HomeMy WebLinkAbout1996-12-16 City Council (36)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: Human Resources
AGENDA DATE: December 16, 1996 CMR: 500:96
SUBJECT:Claims Administration Services for the City of Palo Alto’s Self-
Funded Dental Plan: Renewal of Contract with FIRST HEALTH
STRATEGIES, INC.
REQUEST
The Human Resources Department requests approval to renew an agreement with FIRST
HEALTH STRATEGIES, INC. (FIRST HEALTH) for third-party claims administration
services for an additional three years.
RECOMMENDATIONS
Staff recommends that Council authorize the Mayor to execute the attached agreement with
FIRST HEALTH.
POLICY IMPLICATIONS
This request does not represent any change in existing policies.
EXECUTIVE SUMMARY
The City has contracted with FIRST HEALTH for dental plan claims administration since
March 1, 1994. FIRST HEALTH is processing approximately 7,000 claim transactions per year
and has performed services at a very high level in terms of accuracy and efficiency in the
payment of claims.
A Request for Proposal was developed by the Human Resources Department and sent to 25
providers. Five proposals were received. The companies who submitted proposals and their
quoted fees are listed below:
CMR:500:96 Page 1 of 3
Proposer First Year Second Year Third Year Total
1. John Hancock $33,247 $37,359 $38,768 $109,374
2. FIRST HEALTH $36,218 $36,218 $36,218 $108,654
3. United Concordia $44,642 $44,642 $44,642 $133,926
4. Lipman Company $58,740 $58,740 $58,740 $176,220
5. Delta Dental $80,740 $80,740 $80,740 $242,220
The proposals were reviewed by a selection committee consisting of representatives from the
SEIU, Police and Fire representation units, in addition to staff from the Finance and Human
Resources Departments. The committee unanimously recommended renewing FIRST
HEALTH’s contract for an additional three years. Their reasons for this recommendation
include FIRST HEALTH’s record of payment of more than 95 percent of all claims in seven
days or less, FIRST HEALTH’s very low error rate and the absence of service complaints from
employees.
Staff is in agreement with the conclusions reached by the selection committee and recommends
renewing FIRST HEALTH’s contract for an additional three year term.
FISCAL IMPACT
Funding in the amount of $37,000 is included in the 1996-1997 budget.
ENVIRONMENTAL ASSESSMENT
There is no Environmental Assessment required for this agreement.
ATTACHMENTS
Amendment to Contract with First Health
CMR:500:96 Page 2 of 3
PREPARED BY: Leonard Zucker, Manager of Employee Benefits
DEPARTMENT HEAD REVIEW:
CITY MANAGER APPROVAL:
JAY C. ROUNDS
Di~
Manager
CMR:500:96 Page 3 of 3
~MENT NO. ONE TO CONTRACT NO. C-4047581
BETWEEN THE CITY OF PALO ALTO AND
FIRST HEALTH STRATEGIES (TPA) INC.
FOR DENTAL CLAIMS ADMINISTRATION SERVICES
This Amendment No.One to Contract No. C-4047581
("Agreement") is entered into , by and between the
CITY OF PAL0 ALTO, a chartered city and a municipal corporation of
the State of California ("CITY"), and FIRST HEALTH STRATEGIES (TPA)
INC. a Delaware corporation located at 6975 Union Park Center, Salt
Lake City, UT 84047 ("CONTRACTOR").
RECITALS:
WHEREAS, the Agreement was entered into between the
parties for the provision of dental claims administration services;
and
WHEREAS, the parties wish to amend the Agreement;
NOW, THEREFORE, in consideration of the covenants, terms,
conditions, and provisions of this Amendment, the parties agree:
follows:
SECTION i.Section 2.2 is hereby amended to read as
"2.2 CONTRACTOR
CONTRACTOR shall assign a Project Director to have
overall responsibility for the progress and execution of this
Agreement for CONTRACTOR. CONTRACTOR shall assign staff personnel
from its Salt Lake City, Utah or its Portland, Oregon offices, or
both, in the performance of its obligations hereunder. HARRY B.
HARRISON hereby is designated as the Project Director for
CONTP~ACTOR. Should circumstances or conditions subsequent to the
execution of this Agreement require a substitute Project Director
for any reason, the Project Director designee shall be subject to
the prior written approval of the Project Manager."
follows:
SECTION 2. Section 4 is hereby amended to read as
"SECTION 4 COMPENSATION
For the full performance of the Services described
herein by CONTRACTOR, CITY shall pay CONTRACTOR the amount of Three
Dollars and Ten Cents ($3.10) per month per employee plus printing
costs. Payment shall be made within 45 days of receipt of a
billing statement to CITY. Interest on the unpaid balance shall
accrue after the thirty-day period at the rate of twelve percent
(12%) per annum."
1
follows:
SECTION 3. Section 6 is hereby amended to read as
"SECTION 6 TERM
The term of this agreement, shall commence on
January I, 1997 and shall terminate on December 31, 1999, unless
sooner terminated by a party."
follows:
SECTION 4.Section ii is hereby amended to read as
"SECTION ii NOTICES
All notices hereunder shall be given in writing and
mailed, postage prepaid, by certified mail, addressed as follows:
To CITY:Office of the City Clerk
Post Office Box 10250
Palo Alto, CA 94303
To CONTRACTOR: FIRST HEALTH STRATEGIES, INC.
5000 SW Meadows, Suite 333
Lake Oswego, OR 97035
(503) 639-6600
ATTN: Harry B. Harrison, Project Director
IIII
IIIIIIIIIIIII/I/II
IIIIIIIIii.
//I//I
Copy to:General Counsel
FIRST HEALTH STRATEGIES (TPA), INC.
Suite 600
6975 Union Park Center
Salt Lake City, UT 84047"
2
961127 lac 0031462
SECTION 5. Except as herein modified, all other
provisions of the Agreement, including any exhibits and subsequent
amendments thereto, shall remain in ful! force and effect.
IN WITNESS WHEREOF, the parties have by their duly
authorized representatives executed this Amendment on the date
first above written.
ATTEST:CITY OF PALO ALTO
City Clerk Mayor
APPROVED AS TO FORM:
Senior Asst. City Attorney
FIRST HEALTH STRATEGIES (TPA)
INC.
APPROVED :Taxpayer I.D. No. 87-0459486
City Manager
Director of Human Resources
Deputy City Manager,
Administrative Services
Risk Manager
3
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CERTIFICATE OF ACKNOWLEDGMENT
(Civil Code § 1189)
STATE OF
COUNTY OF
)
)
)
On /-~ -& - ~ Q-, before me, the undersigned, a
notary .public in and for said County,. personally appeared
personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument, and acknowledged to me that
he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
961127 lac 0031462