RFP-309.01-121

STATE OF TENNESSEE

Treasury Department REQUEST FOR PROPOSALS

FOR Third Party Administrative

Services for Workers’ Compensation RFP NUMBER: 309.01-121

CONTENTS

SECTION

1 INTRODUCTION

2 RFP SCHEDULE OF EVENTS

3 PROPOSAL REQUIREMENTS

4 GENERAL REQUIREMENTS & CONTRACTING INFORMATION

5 PROPOSAL EVALUATION & CONTRACT AWARD

RFP ATTACHMENTS:

6.1 Pro Forma Contract

6.2 Proposal Transmittal/Statement Of Certifications & Assurances

6.3 Technical Proposal & Evaluation Guide

6.4 Cost Proposal & Scoring Guide

6.5 Proposal Score Summary Matrix

6.6 State of Tennessee Claim Experience and Information

6.7 Claim Data Requirements

6.8 Reference Questionnaire

1

RFP-309.01-121

1 INTRODUCTION

1.1 Statement of Purpose

The State of Tennessee, Treasury Department, hereinafter referred to as the State, has issued this Request for Proposals (RFP) to define the State's minimum service requirements; solicit proposals; detail proposal requirements; and, outline the State’s process for evaluating proposals and selecting the contractor.

Through this RFP, the State seeks to buy the best services at the most favorable, competitive prices and to give ALL qualified businesses, including those that are owned by minorities, women, persons with a disability, and small business enterprises, opportunity to do business with the State as contractors and sub-contractors.

The State intends to secure a contract for specific administrative services for workers’ compensation claims submitted by state employees, which includes higher education employees at the schools in the University of Tennessee system and the Board of Regents system. State employees are located in all ninety-five (95) counties in the State. The administration of these claims is subject to Tennessee Code Annotated, Sections 9-8-307 and 9-8-402. The Tennessee Code Annotated (T.C.A.) is posted on the Internet at www.michie.com. T.C.A. Section 9-8-402 requires that the State’s Division of Claims Administration (DCA) honor or deny a claim within ninety (90) days of receipt. However, the State desires that the majority of compensability decisions be made in fourteen (14) days. The State is specifically exempt from certain workers’ compensation statutes; however, for claims occurring on or after July 1, 2005, claim disputes are filed with the department of Labor and Workforce Development’s Benefit Review Conference (BRC) program. If the dispute cannot be resolved at the BRC, state claims are appealed to the Tennessee Claims Commission. The defense of litigated claims is handled by the Office of the Attorney General or other attorneys as may be delegated by that office.

A Third Party Administrator (TPA) currently administers all workers’ compensation claims for the State of Tennessee’s employees. Approximately 3,700 claims are administered each year, with 75% of these claims being medical only. Attachment 6.6 provides information regarding the State's workers' compensation claim experience for the past five years. The TPA’s responsibilities include, but are not limited to, claims investigation and determination of compensability, ongoing claims management, payment of medical and indemnity benefits, coordination with the State’s vendor for state mandated fee schedule repricing services, subrogation recoveries, reserving, facilitation of early return to work and modified duty, referral to the State’s managed care vendor for appropriate utilization review and medical case management, attendance at BRCs across the state, and data capturing and reporting. The State also has a workers’ compensation exclusive provider network and the TPA monitors compliance with that network. The current TPA has a claims staff dedicated to the State of Tennessee account. This unit reports to a managing executive. The dedicated staff is comprised of one (1) supervisor, one (1) claims examiner III, four (4) claims examiners II, two (2) medical only technicians, and one (1) claims assistant. The unit reports to a claims manager who is responsible for other accounts.

The objectives of the RFP process are to select a TPA which can: effectively and aggressively administer the state's workers' compensation claims; provide the specific services which the state requires; partner with the DCA to provide excellent customer service to state employees; and, interface effectively with the State’s medical management vendors. The state desires that the chosen TPA operate with them in a quality-oriented, partnership environment. The program envisioned would divide responsibilities between the DCA and the selected proposer. Information concerning the specific claim handling requirements of the TPA can be found in Attachment 1 of the Pro Forma Contract. The selected Proposer must agree to administer the State’s claims based on inclusion of these requirements, as a minimum standard, in its Claims Handling Instructions.

