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<br />REPORT <br /> <br />6.1C <br />a e 1 of 8 <br /> <br />To the Honorable Mayor and City Council <br />From the Ci Mana er <br /> <br />June 23, 2008 <br /> <br />SUBJECT <br />Renewal of agreement with Claims Management Inc. (CM!), to serve as the city's Third <br />Party Administrator for workers' compensation services. <br /> <br />RECOMMENDATION <br />By Motion, authorize the City Manager to execute the renewal of the agreement <br />between the City of Redwood City and CMI to act as Third Party Administrator (TPA) for <br />the City's self-insured workers' compensation program for the period of July 1, 2008 <br />through June 30, 2009. <br /> <br />BACKGROUND <br />The City of Redwood City is a self-insured employer in providing workers' compensation <br />coverage to employees and volunteers of the City of Redwood City. In order to <br />administer the self-insured program, the City retains the services of a TPA to ensure the <br />City is in compliance with the various laws and procedures that govern a self-insured <br />workers' compensation program. The Human Resources Department oversees the <br />prog ram and manages the TP A. <br /> <br />CMI has served as the City's TPA since 2002 and staff has worked collaboratively with <br />CMI to ensure that an aggressive case management approach is being practiced. CMI <br />has provided effective services and has been able to close old cases and manage new <br />and existing cases efficiently. Staff has been satisfied with CMl's performance and as a <br />result the City has realized a reduction in claims and claim costs. In FY 2003/2004 claim <br />costs were $2.5 million and in FY 2006/2007 claim costs were reduced to $800,000 <br />representing $1.7 million in savings. This was due to the following factors: benefits from <br />reforms to workers' compensation laws; reduction in the number of claims filed; <br />implementing new internal systems and closely managing the TPA. Based on the above <br />factors, staff is requesting that Council authorize the renewal of CMl's agreement for <br />third-party administrative services at a cost of $135,000 effective July 1, 2008 through <br />June 30, 2009. The fee of $135,000 represents no increase in the fee paid in the <br />current fiscal year. <br /> <br />ALTERNATIVES <br />Council could direct the Human Resources Department to initiate a Request for <br />Proposals (RFP) for TPA services. Based on the ci,ty's positive results with CMt and <br />the desire to have continuity in effective claims management, this option is not <br />recommended this time. <br /> <br />FISCAL IMPACT <br />The annual cost for the contract for TPA services provided by CMI is $135,000; these <br />funds are included in the recommended FY 2008-2009 Workers' Compensation budget. <br />