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Fairfield and Associates Medical Claims AuditTHE CITY OF DUB E Masterpiece on the Mississippi MEMORANDUM October 10, 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Agreement between the City of Dubuque and Fairfield and Associates for Medical Claims Audit and Operational Review Services Five proposals were received in response to a Request for Proposal for Medical Claims Audit and Operational Review Services. Three proposals were eliminated from consideration because they did not provide all of the services needed in the audit. The Healthcare Committee reviewed the two remaining firms, Fairfield and Associates and Med Review LLC. Personnel Manager Randy Peck recommends City Council approval of the agreement between the City of Dubuque and Fairfield and Associates for medical claims audit and operational review services at a fee of $22,500. concur with the recommendation and respectfully request Mayor and City Council approval. ,U Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager THE CITY OF DUB E Memorandum October 4, 2007 TO: Michael C. Van Milligen City Manager FROM: Randy Peck Personnel Manager SUBJECT: Agreement between the City of Dubuque and Fairfield and Associates for Medical Claims Audit and Operational Review Services Bill Robinson of Gallagher Benefit Services, our benefit and actuarial consulting firm, has completed his analysis of the responses to our Request for Proposal for Medical Claims Audit and Operational Review Services. Health Choices, Inc. of Dubuque is our medical plan third party administrator. Five proposals were submitted and three were eliminated from further consideration because they did not provide all of the services needed in the audit. The two remaining firms are Fairfield and Associates and Med Review LLC. The significant features of their proposals are as follows: Fairfield and Associates • Their fee for an on-site claims audit is $17,500 (including travel) and their fee for the operational review is $5,000 (including travel). Their fee includes five days of on-site auditing of at least 250 claims as well as an audit of the provider discounts. Their total fee is $22,500. Med Review LLC • Their fee for an on-site claims audit is $25,000 (including travel). They wold audit between 200 and 250 claims. They will also audit provider discounts. Their fee is reduced to $20,000 if the audit is done electronically, which means there would be no on-site visits. Their fee for the operational review is $5,000 (including travel). Their total fee is $25,000 or $30,000, depending on the audit method to be used. The Healthcare Committee has selected Fairfield and Associates of Castle Rock, Colorado for a medical claims audit and operational review of our medical plan third party administrator. I recommend that the City Council pass a motion approving the agreement between the City of Dubuque and Fairfield and Associates for medical claims audit and operational review services at a fee of $22,500 and authorize you to sign the agreement. RP:tlb Contractual Agreement Between FAIRFIELD ASSOCIATES LIMITED, LLC and The City of Dubuque, Iowa For Medical Claims Audit/ Operational Review This contractual Agreement ("Agreement") is entered into by and between Fairfield Associates, LLC, a Colorado company hereinafter referred to as "Fairfield", and the City of Dubuque, Iowa, hereinafter referred to as "City". WHEREAS, City is the Plan Sponsor of aself-funded health coverage plan for its employees; and WHEREAS, City uses HMS Preferred Health Choices as a Third Party Administrator, hereinafter referred to as "TPA", to process and pay claims on behalf of City in said self- funded plan; and WHEREAS, City wishes to