Title
[Contract Supplement] Workers’ Compensation Cost Containment Services
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FileID
File ID: 2026-00928
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Location
Location: Citywide
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Recommendation
Recommendation: Pass a Motion authorizing the City Manager or designee to execute a Supplemental Contract with Allied Managed Care to increase the not-to-exceed (NTE) amount by $300,000 for an additional one year of service for Workers’ Compensation Cost Containment Services.
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Contact
Contact: Natalie Dempsey, Risk Manager, (916) 808-8587, ndempsey@cityofsacramento.org, Department of Human Resources
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Presenter
Presenter: None
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Attachments
Attachments:
1-Description/Analysis
2-PSA-Allied Managed Care Supplemental Contract
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Description/Analysis
IssueDetail
Issue Detail: On July 11, 2023, the City executed Contract No. PRC002457 with Allied Managed Care to provide critical Workers’ Compensation cost containment services necessary to support the City’s self-insured, self-administered Workers’ Compensation program. These services include Nurse Case Management, Utilization Review, Peer Review, Medical Bill Review, and Pharmaceutical Benefit Management.
To maintain continuity of these essential services and ensure ongoing compliance with State regulations and to support appropriate and timely medical treatment for injured employees, a Supplemental Agreement is proposed.
The initial contract term was for three (3) years, with provisions for two renewals in one (1) year increments. The total cost for the initial term was $1,400,000. To extend services through June 30, 2027, an additional $300,000 is recommended, increasing the total not-to-exceed amount to $1,700,000.
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PolicyConsiderations
Policy Considerations: Council approval is required to execute agreements for services if the amount to be expended under each such agreement is $250,000 or more. This recommendation is consistent with City Code section 3.56 and in accordance with Procurement Policy Number AP-4101 Section 1.1(b).
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EconomicImpacts
Economic Impacts: None.
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EnvironmentalConsiderations
Environmental Considerations:
California Environmental Quality Act (CEQA): This report contains administrative activities that will not have a significant effect on the environment and that do not constitute a “project” as defined by the California Environmental Quality Act (CEQA) Guidelines Sections 15061(b)(3) and 15378(b)(2).
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: Not applicable.
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RationaleforRecommendation
Rationale for Recommendation: The proposed contract extension will ensure the continued delivery of essential Workers’ Compensation cost containment services, maintaining continuity of care for injured employees and compliance with statutory requirements. Allied Managed Care has demonstrated reliable performance, including timely processing, effective cost control, and strong customer service. Extending the existing agreement supports program stability, avoids disruption to active claims, and mitigates the risks and costs associated with transitioning to a new provider.
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FinancialConsiderations
Financial Considerations: The estimated total not-to-exceed amount of $1,700,000 for the contracts, plus any subsequent contracts included through additional sourcing events, will be funded through the Human Resources Department Workers’ Compensation/Risk Fund. Funding for future fiscal years beyond FY2026/27 and any supplemental contracts is subject to Council approval.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): LBE Preference was included in the sourcing event. Allied Managed Care is headquartered in Sacramento, CA.
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