11-16-2010 - Award of Bid - General Liability Third Party Claim - Item 8 (2).docTO: Andrew G. Pasmant, City Manager
and City Council
FROM: Erin P. Hoppe, Risk Manager
Director of Risk Management
SUBJECT: AWARD OF BID – GENERAL LIABILITY THIRD PARTY
CLAIMS ADMINISTRATION SERVICES CONTRACT
RECOMMENDATION: It is recommended that the City Council authorize the City Manager and City Clerk to execute a five-year contract with NovaPro Risk Solutions, LP to provide General
Liability Third Party Claims Administration (TPA) Services, effective January 1, 2011.
DISCUSSION:
On January 1, 2005, the City entered into a two-year contract at $25,032 per year with NovaPro Risk Solutions, LP to provide claims administration services for the City of West Covina’s
Self-Insured General Liability Program. On November 20, 2007, the City Council approved an amendment to the existing agreement to extend the City’s current service rate for three additional
years pursuant to the terms and conditions set forth in the amendment. That contract is due to expire December 31, 2010. Staff prepared a Request for Proposal (RFP) and mailed it
to four TPA firms.
Three proposals were received by the November 4, 2010 deadline. Staff reviewed the proposals for completeness of content, and compared them using the following criteria:
Experience and reputation of the firm and experience of key personnel assigned to handle West Covina claims;
Location of service office;
Statistical reports;
Adjuster’s maximum caseload;
Existing municipal clients; and
Cost.
Firm
1st Year
2nd Year
3rd Year
4th Year
5th Year
Total
NovaPro Risk Solutions, LP●
$31,500
$31,500
$32,455
$32,455
$32,455
$160,365
Carl Warren & Company ●●
$26,400
$26,400
$26,928
$26,928
$27,528
$134,184
Kennan & Associates ●●●
$24,000
$24,000
$24,000
$24,000
24,000
$120,000
While all firms are well qualified to provide the services needed, after reviewing the proposals, considering the scope of work to be performed, and reviewing the fee quotes, staff concluded
that the proposal submitted by NovaPro Risk Solutions, LP continues to offer the City the best professional services overall.
●The annual cost quoted by NovaPro Risk Solutions, LP provides for all required administrative services including Medicare Set Aside (MSA) services. The new law regarding Medicare Set
Aside (MSA) services became effective January 1, 2010. This law requires additional claims data to be submitted electronically to the Centers for Medicare (CMS), along with additional
technical services identifying and calculating set aside settlement monies needed to satisfy claimant’s potential future Medicare costs.
●●The annual fee quoted by Carl Warren & Company is capped at 65 claims per year. Should our claims exceed 65 per year, an additional flat fee of $450 per claim will be charged. In
the past five years, the City has received as few as 53 and as many as 81 claims in a given year. In addition, the annual fee is not all-inclusive as they bill many services at time
and expense. There is also an additional one-time per claim fee of $250 to assume administration for our existing claims which number approximately 50.
●●●The annual fee quoted by Kennan & Associates does not include performance of all the Medicare Set Aside (MSA) as required in the City’s Request for Proposal and would require the
City contract separately with another vendor for certain required services that have the potential of additionally costing the City thousands of dollars per Medicare eligible claim.
ALTERNATIVES:
The alternative to the recommendation is to accept one of the other proposals submitted and appropriate monies as may be needed.
FISCAL IMPACT:
These services are funded directly from the General Liability Self-Insurance Reserves (361.15.1510.6119). Adequate funds are available within this reserve to cover the additional $3,266
needed to fund this contract through the remainder of FY 2010/11, should the City Council choose to award the contract to NovaPro Risk Solutions, LP.
Prepared by: Reviewed & Approved by:
_________________________ _____________________________
Debbie Dominguez Erin P. Hoppe, Risk Manager/
Safety & Claims Manager Director of Risk Management
Liability TPA Contract Staff Report 2010