retain the services of Fairfield to audit claims paid by TPA; measure claims payment accuracy, verify that plan benefits are being correctly applied, and to review the overall operations of TPA as it pertains to claims payment for City; THEREFORE, Fairfield and City hereby agree as follows: Term of Agreement This Agreement will become effective upon the date shown on the City's signature block on the last page of this Agreement and will remain in effect until cancelled in writing by one of the parties or until the scope of work described herein is completed. Either Fairfield or City may terminate this Agreement with or without cause by giving ten (10) days written notice of such intent to the other party except that any written cancellation by City must be provided prior to Fain`ield's receipt from TPA from of an electronic claims file for the audit period. In the event of such cancellation by City, any fees previously paid by City shall remain the property of Fairfield and shall not be refunded. In the event of cancellation by Fairfield, any fees previously paid by City shall be promptly refunded in full by Fairfield. Upon said cancellation, Fairfield will return to City (or to TPA firm) all documents and information that are the property of the City or will destroy said information. Should City fail to place a date in City's signature block, then the effective date of this Agreement shall become the date placed in the Fairfield signature block. Scope of Services 1. Fairfield will audit medical claims incurred by City's self-funded health plan during the period July 1, 2005 through June 30, 2007. For some areas of examination, all claims paid during the audit period will be analyzed; for other areas of examination, a group of up to 250 audit claims selected by Fairfield will be used. 2. Claims will be reviewed for the following processing and payment issues: - Eligibility for Plan coverage on Date of Service - Possible Third Party Liability - Coordination of Benefits - Other Third Party Liability - Plan Coverage of Services Provided - Proper Application of Plan Benefits - Pre-Authorization of Services (If applicable) - Claim Re-Pricing (discounting) (See below for additional detail.) - Bundling/ Unbundling of Related Surgical Procedures - Duplicate Payments - Timeliness of Payment The above list is not intended to be comprehensive but is provided as an indication of the types of issues for which claims will be audited. For any one claim, or group of claims, the examination may be more extensive. 3. Fairfield will conduct an in-depth analysis of the processes, procedures, policies, and practices used by TPA to pay City claims, will make note of areas where plan operating efficiencies can be improved, and will make note of areas where City's best interests are not being properly safeguarded. This review will include, but is not necessarily limited to: - Claims Payment Organization /Supervision - Maintenance of Eligibility Data - Maintenance of COB Data and Processing of COB Claims - Processing and Payment of Facility Claims - Processing and Payment of Professional Claims - Internal Claims Auditing/ Quality Control - Internal Programs To Audit Provider Contract Info Loaded Into Payment System - Process for Posting Claim Credits /Adjustments - Process for Recovering Overpayments 4. During the course of the audit, Fairfield will periodically update City on audit progress. Then, Fairfield, at the conclusion of the audit, will provide a detailed written report ("Final Audit Report") to City summarizing audit activities and results. Indemnification 2 Fairfield will indemnify, defend, and hold harmless the City, its officers, and its officials from any and all actions, claims, damages, liabilities, and lawsuits arising out of or relating to Fain`ield's breach of the obligations contained in the Agreement. City Responsibilities 1. City will send to TPA a written notification of the audit introducing Fairfield as City's audit representative. This notification by City will be via a form letter provided by Fairfield to City and then placed on City's letterhead. 