A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE WRITTEN RECOMMENDATION OF THE CITY MANAGER AND WAIVING, BY 5/7TH VOTE, THE FORMAL COMPETITIVE BIDDING REQUIREMENT FOR CLAIMS ADMINISTRATION SERVICES, FINDING SUCH WAIVER TO BE IN THE CITY'S BEST INTEREST, AND FURTHER AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND EXECUTE AMENDMENT NO. 1 TO THE CURRENT AGREEMENT WITH CORVEL ENTERPRISE COMP, INC., PURSUANT TO RFP 2014-302-SW FOR CLAIMS ADMINISTRATION SERVICES BY A THIRD-PARTY ADMINISTRATOR FOR WORKER'S COMPENSATION AND GENERAL LIABILITY, EXTENDING THE AGREEMENT FOR AN ADDITIONAL TWO (2) YEARS, AT THE CURRENT ANNUAL ADMINISTRATION COST OF $154,000, PLUS ANNUAL COST ESCALATION NOT TO EXCEED THE APPLICABLE CPI INCREASE OR 3%, WHICHEVER IS LESS.

Adopt the resolution approving the City Manager's recommendation.

The City is approved by the Florida Department of Labor and Employment Security/Division of Workers’ Compensation to self-insure for Workers’ Compensation.  Workers’ Compensation is a statutory benefit provided to employees that sustain injury within the course and scope of their employment.  The Division of Workers’ Compensation requires that the claims administration be provided by a State Certified Workers’ Compensation Claims Administrator. 

On November 19, 2014, the Mayor and City Commission awarded an Agreement, pursuant to Request for Proposals (RFP) 2014-302-SW for claims administration services by a third-party administrator for worker’s compensation and general liability (the “Agreement”), to CorVel Enterprise Comp, Inc. The Agreement had an initial term of three (3) years, with two (2) additional one (1) year renewal options. All renewal options have been exercised and the Agreement is now set to expire on January 31, 2020.

In the past five years, staff has built a strategic partnership with CorVel to reduce our overall workers’ compensation cost, while providing our injured workers with quality medical care and the opportunity to return to work as soon as possible.  The Administration is seeking an extension of the Agreement, which will result in savings to the City for reasons explained below, as well as avoid possible disruption of medical care, prescription drugs and loss wage payments for nearly 300 injured workers.

Decrease in Total Incurred/Average Incurred Claims

There has been a steady decrease in both total incurred (includes medical, pharmacy and indemnity), as well as average incurred losses per claim since the inception of the program.  It generally takes a three to four-year partnership to make an impact on your claim cost bottom line.  In fiscal year 2018, the average incurred claim was $3,667, which is a 42% decrease from fiscal year 2017.  See the chart below ranging from year 2014 – 2018.

Pharmacy Program

The pharmacy program within the CorVel bundled system achieves many safety outcomes for the injured workers.  The medications are crossed check for safety and approved against the city's formulary.  This savings and network increase are a direct result of the trainings and employee education conducted by Risk Management and the CorVel team. Most TPA's do not have an owned Pharmacy network within their Risk Management Information System (RMIS).  Pharmacy is typically a stand-alone service.  With transparency of CorVel’s RMIS, medications are reviewed for formulary, safety of combinations, and decision on claims and conditions. 

CorVel’s Pharmacy Benefit Management (PBM) program is an integral part of claims administration and the resulting savings are passed on to the City.  CorVel’s PBM has a bill review system that identifies out-of-network bills, paper bills and third-party bills, and having them redirected into the pharmacy program.  This results in more pharmacy bills being processed through the PBM program.  Since 2015, the number of injured workers that participate in CorVel’s Pharmacy Benefit Management (PBM) program has grown to 80.7% in fiscal year 2018.  This utilization has resulted in a $304,939 savings. 

Risk Management Information System (RMIS)

In the current Agreement, City staff has access to CorVel’s RMIS CareMC platform at no additional cost to the City. In contrast, several municipalities have reported that using a third-party RMIS is costing up to $1,000 per user per year. The RMIS feature is a valuable tool that provides access to over 100 user accounts where City staff are able to electronically report injury/illness claims to the TPA, Human Resources, and the State of Florida simultaneously, which avoids costly penalties, and gets a CorVel adjuster on the case and contacting the injured worker within 24 hours of the incident.  The adjusters are able to immediately begin intervention of the on-the-job injury, which ultimately can control the outcome of the claim.  The RMIS is especially helpful when handling heart/lung claims because the majority of those cases are when our first responders are seen in an emergency room and one of the primary goals is to have a clear snapshot of the first notice.

Further, the training that is involved in adopting a new RMIS system is expensive and time consuming. It took approximately six to nine months to transition City staff from paper reporting to electronic reporting.  Also training for new staff and refresher training is conducted throughout the year.  (Note:  City of Miami, with a similar claim count size as Miami Beach, had a recent RFP for Workers’ Compensation TPA Services (RFP#605386) and was quoted $1,000 per user for the RMIS. This sort of pricing would cost the City an additional $105,000 a year for our current 105 users.)  Our annual administrative cost to CorVel is $154,000 for three workers compensation adjusters, an on-site dedicated adjuster, Supervisor, and Account Manager.

Other Remarkable Factors

At no additional cost to the City, CorVel provides the following services to improve claims processes and injured workers’ experience:

• Dedicated on-site claims adjuster that provides immediate response to injured workers and assistance to Risk Management when returning the injured workers back to work
• 24/7 Work Injury Registered Nurse Hotline for Police and Fire personnel that may be injured after hours or on weekends
• Nurse case management for catastrophic injuries/illnesses that improve care of injured workers and coordinates comprehensive information with the adjusters to make better decisions
• MyCare App that is available to all injured workers as a download to their phone.  The App provides an injured worker access to their claims data, appointments, pharmacy card, and adjuster contact information

Prior RFP

CorVel was selected pursuant to RFP 2014-302-SW issued by the City in July 2014. Only two (2) other bidders submitted proposals in response to the RFP. Both bidders submitted significantly higher pricing for the services required by the City.

Based on the documented cost savings and the disruptive nature of transitioning from one third-party administrator to another, as well as the fact that the prior RFP resulted in only two other bidders with proposed costs higher than CorVel, it is the recommendation of the Administration that the Mayor and City Commission of the City of Miami Beach, Florida, accept the written recommendation of  the City Manager to waive, by a 5/7ths vote, the formal competitive bidding requirement, finding such waiver to be in the City’s best interest, authorizing the City Manager to negotiate and execute Amendment No. 1 to the current Agreement with CorVel Enterprise Comp, Inc., pursuant to RFP 2014-302-SW for claims administration services by a third-party administrator for worker’s compensation and general liability, extending the Agreement for an additional two (2) years, at the current annual administration cost of $154,000, plus annual cost escalation not to exceed the applicable CPI increase or 3%, whichever is less.