The Risk Management Division of the Finance Department is in the process of converting to a new claims management system.  This system is used by staff to track, manage, and report on the City’s Workers’ Compensation Program.  One critical and complex element of the conversion, integrating InterMed’s bill review software into the new claims management system, has been completed and tested in anticipation of an October 2017 “go live” date – just one month prior to InterMed’s contract expiration.  Given this timing, staff recommends that the City extend InterMed’s contract for one additional year (all other terms and conditions will remain the same).  This approach will give staff time to adapt to the new, more sophisticated claims management system using a familiar and proven bill review system.  Staff can then release an RFP for bill review services in the spring of 2018 to comply with procurement policies.

 

Financial Impacts and Budget Actions

There is no immediate financial impact or budget action necessary as a result of the recommended action.  The agreement’s total compensation will remain capped at $750,000. Funds in the amount of $150,000 are available in the FY 2017-18 budget for the Finance Department in account 59235.555060. Future year funding is contingent on Council budget approval.

Meeting History

Sep 12, 2017 5:30 PM  City Council Regular Meeting
draft Draft