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Approve a three-year contract for $1,680,936 with Athens Administrators, Inc. for third-party workers’ compensation services for the period of July 1, 2025, through June 30, 2028, with the right to extend the term of the contract for a total term not to exceed five years; and Delegate authority to the County Administrator to execute the contract and any subsequent extension and amendments within approved budget appropriations
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Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
The Director of Human Resources (HR) recommends that the Board of Supervisors approve a three-year contract for $1,680,936 with Athens Administrators, Inc. for third-party workers’ compensation services for the period of July 1, 2025, through June 30, 2028, with the right to extend the term of the contract for a total term not to exceed five years; and Delegate authority to the County Administrator to execute the contract and any subsequent extension and amendments within approved budget appropriations.
SUMMARY:
The current third-party administrative services contract for the County’s self-insured workers’ compensation program expires June 30, 2025. In anticipation of the contract expiration date, the County issued a Request for Proposal (RFP) in October 2024. After evaluating RFP responses, the Director of Human Resources recommends that the Board of Supervisors approve a three-year contract with Athens Administrators, our current third-party administrator, beginning July 1, 2025.
Pursuant to the terms of the RFP, the County reserves the right to extend the contract for up to two additional years if written notice to Athens Administrators is provided at least ninety (90) days prior to the contract expiration date.
FINANCIAL IMPACT:
The yearly cost of the third-party workers’ compensation administration for the period of July 1, 2025, through June 30, 2028 is as follows: $542,490 for Year 1 (July 1, 2025 to June 30, 2026); $560,121 for Year 2 (July 1, 2026 to June 30, 2027); and $578,325 for Year 3 (July 1, 2027 to June 30, 2028). Costs for July 2025 to June 2026 are included in HR’s FY2025/26 Requested Budget. Workers’ compensation costs are recovered through charges back to the departments, including the Allocated Loss Adjustment Expense (ALAE) that are charged through individual workers’ compensation claims.
DISCUSSION:
Solano County is permissibly self-insured for workers’ compensation insurance and contracts with a third-party administrator company for the administration of claims. The process of properly and effectively administering claims is very complex, including ensuring compliance with numerous mandated deadlines, ensuring the reserve process adheres to the law, effectively providing benefits, and facilitating the injured worker’s return to work, all of which have a direct effect on controlling an employer’s workers’ compensation program costs. Regulations regarding Self-Insurance Plans are contained in Title 8, California Code of Regulations, Chapter 8, Subchapter 2. Administration of Self-Insurance Plans (Sections 15200 -15481).
In October 2024, the County solicited proposals for third-party claims administration services for its self-insured workers’ compensation program. The Evaluation Committee (EC) reviewed the six vendor proposals received. The EC included representatives from Human Resources, Risk Management, the Sheriff’s Office, and Health and Social Services. Athens Administrators received the highest evaluation score from the EC and was recommended to continue performing the third-party administration services for the County for the next three fiscal years beginning July 1, 2025. This contract provides for the continued administration of services and compliance to Title 8 regulations, and provides the right to extend the term of the contract for an additional period of time not to exceed a total of five years
Highlights of the third-party administrative services include:
• Full-service administration of all open workers’ compensation claims files, utilizing an automated risk information management system with full access made available to Risk Management. Data remains the property of the County.
• Standard utilization review, case management, and physician review services to be provided by Athens Administrators with direct and timely communication and coordination between claims examiners and a nurse case manager. This arrangement is designed to encourage and promote program management and cost efficiencies.
• Utilization of the Managed Provider Network to manage the medical delivery to employees and costs of claims.
• Telephonic nurse triage services for injured employees at a reduced cost.
• Performance guarantee for an indemnity closure rate of 102% or more per fiscal year. If not achieved, fees paid to Athens are reduced by $5,000 per year.
• Performance guarantee that biannual audits shall score no lower than “meets expectations” as defined in the CSAC-EIA Claims Standards.
• On-site claims review up to 3 times per year.
• 180-day termination clause.
ALTERNATIVES:
The Board of Supervisors may choose not to execute this contract and direct staff to reissue the RFP; however, this alternative is not recommended as the results of the competitive bidding process followed County procurement requirement, and the Evaluation Committee’s objective evaluation showed that Athens Administrators is the most qualified to provide the services outlined in the RFP.
OTHER AGENCY INVOLVEMENT:
The Auditor-Controller will continue to replenish the trust account as established by Athens Administrators on behalf of the County to provide a funding source for the County’s workers’ compensation program.
The Human Resources Department, General Services Department - Purchasing Division, and County Counsel have worked collaboratively in the RFP, negotiations, and contracting process. County Counsel has reviewed the contract as to form.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION