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Alternative Concepts (ASC) Fee Renewal_Worker's CompTHE CITY OF Dubuque DT TR ~ M-NnedcaC~y V Li Masterpiece an the Mississippi ~~ zoa~ TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Alternative Services Concepts (ASC) Fee Renewal -Worker's Compensation DATE: October 15, 2008 Personnel Manager Randy Peck is recommending City Council approval of the renewal rates for Alternative Services Concepts (ASC), the City's Worker's Compensation Claims Administrator. Their fee for medical claims increased from $160 to $165 per claim; their fee for indemnity claims increased from $736 to $750 per claim; and the managed medical only claims will now be paid as indemnity claims which means the cost for these claims will increase from $208 per claim to $750 per claim. Their per claim fee for run-in claims will remain the same. The account administration fee will remain at $3,000. The litigation fee will increase from $200 to $250, plus the base fee. There will also be an increase in the client data transmission fee and the fee for medical cost management services. Under the renewal proposal, the minimum claims fee will be reduced from $24,220 in 2008 to $23,800 in 2009. The reason the minimum claims fee is reduced is because we anticipate fewer medical claims next year, based upon claims history. In addition, the fee for managed medical only claims has not been included in the minimum claims fee. Consequently, the increase in the cost of the managed medical only fee would not be reflected in next year's minimum claims fee. Total expenses for worker's compensation claims administration services were $24,589.85 in 2007 and $27,420 in 2008. Randy anticipates that the administrative services fee for 2009 will be approximately $31,000, based on the new fee schedule. The renewal rates are in effect from October 1, 2008 through September 30, 2009. I concur with the recommendation and respectfully request Mayor and City Council approval. ~'~ Michael C. Van Milligen MCVM:tIb cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Randy Peck, Personnel Manager THE CITY OF Dubuque All DLTB E Masterpiece on the Mississippi ,~ 2007 TO: Michael C. Van Milligen, City Manager FROM: Randy Peck, Personnel Manager SUBJECT: Alternative Service Concepts (ASC) Fee Renewal -Workers' Compensation DATE: October 15, 2008 I received the renewal rates from Alternative Service Concepts (ASC), our workers' compensation claims administrator. The following is a comparison between the currents rates and the renewal rates: Current Rate. Renewal Rate Service per Claimant Fee per Claimant. Fee Increase/Decrease Workers' Compensation • Medical Only $160 $165 +$5 • Indemnity $736 $750 +$14 • Managed Medical Only $208 $750 +$542 Run-in Claims _• Indemnity $450 $450 $0 • Medical Only $50 $50 $0 Incident Reports $40 $40 $0 Catastrophic Claims Time and Expense Time and Expense Estimated Claims Fee $18,720 $18,300 -$420 Account Administration Fee $3,000 $3,000 $0 Litigation Fee $200 Plus Base Fee $250 Plus Base Fee +$50 Subrogation Fee 15% of Recovery 15% of Recovery Systems Fee $2,500 $2,500 $0 Maintenance Fee for Claims .Open after 24 Months $450 $450 $0 Minimum and Deposit Claims Fee $24,220 $23,800 -$420 Managed medical only claims will be paid as indemnity claims, which means the cost for a managed medical only claim will increase from $208 per claim to $750 per claim. Under Additional Services, the client data transmission fee will increase from $295 per release to $2,500 per release. This fee would apply only if we went with a different third party administrator for our worker's compensation claims. The new fee provides for the transfer of all financial information to a new third party administrator. Under the previous fee schedule, the amount of information transferred to a new third party administrator would have been more limited. Also, the fee for medical cost management services will increase from 22% of savings to 25% of savings. Under the renewal proposal, the minimum claims fee will be reduced from $24,220 in 2008 to $23,800 in 2009. The reason the minimum claims fee is reduced is because we anticipate fewer medical claims next year, based upon claims history. In addition, the fee for managed medical only claims has not been included in the minimum claims fee. Consequently, the increase in the cost of the managed medical only fee would not be reflected in next year's minimum claims fee. Total expenses for worker's compensation claims administration services were $24,589.85 in 2007 and $27,420 in 2008. I anticipate that the administrative service fee for 2009 will be approximately $31,000, based on the new fee schedule. The renewal rates are in effect from October 1, 2008 through September 30, 2009. I recommend that the renewal rates be approved. The requested action is for the City Council to pass a motion approving the new administrative services fees submitted by Alternative Service Concepts (ASC). I am working with ASC to finalize the terms of the Administrative Services Agreement. I will present it to you as soon as the document is finalized. If you have any questions, please feel free to call RP:tlb alternative service Concepts, L.L.C. City of Dubuque, Iowa October 1, 2008 -October 1, 2009 Two-Year Claims Handling •. .