SR 09-12-2017 3G
City Council Report
City Council Meeting: September 12, 2017
Agenda Item: 3.G
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Risk Management
Subject: First Modification for Workers Compensation Medical Bill Review Services
Contract
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.
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
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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
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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.
Prepared By: Michael Spenelli, Risk Management Analyst
Approved
Forwarded to Council
Attachments:
A. October 2, 2012 Staff Report
B. InterMed Cost Containment Services Oaks Form
REFERENCE:
FIRST MODIFICATION TO
CONTRACT NO. 9650
(CCS)