2. City will designate a specific representative to the audit. This person will be the contact between Fairfield and City for questions concerning City's plan specifications. 3. City will provide Fairfield with copies of the following materials: - Administrative Services Contract between City and TPA. - City's audit notification letter to TPA. - City's summary plan documents. - Network access contract between City and any PPO network that might differ from the TPA. 4. In order for Fairfield to verify that each audit claim was eligible for plan coverage during the audit period, City will provide to Fairfield a list of all plan members whose coverage terminated (without COBRA continuation) during the audit period. Fairfield will then compare the audit claims to this list and will search the entire claims file for the audit period to identify any claims that were inappropriately paid for names appearing on this list. Compensation In exchange for services rendered under this Agreement, City will pay to Fairfield, without exception and in U.S. dollars, the amount of twenty-two thousand, five-hundred dollars ($22,500.00) to be paid as follows: Fifty percent (50%) at the time of the signing of this Agreement to secure City's place in Fain`ield's audit schedule; and the remaining fifty percent (50%) within ten business days following Fairfield's delivery of the Final Audit Report. Late payments are subject to an annual interest rate of eighteen percent (18%) compounded monthly. To facilitate payment, Fairfield will provide formal invoices to City for each payment along with the signed contract document and the Final Audit Report. There will be no other charges /payments between Fairfield and City. Fairfield will pay its own travel expenses to conduct the audit work described herein. If, following receipt of the final Audit Report, City requests Fairfield to attend a meeting to review audit results in person, then City will reimburse Fairfield for said expenses and time in a manner mutually satisfactory to both parties. 3 511 rairrieia c;ircie Castle Rock, CO 80104 4 Governance This Agreement will be governed by and interpreted in accordance with the laws of the State of Iowa. Other Terms and Conditions This Agreement represents the entire agreement between Fairfield and City. Any alterations, addendums, additions, or deletions from this Agreement must be made in written form and duly signed by both Fairfield and City. Agreed to and accepted by: City of Dubuque, Iowa FAIRFIELD ASSOCIATES LIMITED, LLC ("Fairfield") BY: Michael C. Van Milligen BY: ITS: Citv Manager SIGNATURE: SIGNATURE: Date: Date: INSURANCE SCHEDULE C INSURANCE REQUIREMENTS FOR PROFESSIONAL SERVICES TO THE CITY OF DUBUQUE 1. All policies of insurance required hereunder shall be with an insurer authorized to do business in Iowa. All insurers shall have a rating of A better in the current A.M. Best Rating Guide. 2. All policies of insurance shall be endorsed to provide a thirty (30) day advance notice of cancellation to the City of Dubuque, except for 10 day notice for non- payment, if cancellation is prior to the expiration date. This endorsement supersedes the standard cancellation statement on the Certificate of Insurance. 