Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
OCTOBER 16, 2019
Subject
SUBJECT: WORKERS’ COMPENSATION MEDICAL BILL REVIEW SERVICES
Action
ACTION: APPROVE CONTRACT AWARD
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to award a firm fixed unit rate Contract No. PS61721000 to Lien On Me, Inc. for Workers’ Compensation Medical Bill Review Services, in an amount not-to-exceed $2,576,976 for the four-year base term, effective July 1, 2020 through June 30, 2024, plus $1,314,258 for the first, two-year option period, and $1,340,724 for the second, two-year option period, for a combined not-to-exceed amount of $5,231,958, subject to resolutions of protest(s), if any.
Issue
ISSUE
The current contract for this service expires on June 30, 2020. Review of medical bills for workers’ compensation claims ensures 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.
Discussion
DISCUSSION
The review of medical bills is consistent with industry best practice and is one of a variety of techniques government agencies and private entities employ to lower workers’ compensation related medical expenditures. Bill review service providers take gross medical billings from physicians, hospitals, pharmacies and other medical service providers and recommend reductions in conformance with the State of California Fee Schedule and negotiated rates between service providers (PPO contracts). Bill review service providers have custom dedicated software that apply the bill review reduction in accordance with the California Fee Schedule and detect duplicate billings at the line level. In addition to reviewing bills, bill review service providers have the ability to integrate PPO networks with their bill review system to determine the highest level of savings per line item and maintain the appropriate software to facilitate submission of California regulatory reporting requirements via Electronic Data Interchange (EDI) with the California Workers’ Compensation Information System (WCIS). Bill review vendors represent Metro in legal proceedings involving bill payment disputes with service providers. The review of medical bills is consistent with industry best practice and is one of a variety of techniques to lower our medical expenditures.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Approval of this recommendation will not impact the safety of Metro's patrons or employees.
Financial_Impact
FINANCIAL IMPACT
Funding for this action is not included in the FY20 budget given the contract starts in FY21. Since this is a multi-year contract, the Chief Risk, Safety and Asset Management Officer will be responsible to budget the cost in future years, including any options exercised. In FY19, $304,000 was expended on these services.
Impact to Budget
Approval of this action has no impact on the FY20 budget.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
Recommendation supports strategic plan goal # 5 “Provide responsive, accountable and trustworthy governance within the LA Metro organization.” The responsible administration of Metro’s workers’ compensation claims within the guidelines of California’s regulatory requirements lowers Metro’s medical expenditures.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The alternative of not reviewing medical bills will result in Metro overpaying for medical treatment costs and foregoing savings that could have been generated through the application of bill review services. For FY19, bill review services generated an average monthly savings of approximately $1.5 million.
Next_Steps
NEXT STEPS
Upon Board approval, staff will execute Contract No. PS61721000 with Lien On Me, Inc. for workers’ compensation medical bill review services, effective July 1, 2020.
Attachments
ATTACHMENTS
Attachment A - Procurement Summary
Attachment B - DEOD Summary
Prepared_by
Prepared by: Cathy Yates, Director, Workers’ Compensation Claims Administration, (213) 922-4297
Reviewed_By
Reviewed by: Vijay Khawani, Interim Chief Risk, Safety and Asset Management Officer, (213) 922-4035
Debra Avila, Chief Vendor/Contract Management, (213) 418-3051
