BOARD MEETING DATE: January 8, 2010
AGENDA NO. 10

PROPOSAL:

Amend Contract for Workers’ Compensation Third-party Administrator Services

SYNOPSIS:

On April 6, 2007, the Board approved a three-year contract with ACME Administrators for workers’ compensation third-party administrator services. The contract expires June 30, 2010. This action is to amend the contract to extend the term one additional year, which would lock in very competitive rates, eliminate the need for significant advertising expenses, avoid costly data transfer fees associated with moving claims files to a new contractor, and ensure continued consistent and efficient workers’ compensation claims administration services. Funding for this one-year extension will be included in the FY 2010-11 Budget request.

COMMITTEE:

Administrative, December 11, 2009, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to extend the contract for workers’ compensation third-party claims administration services with ACME Administrators Inc., to June 30, 2011. The cost for the additional year is $54,574, and will be included in the FY 2010-11 Budget request.
 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

AQMD’s workers’ compensation third-party administrator assists risk management staff with the reporting of employee injuries to the State Department of Industrial Relations -Workers’ Compensation Division, provides case management services to ensure treatment is appropriate and cost-effective, makes timely and accurate disability payments to injured employees, pays medical bills to vendors, hospitals, and physicians according to state-approved fee schedule guidelines, provides AQMD weekly cost reports, and files annual workers’ compensation loss reports with the State Self-Insured Plans.

Currently, AQMD has a contract with ACME Administrators Inc., which is scheduled to expire June 30, 2010. 

During the past two and a half years, ACME has worked closely with AQMD staff to identify risks and control liability costs and to get quick treatment for injured employees. Due to their exceptional service, AQMD has been able to streamline the workers’ compensation program, have convenient access to detailed automated claims management information, negotiate several unsettled claims, and close a number of files. The result is a record low number of open claims. Additionally, extending the current contract will save the agency advertising costs and an approximately $15,000 data transfer fee associated with moving claims files to a new third-party administrator.

Proposal

ACME has agreed to continue to provide these services for an additional year at the same rate they are currently receiving.

To avoid costs associated with advertising a request for proposals and transferring claims files to a new third-party administrator, to lock in competitive rates, and to continue receiving a proven high level of claims handling, staff recommends the current contract be extended for an additional one-year period, July 1, 2010, through June 30, 2011.

Sole-Source Justification

This one-year extension of an existing contract is warranted under Section VII B 2 a. of AQMD’s Procurement Policy, as the contractor has performed exceptionally well and the costs required to prepare documents and advertise the opportunity, as well as the cost to transfer extensive workers compensation files, exceed possible savings that could be derived.

Resource Impacts

The cost of this contract is $54,574. This cost will be included in the FY 2010-11 Budget request.