3. shall furnish a signed Certificate of Insurance to the City of Dubuque, Iowa for the coverage required in Paragraph 6 below. Such Certificates shall include copies of the following endorsements: a) Commercial General Liability policy is primary and non-contributing. b) Commercial General Liability additional insured endorsement. c) Governmental Immunities Endorsement. shall also be required to provide Certificates of Insurance of all subcontractors and all sub-sub contractors who perform work or services pursuant to the provisions of this contract. Said certificates shall meet the same insurance requirements as required of 4. Each certificate shall be submitted to the contracting department of the City of Dubuque. 5. Failure to provide minimum coverage shall not be deemed a waiver of these requirements by the City of Dubuque. Failure to obtain or maintain the required insurance shall be considered a material breach of this agreement. 6. Contractor shall be required to carry the following minimum coverage/limits or greater if required by law or other legal agreement: a) COMMERCIAL GENERAL LIABILITY General Aggregate Limit $2,000,000 Products-Completed Operations Aggregate Limit $1,000,000 Personal and Advertising Injury Limit ~ ~ $1,000,000 Each Occurrence Limit $1,000,000 Fire Damage limit (any one occurrence) $ 50,000 Medical Payments $ 5,000 1 of 2 June 2005 INSURANCE SCHEDULE C (Continued) INSURANCE REQUIREMENTS FOR PROFESSIONAL SERVICES TO THE CITY OF DUBUQUE This coverage shall be written on an occurrence form, not claims made form. All deviations or exclusions from the standard ISO commercial general liability form CG 0001 or Business owners BP 0002 shall be clearly identified. Form CG 25 04 03 97 `Designated Location (s) General Aggregate Limit' shall be included. Governmental Immunity endorsement identical or equivalent to form attached. Additional Insured Requirement: The City of Dubuque, including all its elected and appointed officials, all its employees and volunteers, all its boards, commissions and/or authorities and their board members, employees and volunteers shall be named as an additional insured on General Liability including "ongoing operations" coverage equivalent to ISO CG 20 10 07 04. b) Automobile $1,000,000 combined single limit. c) WORKERS COMPENSATION & EMPLOYERS LIABILITY Statutory for Coverage A Employers Liability: Each Accident $ 100,000 Each Employee Disease $ 100,000 Policy Limit Disease $ 500,000 d) PROFESSIONAL LIABILITY $1,000,000 e) UMBRELLAlEXCESS LIABILITY *Coverage and/or limit of liability to be determined on a case-by-case basis by Finance Director. 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T 4... j {P~r m~erit.'t ~ PrtC~P;rRT^r ~Rtr1ApE ^ ! :~ i A{fTfi~'L1` - EA ACCIDENT - -;5 _ -_ ' 1YNY ALtI'fJ j E 4 AC C U'TNER'T}1AN ` -~ ! ( AlfrdOdt~" Rya ~ :~ 's1~dK{3lRBRF1.U5 ,j rra~t~vi~ ~ - _- - ~-------~,~°°, -~ r3C3Ct1i~ ~ CtA1RRt$ I: i w 1?,i3~GRE6A'1'£ ~ ! ~ , fl~ ~ .; fi L.tiEL1t~-I~l3l:E ~ - -.^.^-.- ~- r ~! ~ RE'~tsf7it3t0 i YMOi~'R6 GfSMP£NSATIOW AfVp 1 ~ 7MC 5TATU- !~ !l. TM. ~~ E~11PI.OYE~RS' 11A811TlY ft1Y PRQPRI[TC~Iih''A~TIEXECUTIVL• .. .G:l ERCM AGCI+iT ~ S ~.~ ~, ~::. •: OPFtGEW1elEA~NiC~f:F~CCLUDE~17 . i ~'^ ~ E;t 3~[iw$E~iwA~F'LDY>r ~ ~ ~:~ rveu~.xbre.ekJ~ ",i~'fC17~t PRC?Y3SlC3NSbatiw __... F.i CSt5EA8fi - ~Si-lCYLIRYT _ w ~+~: t DESCWPTIO/t ~F ~EWATKk~$ + IOCAT4DNS / 1lEiMG{:E$1'fXC~:US~N51~D13ED 8Y $ik~iTa SP~{AL PROL131R1I$ E CITY OF #tiQUE IS AN ADDI~ZflNAi. Ii+tSUR~U Obi GfIV1=RAl LIi~8I1<rTY P013~CICS TNCL. U-4C1C~IH0 & CtlN~'i~Tm RATiOhlS COVERi4~ ~U31(ZLANT T43 SCE CG 3010 0704. & CG 2037 0701. ~EPIi_R~1"i_ lIABIt~ITY i?~LI{:1' xS ~RIi<1A~CY h1014-C(~NT1tBiJ1'I F~QR~t' GG 2Sti4 U~39~ "~ES~~iATE[? LaC,4'1`IDNS" GFN~RsA~, I.TABILITY AG>~I1EGA'f£ Li~tIT 51iALL BE wo~a. c~virt;i~~r~rra~. zi+i~Tr~s ~~cssr~i~sr zs ~~iCC~ua~o. ALA t~flLICIES ~ INStiR~#t~E swat..t_ BE E~Et3 PROVIDE '[}iTRT~' 03(33 DAY 1413-rANCf N@I'iCE OF CANCt,i.E.tiTlttt+l mTHE CI7'1' OF i~iBiiQ!!E. ~1~ ~ ~~~ CITY #iA~l~ ~~} ~. 