Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
MARCH 19, 2026
Subject
SUBJECT: WORKERS’ COMPENSATION MEDICAL BILL REVIEW SERVICES
Action
ACTION: APPROVE RECOMMENDATION
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to execute Modification No. 3 to Contract No. PS61721000, with Lien On Me, Inc. for workers’ compensation medical bill review services to exercise the second, two-year option in the amount of $2,541,000, increasing the total contract amount from $5,160,225 to $7,701,225, and extending the period of performance from July 1, 2026, to June 30, 2028.
Issue
ISSUE
Metro’s workforce has increased by 20%, rising from 10,219 FTE employees in FY21 to 12,260 in FY26. With this expansion, the Workers’ Compensation division has seen an increase in the average monthly number of claims filed, leading to higher volume of medical bills received and processed. Approval of this recommendation exercises the second, two-year option term to continue providing medical bill review services through June 30, 2028. This will ensure that Metro pays for various medical services in accordance with the State of California approved fee schedules and pre-established rates contracted with Preferred Provider Organization (PPO) providers. The current contract expires on June 30, 2026.
Background
BACKGROUND
The review of medical bills is consistent with industry best practices and is a primary technique employed by government agencies and private entities to lower workers’ compensation-related medical expenditures. Bill review service providers analyze gross medical billings from physicians, hospitals, pharmacies, and other providers to recommend reductions in conformance with the State of California Fee Schedule and negotiated PPO contract rates. These providers utilize dedicated software that automatically applies reductions in accordance with the state schedule while detecting duplicate billings at the line-item level.
In addition to reviewing bills, service providers integrate PPO networks into their system to identify the maximum savings per line item. They also maintain the necessary software to facilitate California regulatory reporting requirements via Electronic Data Interchange (EDI) with the California Workers’ Compensation Information System (WCIS). Furthermore, bill review vendors represent Metro in legal proceedings involving payment disputes with medical providers.
On October 24, 2019, the Board awarded the eight-year (inclusive of two, two-year options) firm fixed unit rate Contract No. PS61721000 to Lien On Me, Inc. (LOM) for workers’ compensation medical bill review services. On March 28, 2024, the first two-year option in the amount of $2,083,248 was approved by the Board. Metro’s average monthly medical bill reduction under this contract is $2.6 million.
Discussion
DISCUSSION
The second, two-year option term amount reflects the current volume of medical bills and factors in an increased margin for the next two contract years. The contract award was based on 2018 data, with a monthly average of 2,902 medical bills. Recent medical bill volume averages 4,300 per month and reflects the current open claims inventory of 2,374 (compared to 1,429 open files at the start of FY21). Metro has implemented and is actively working to further implement various mitigation strategies to reduce workers’ compensation claims and costs. Mitigative measures include implementing full bus barriers, bolstering Metro’s Return to Work program, implementing Bus Riding Teams by System Security and Law Enforcement, providing de-escalation training created by Corporate Safety, and partnering with Operations to enhance claims investigations. LOM provides excellent services and averages 59% medical expenditure savings. Due to the savings results and excellence in the delivery of services, staff recommends that the second, two-year option period be exercised.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Receiving timely medical care is critical to injured Metro employees. Approval of this item will support the Workers’ Compensation division’s ability to administer claims promptly.
Financial_Impact
FINANCIAL IMPACT
The FY26 Budget includes $3.01 million for the recommended modified contract in Project 100004, PRMA - Workers’ Compensation, under Cost Center 0531, Non-Departmental Operations Risk Management.
Since this is a multi-year contract, the cost center manager and the Chief Risk, Corporate Safety, and Asset Management Officer will be responsible for budgeting the cost in future years.
Impact to Budget
The source of funding for this action will come from federal, state, and local funding sources that are eligible for bus and rail operations.
Equity_Platform
EQUITY PLATFORM
The proposed action supports Metro’s ability to safely serve the communities and customers who rely on Metro’s transportation services and assets by supporting the use of industry best practices that reduce costs associated with the administration of Metro’s WC program. Lien On Me, Inc., a Small Business Enterprise (SBE) Prime, made a 100% SBE commitment, with 100% SBE participation to date, meeting its commitment.
VEHICLE MILES TRAVELED OUTCOME
Vehicle Miles Traveled (VMT) and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
While this item does not directly encourage taking transit, sharing a ride, or using active transportation, it is a vital part of Metro operations, as it provides workers’ compensation medical bill review services in accordance with State approved fee schedules, and determines the highest level of savings to reduce medical expenditures. Because the Metro Board has adopted an agency-wide VMT Reduction Target, and this item supports the overall function of the agency, this item is consistent with the goals of reducing VMT.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendation supports strategic plan goals #1) “Provide high-quality mobility options that enable people to spend less time traveling,” and #5) “Provide responsive, accountable, and trustworthy governance within the Metro organization.” This Board action supports the use of industry best practices that reduce costs associated with the administration of Metro’s WC program.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board may elect not to approve the recommendation. This option is not recommended as it will result in Metro overpaying for medical treatment costs and foregoing an average monthly savings of $2.6 million in workers’ compensation expenditures which is generated through the application of bill review services.
Next_Steps
NEXT STEPS
Upon Board approval, staff will execute Modification No. 3 to Contract No. PS61721000 with Lien On Me, Inc., to continue to provide workers’ compensation medical bill review services and exercise the second, two-year option term.
Attachments
ATTACHMENTS
Attachment A - Procurement Summary
Attachment B - Contract Modification/Change Order Log
Attachment C - DEOD Summary
Prepared_by
Prepared by: Claudia Castillo del Muro, Executive Officer, Risk Management, (213) 922-4518
Carolina Coppolo, Deputy Chief Vendor/Contract Management, (213) 922-4471
Reviewed_By
Reviewed by: Kenneth Hernandez, Chief Risk, Corporate Safety, and Asset Management Officer, (213) 922-2990
