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Workers' Compensation Claims Administration_ACSMasterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Acceptance of the Renewal Rates for Worker's Compensation Claims Administration DATE: October 10, 2011 Dubuque Iii- AmedcaCity IIII! 2007 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 effective October 1, 2011 through October 30, 2012. The Medicare, Medicaid and SCHIP Extension Act (MMSEA) annual transmission fees will increase from $1,920 to $2,100. The minimum and deposit claims fee will decrease from $27,760 to $26,240. The decrease is due to the fact that the estimated number of medical only claims has been lowered from 20 to 10. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Randy Peck, Personnel Manager Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Randy Peck, Personnel Manager SUBJECT: Acceptance of the Renewal Rates for Worker's Compensation Claims Administration DATE: October 10, 2011 Dubuque Intel All- Americacily 2007 On October 4, 2011, I received the renewal rates from Alternative Services Concepts (ASC) for services related to the administration of the City's Worker's Compensation Program. The effective date of the renewal rates is October 1, 2011. The following is a comparison between the current rates and the renewal rates: Service Current Rate Renewal Rate per Claimant Fee per Claimant Fee Increase /Decrease Workers' Compensation • Medical Only $170 $170 $0 • Indemnity $770 $770 $0 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 Time and Expense Estimated Claims Fee $20,340 $18,640 - $1,700 Account Administration Fee $3,000 $3,000 $0 Litigation Fee $300 Plus Base Fee $300 Plus Base $0 Fee Subrogation Fee 15% of Recovery 15% of Recovery No Change Systems Fee $2,500 $2,500 $0 Maintenance Fee for Claims Open after 24 Months $450 $450 $0 MMSEA — Annual Transmission Fees (includes query and submissions) $1,920 $2,100 +$180 Minimum and Deposit Claims Fee $27,760 $26,240 - $1,520 The Medicare, Medicaid and SCHIP Extension Act (MMSEA) annual transmission fees will increase from $1,920 to $2,100. The minimum and deposit claims fee will decrease from $27,760 to $26,240. The decrease is due to the fact that the estimated number of medical only claims has been lowered from 20 to 10. The requested action is for the City Council to pass a motion approving the renewal rates for our workers compensation claims administration effective October 1, 2011 through October 30, 2012. I will send you the Administrative Services Agreement as soon as it is available. RP:jmh 2 alternative service concepts, L.L.C. City of Dubuque, Iowa October 1, 2011 - October 1, 2012 Two -Year Claims Handlin Service Estimated Number Of Claimants Per - Claimant Fee Estimated Total Fee Workers' Compensation Medical Only 10 $170 $1,700 Indemnity 22 $770 $16,940 Litigation fee TBD $300 + 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 $18,640 MMSEA- AnnualTransmission Fees(includes query & submissions) $2,100 Account Administration Fee $3,000 Systems Fee $2,500 Minimum & Deposit Claims Fee $26,240 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. ' Recorded in claims system only. Must be specified as `Incident" at time of reporting. 2 Any event resulting in 10 or more claimants and/or property losses over $50,000 will be treated as a catastrophe. 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) • 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 • 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 Transfers Data Conversion From Prior Administrator On -Line Access (One User) Additional Users $2500 Per Release $400 Per Release $3 Per Report/Bill At Cost At Cost No Charge $60 Per User Per Month No Charge $50 Per Copy T &E ($85 Per Hour) T &E ($ /Hour) $50 Per Hour T &E ($85 Per Hour) T &E ($85 Per Hour) Reports Produced by Client Reports Produced by asc Systems Training Customized Programming Actuarial Data Requests Travel Over 100 Miles Outside Investigation Medical Cost Management4 Fee Scheduling 28% of Savings PPO Usage 30% of Savings Invoicing and Payment Terms Fees will be invoiced annually. Fees are payable upon receipt of the invoice. asc reserves the right to charge 11/2% 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 3 As required or requested. Most services are optional. 4 Pricing for additional managed care services is available upon request. • Index Bureau reporting • Architects, contractors • Police, fire, coroner, weather reports • Surveillance • Extraordinary travel at client's request • Independent medical examinations, MRIs, etc. • Accident reconstruction • Engineers, chemists • Expert witness statements • Official documents and transcripts • Court reporters • Managed care Workers' Compensation Definitions 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.