13~ STREE7 Dlf$UCIUE. IA 52fll3I SHOl1LD ANY OF 7+1E ASOV£ CY$1.$CfitBEC PiN.1Ci4S SE CAri1CEL1.£D-HEFOKET#E Fxpt>„a OIATE ~;~a~IF, TiiE ~.sua n~rsua~ w-~. ii~b L ~~ I)AY5 ititRITT~N Ni?TICE T~@ TfIE G£ft7~fCAT~~EttyyHOL{7ER NAlAE!J TG TNELEFf. ~~~31K3~`liwlA~~~A#iA1«RT~X Af1THORLL£D 1!tEPR~SENTATISiE AGt~RU 2~ (2(fE!'1/081 ~,L-C(?R(] C:ORPC')F2ATtObf KARR IM~'QRTA~T lt#he certifrcate holder is an AUDIT(QNAI_ Ih1SUR.~f~, fhe poticy(ies).rnusi tie endorsed. A stateuneni on this c~rti~cate does>;ru~t ~nfier rights i~~ aettificat~ hider in qeu o!f such endor~men'k(s). lt.St18R. C~Gf~'('II~N IS V1I,4NED, subject to the -terms and candttions crf ttte polity, certain poiicie:s rr~ay require an endr~rsemerrt. A statement on thi'; cectifrca~e doss not<cpnf~sr rights to the cer#ifcat+~ hailer in o#sucfi endorsornent(s}. DISCLAIMER The Certificate of insuranrh: nn the reuerse side of this form does nat ccs7sttute a ,rAntrad bet~we±er+ tt~e "~st~~g..in~sur~r(s), at~ifi~arizeci r~epresen#aii~: ar producer, and ttne cefif+cete #~ott~r, t~t~r dog it affir+nativelyr cur r~gativeiy amend, extend nr alter the rxru+erage aff. ocded by fhe p!c~ti+~ss 9istsd ttnssreon: SPECI[NEN roe) ~, .. f?~LSC'~ t4'U!v#,:,Ef~: COh9P,~EFiCiAL GENERAL LI/A~lt,.l'~Y ' ' _ ~G ~ 4~ i33 ~~ _'; THiS E~I'D~FSEM:ENT CHANGES THE POLfCY, PLEASE READ !T C~2E~U~1.Y. D~~~ ~~~'~L~ ~~C~~`~~~~5 i't~iM endorsement modifies ins.;lrance provided ender the foti~lvirrg; C~JMl41lEP.Ci:~.. GcNcRAi. i_iRirll.!"~'y C4VEFcFtiC~ PA~i . SCHE17Ui:E At+iY ~~Q ALI. CC1ti;~CED ~DCP_T~GNE (lf nq errtrv a~t~e~rs above. ir3formatian required to complete this endocserrterrt will be shown in the Declarations as appticab#e to ties endors+etnent,.~ ,.. k ~ A F,~r. ail. sums w#~ictr tt-e :insured becomes le~aaliy- ,, b. Cla~tr~s made or `suits' brought ar obiig~ed to pay as damages caused by ' ' c. l~srsdns of or+ganczat'ror~s making ria'rirrs ,ac ustences" under COVE,Rf,GE A (SEC it3l+i; ~ ar Bringing "`suits'. ~,. arrd for. aq medical expenses caused .6y acrra- aen#5 under COVEi~',GE C :(SECTf4N >j, which 3. Any payments made under COVERAGE A can be at#ributed or31y to operations at a single for damages or ~det' CtOV~i:2AGE C iar designated 'location' Shov+m in the' Ecl3eduie' medical expenses shat! r±~iuce the Deng- above: nate~d Loc2tion General Alggr~ate limit for 'l. A separate Designated- Lot~tictn General. ti~at designated 'focatir.~n'. ',~trch paymertits s#taii not r~dure t2le Genera! Aggregate litr3it Aggregate Limit 4ppiies tD each desana#ed ghown in the Declarations rivr shalt they re- loc~tion', and that omit !s_ equal::. ta: the ~3uce any other Designated. Lotion Gensia! amount of the General .Aggregate Limit A9gr~gate Lirriit ~ttr ~ otfie~r designated shown in tfie Declarations. 'location' shcrwrr in the Schedtaie above, ~. 77it°Desigrr~ted ~ocafipn Gener2! A99re92ite ~. 'The firni#s sl~omt'u~ the Deolarlioris #dr' ~a~ L.in'iit ~5 ttte rrio5t we wi[l pay for the sure of ail t~ccurrerre.~ Ftt~e Da ~e and Mr.;al Esc=. damages under CtJ~Rf+GE A, excr:p# dam- ` ' :Pease Carr#inue to' apply. However, irr~teed cif or property ages iaecause of 'bodsiy Injury lzeirrg subject to the General Aggn~gate tirtzi#_ darnage• included in lfie "products-compie#ed showan in tfie Declarations, strc~,Jimits w~i be operatwns hazard` arrd for rnetlicai expenses ' subject tt~ the applicalate .Denatsc! `i~ocation under Crr ?VEi:tAGE C regardless at the. Horn- General ,;4ggregaie l~rrrlet. k~t't~€: a.. •lnsureds; . SPECIMEN CG ~~ 04 03 9r' Copyright,: lnsuran:,e Services Office, Inc., 199£ l=oge '1 of 2 i:1 !'r. ~ :. ~ot.lc~ lur~s~~: COMMERCIAL jGENERAL LlA+BiLfI°Y ~GG ~01~ Q7 t1# THtS-EN.DCIRS€MENT GH~INGES THE PC}EIC'Y. PL.EAS':E READ ~T CAREfUEL~f'. ~~~~~C"C,~~ -- ~~~~~~l~.E~ 'PE~~t~~ CAE t~R+GA~~`~C~ i his-endorsement modifies insurance Provided under the folti3wing; GC A+IME4~C1PiL GENERAL LIAi31LiiY GOVER;4GE r~ART SGHEi:7ULE ~ Name Of Ariditaonal Insured Personfs} Or Or anzatlonls : . Lacati~an s Uf`Coveted O: rations Tie City of Dubuque,, including all its ;elected and appointed ©ffi~ials, ail its emplo}~'ees ar,d ~rolunteers, all its iaoards, commissavns andnr authorities and their ' 'board members, employees and volunteers.. tnfori~nat'son required to s:ornolete this Schedule, if not shown a5t~yie; 5,viit be.shown in th$ :C~eclarations. 1 ~!. Sec~on tl - 'Who is Ate Insured is .amended #o include as an additional insured the person(s) or organizston(s) shown in the Schedule, .but only with respewt to iiabiir~y far.:"bod8y injury":, "prapery darnage" or "Personal and advertising injury' caused; in whole ar In Parf, by 1, 'rrauracts or:amissicns; or 2. 'The acts or omissions of those acting an .ytaur behatf; In-the performance of your ongoing operatrons for- the additional iinsured~s) at the locaiion{sJ .desig- nated above. E~~~N 9..ith respect to the insurance worded to these additional insureds, the following additional eacd- lions appi~jr. This 'snsurarace does riot apply to "boiiiy injury` ct- "property damage" occurring after: 1. Alt work; :including maleriais, Parts or equip- merit furnished in cx~nnecEion Frith such whit:, _ on the .project bother than service, maintenance; +ar repairs) to tse perfortrted ~ or on behatf:tii' the additional insureds) at the (ovation of ~e covered ~peratiorts .has been completed; crt Z ghat. pnrtion of '~rour work"' auR of which the ..injury cr damage irises 'has been put<to ifs ln- tended use by any person or organization other than another contractor or si,t,~contractor en= .caged in ,performing operations far a principal as>a part. of the same. project. CG 20 10 t!7 04 +~.~ iSQ i-rooerties, inc., 2(3©A Page 1 of 1 ~ ~' CITY OF DUBUQUE, IOWA GOVERNMENTAL IMMUNITIES ENDORSEMENT 1. Nonwaiver of Governmental Immunitv. The insurance carrier expressly agrees and states that the purchase of this policy and the including of the City of Dubuque, Iowa as an Additional Insured does not waive any of the defenses of governmental immunity available to the City of Dubuque, Iowa under Code of Iowa Section 670.4 as it is now exists and as it may be amended from time to time. 2. Claims Coverage. The insurance carrier further agrees that this policy of insurance shall cover only those claims not subject to the defense of governmental immunity under the Code of Iowa Section 670.4 as it now exists and as it may be amended from time to time. Those claims not subject to Code of Iowa Section 670.4 shall be covered by the terms and conditions of this insurance policy. 3. Assertion of Government Immunitv. The City of Dubuque, Iowa shall be responsible for asserting any defense of governmental immunity, and may do so at any time and shall do so upon the timely written request of the insurance carrier. 4. Non-Denial of Coverage. The insurance carrier shall not deny coverage under this policy and the insurance carrier shall not deny any of the rights and benefits accruing to the City of Dubuque, Iowa under this policy for reasons of governmental immunity unless and until a court of competent. jurisdiction has ruled in favor of the defense(s) of governmental immunity asserted by the City of Dubuque, Iowa. No Other Change in Policy The above preservation of governmental immunities shall not otherwise change or alter the coverage available under the policy. SPECIMEN 1 of 1 June 2005