4.2. SR 03-18-1996ITEH 4.2.
ity of
iver
FROM:
DATE:
MEMORANDUM
Mayor & City Council
Lori Johnson, Asst. City Administrator~ ~
March 26, 1996
SUBJECT: Managed Care Provider for Worker's
Compensation
When the city renewed its worker's compensation coverage in October, the
City Council agreed that staff should proceed with instituting a managed
care program. As you may recall, having a managed care program will
decrease the premium by 5 percent until renewal in October when it will
decrease by 10 percent. In addition, it will hopefully assist injured employees
in working through the worker's compensation process by directing them to
the appropriate medical facilities, and in returning employees to work as
soon as possible after an injury.
After reviewing five managed care companies, the field was narrowed to the
two companies that include Elk River clinics in their provider network. The
two companies which were reviewed in depth were Medica Worker's
Compensation Services and CorVel. The companies both include the Mork
Clinic and other Elk River clinics in their provider list. The Fairview Clinic
in Elk River is not included. However, all employees who have a previously
existing relationship with a health care provider (an existing relationship
means that they have seen the physician at least once in the last two years)
are allowed to go out of the network. The main difference between Medica
and CorVel is their method of billing and the training they provide to
employees and supervisors.
CorVel bills strictly on a per case basis. Each injury must be registered and a
case file is opened at a cost of $30. Following that, if time is lost an
additional charge of $345 is assessed. If there is no time lost, and it is a
medical only case, there is no charge unless the city, the adjuster, or CorVel
requests that a file be opened, at which time a per hour charge of $75 is made
with a maximum of $150 per case. CorVel charges $2 per employee for on-
site training and $25 for a training video.
Medica offers two choices of billing. One is a monthly fee based on the
number of employees covered. There is then no fee for medical or lost time
case review. The second option is a per case fee which is $360 for lost time
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 ° (612) 441-7420 · Fax: (612) 441-7425
cases and $50 for medical only cases. Medica offers free on-site training for
employees and supervisors, including distribution of all materials and
handouts so that employees know what to expect in case of an injury.
Estimated costs under each of the providers are listed on the attachment. As
you can see, the per month savings far exceed the estimated cost for
participating in the managed care program.
Recommendation
It is recommended that the City Council approve entering into a managed
care provider agreement with Medica. Following approval by the City
Council, employees will be notified of this change and the appropriate
training will be held.
s:XcouncilXmngdcare.doc
MANAGED CARE PROVIDER COST ANALYSIS
Actual Work Comp. Claims
Lost Medical No Total
Year Time Only Cost Claims
1994-1995 1 8 7 16
The following estimates what the cost for managed care would have been
based on the actual claims experience for 1993-1995.
This assumes that only two of the medical only claims would require
managed care intervention.
CorVel
$30/each case
$75/hr med only
$345/Iost time
$ 375 $ 54O $ 210
Total
Cost
$ 1,125
1994-1995
Medica
Case Fee Option
SOO/each case
$50/med. only
$360/Iost time
Monthly Fee Option
$1.35/employee
(ESTIMATED.
Total
Cost
$ 360 $ 400 $ $ 760 1994-1995
Total
Cost
$ 1,215 1994-1995
The actual fee is based on an audit of hours and FTE positions)
Estimated MONTHLY premium credit is $465.
Estimated ANNUAL premium credit is $5,588. (Approximately $3,700 of the annual credit
would be realized in the General fund.)
Effective with renewal the premium credit increases from five to ten percent which will double
our credit.
3/15/96 CARE.XLS