- • -. Workers' Compensation Medical Only 20 $165 $3,300 Indemnity 20 $750 $15,000 Litigation fee TBD $250 + base fee Run-In Claims Indemnity TBD $450 --- Medical Only TBD $50 --- Incident Reports' TBD $ 40 --- Catastrophic Claims2 TBD Time & Expense --- Estimated Minimum Claims Fee $18,300 Account Administration Fee $3,000 Systems Fee $2500 Minimum & Deposit Claims Fee $23,800 Claims will be handled for two years from the date the loss is reported to asc with no additional per claim fee. Any claim remaining open after 24 months will be subject to an annual maintenance fee of $450.00 Notes ASC will handle the number of claims indicated for the minimum claims fee. If the fee for the actual number of claims is more than the minimum claims fee, ASC will invoice the client for the difference. The account administration fee will be 7.5% of the claims fee or $3,000, whichever is greater. The administration fee includes: • Account Setup • New Claim Setup • Client Meetings (Frequency to be Determined) ' Recorded in claims system only. Must be specified as "Incident" at time of reporting. a Any event resulting in 10 or more claimants and/or property losses over $50,000 will be treated as a catastrophe. • Excess Reporting • State Reporting • Storage Fees At the conclusion of the contract, the following options are available for continued handling of open claims: • Negotiated annual fee per claim • Time and expense at asc's prevailing rates • Claims returned to client Subrogation All parties will automatically be placed on notice if the potential for subrogation exists. Pursuit of subrogation will be performed at the client's request. Pursuit of recovery fee is 15% of recovery. Additional Services and Fees3 Client Data Transmission Carrier Data Transmission State-Mandated EDI Computer Compatible Checks & Electronic Data Conversion From Prior Administrator On-Line Access (One User) Additional Users Reports Produced by Client Reports Produced by asc Systems Training Customized Programming Index Bureau Reporting Actuarial Data Requests Travel Over 100 Miles Outside Investigation Medical Cost Mana ement°- ee c e u ing PPO Usage Field Medical Case Management $2500 Per Release $400 Per Release $3 Per Report/Bill Transfers .....................At Cost At Cost No Charge $60 Per User Per Month No Charge $50 Per Copy T&E ($85 Per Hour) T&E ($/Hour) $6.25 Per Report $50 Per Hour T&E ($85 Per Hour) T&E ($85 Per Hour) 25% of Savings 30% of Savings $68 Per Hour Invoicing and Payment Terms Fees will be invoiced annually. Fees are payable upon receipt of the invoice. asc reserves the right to charge 1'/Z% per month or the maximum legal rate on unpaid balances after 30 days. Allocated Expenses Allocated expenses will be charged to the claim file and include fees for: • Legal services • Professional photographs • Medical records • Experts' /rehabilitation services • Index Bureau reporting • Accident reconstruction • Architects, contractors • Engineers, chemists • Police, fire, coroner, weather reports • Expert witness statements s As required or requested Most services are optional. ° Pricing for additional managed care services is available upon request. ,. • Surveillance • Extraordinary travel at client's request • Independent medical examinations, MRIs, etc. Workers' Compensation Definitions • Official documents and transcripts • Court reporters • Managed care Medical Only Claims -Work-related claims that require medical treatment only. • Subrogation not required • Investigation sufficient to determine claim type and compensability • Lost days do not exceed statutory waiting period • No loss notices, captioned reports, client meetings, or settlement authority required • Payments do not exceed $2,500 • Two-point contact made Indemnity Claims -Work-related claims that involve disability or payment of medical and other expenses in excess of $2,500. Claims that require investigation for subrogation and settlement negotiations. All claims, regardless of type, will be investigated, evaluated, and adjudicated in accordance with state statutory requirements and corporate guidelines.