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Report regarding a resolution approving a Second Amendment to the Professional Services Agreement with Athens Administrators to extend the agreement for workers’ compensation claims through June 30, 2024 and to increase the amount by $225,658 for a total amount not to exceed $1,065,866. (Leah Lockhart, HR Director)
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RECOMMENDATION
Recommendation
It is recommended that the City Council adopt a resolution approving a Second Amendment to the Professional Services Agreement with Athens Administrators to extend the agreement through June 30, 2024, and to increase the amount by $225,658 for a total amount not to exceed $1,065,866.
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BACKGROUND/DISCUSSION
The City of South San Francisco is a self-insured employer for worker’s compensation claims, up to a self-insured retention (SIR) of $500,000 per claim. In order to maintain an effective and compliant claims administration program, the City contracts with a third-party administrator for worker’s compensation claims administration. On June 12, 2019, the City Council approved Resolution 19-497 to contract with Athens Administrations for a three-year term from July 1, 2019 through June 30, 2022. This agreement also contains an option for services agreement extension for up to two (2) additional one-year periods at a pre-agreed service fee for those years. On June 22, 2022, the City Council approved a first amendment (Resolution 22-331) extending the service agreement with Athens Administrators for a period of one year through June 30, 2023.
Staff recommends exercising the option to extend this service agreement for a second one-year period for the July 1, 2023 through June 30, 2024 term, at the rate guarantee provided by the original agreement. In addition to providing continuity of claims service for injured employees, Athens has provided satisfactory services and has been responsive to the City’s needs, particularly in light of new regulatory requirements related to COVID-19 case reporting and claims handling. In a 2022 audit by the City’s excess insurance risk pool, PRISM, Athens Administrators received an overall score of 95/100 for claims administration and claims handling. The total annual service fee of $225,658 for the 2023-2024 extension, as listed in the original agreement, represent an increase of three percent (3%) over the 2021-2022 fiscal year. As this will be the final year for a guaranteed rate extension for this service agreement, staff will issue Request for Proposals and evaluate the market for service providers prior to making a recommendation for fiscal year 2024-2025.
FISCAL IMPACT
The service fee for Athens Administrators is $220,658 for fiscal year 2023-2024, plus an annual administration fee of $5,000, bringing the total cost for this one-year extension to $225,658. Funds have been included in the 2023-2024 proposed operating budget (self-insurance fund) for these services.
RELATIONSHIP TO STRATEGIC PLAN
The City’s worker’s compensation program supports the City’s strategic priorities of Workforce Development, by ensuring injured employees are supported in their recovery and return to work, and Fiscal Sustainability by ensuring that claims are evaluated appropriately and expeditiously, and that medical treatment and benefits are provided to injured workers in a cost-effective manner.
CONCLUSION
It is recommended the City Council adopt a resolution authorizing the City Manager to execute an amendment to the agreement with Athens Administrators to continue providing worker’s compensation claims administration services for fiscal year 2023-2024 in the amount of $225,658.