2

RFP-309.01-121

1.2 Scope of Service, Contract Period, and Required Terms and Conditions

The RFP Attachment 6.1, Pro Forma Contract details the State’s required:

Scope of Services and Deliverables in Section A; Contract Period in Section B; Payment Terms in Section C; Standard Terms and Conditions in Section D; and, Special Terms and Conditions in Section E.

The pro forma contract substantially represents the contract document that the proposer selected by the State MUST agree to and sign.

1.3 Nondiscrimination

No person shall be excluded from participation in, be denied benefits of, be discriminated against in the admission or access to, or be discriminated against in treatment or employment in the State’s contracted programs or activities on the grounds of disability, age, race, color, religion, sex, national origin, or any other classification protected by federal or Tennessee State Constitutional or statutory law; nor shall they be excluded from participation in, be denied benefits of, or be otherwise subjected to discrimination in the performance of contracts with the State or in the employment practices of the State’s contractors. Accordingly, all vendors entering into contracts with the State shall, upon request, be required to show proof of such nondiscrimination and to post in conspicuous places, available to all employees and applicants, notices of nondiscrimination.

The State has designated the following to coordinate compliance with the nondiscrimination requirements of the State of Tennessee, Title VI of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, and applicable federal regulations.

Janice Cunningham First Floor, State Capitol Nashville, Tennessee 37243 Phone (615) 741-2956

1.4 Assistance to Proposers With a Disability

A Proposer with a disability may receive accommodation regarding the means of communicating this RFP and participating in this RFP process. A Proposer with a disability should contact the RFP Coordinator to request reasonable accommodation no later than the Disability Accommodation Request Deadline detailed in the RFP Section 2, Schedule of Events.

1.5 RFP Communications

1.5.1 Unauthorized contact regarding this RFP with employees or officials of the State of Tennessee other than the RFP Coordinator detailed below may result in disqualification from this procurement process.

1.5.1.1 Interested Parties must direct all communications regarding this RFP to the following RFP Coordinator, who is the state of Tennessee’s only official point of contact for this RFP.

Dawn Rochelle Treasury Department 502 Deaderick Street Nashville, Tennessee 37243-0225 Phone: (615) 253-8769 FAX: (615) 253-4966 Dawn.Rochelle@state.tn.us

3

RFP-309.01-121

1.5.1.2 Notwithstanding the foregoing, Interested Parties may contact the staff of the Governor’s Office of Diversity Business Enterprise for general, public information regarding this RFP, assistance available from the Governor’s Office of Diversity Business Enterprise, or potential future state procurements.

1.5.2 The State has assigned the following RFP identification number that must be referenced in all communications regarding the RFP:

RFP-309.01-121

1.5.3 Any oral communications shall be considered unofficial and non-binding with regard to this RFP.

1.5.4 Each Proposer shall assume the risk of the method of dispatching any communication or proposal to the State. The State assumes no responsibility for delays or delivery failures resulting from the method of dispatch. Actual or electronic “postmarking” of a communication or proposal to the State by a deadline date shall not substitute for actual receipt of a communication or proposal by the State.

1.5.5 The RFP Coordinator must receive all written comments, including questions and requests for clarification, no later than the Written Comments Deadline detailed in the RFP Section 2, Schedule of Events.

1.5.6 The State reserves the right to determine, at its sole discretion, the appropriate and adequate responses to written comments, questions, and requests for clarification. The State’s official responses and other official communications pursuant to this RFP shall constitute an amendment of this RFP.

1.5.7 The State will convey all official responses and communications pursuant to this RFP to the potential proposers from whom the State has received a Notice of Intent to Propose.

1.5.8 Only the State’s official, written responses and communications shall be considered binding with regard to this RFP.

1.5.9 The State reserves the right to determine, at its sole discretion, the method of conveying official responses and communications pursuant to this RFP (e.g., written, facsimile, electronic mail, or Internet posting).

1.5.10 Any data or factual information provided by the State, in this RFP or an official response or communication, shall be deemed for informational purposes only, and if a Proposer relies on such data or factual information, the Proposer should either: (1) independently verify the information; or, (2) obtain the State’s written consent to rely thereon.

1.6 Notice of Intent to Propose

Each potential proposer should submit a Notice of Intent to Propose to the RFP Coordinator by the deadline detailed in the RFP Section 2, Schedule of Events. The notice should include:

Proposer’s name

name and title of a contact person

address, telephone number, and facsimile number of the contact person

NOTICE: A Notice of Intent to Propose creates no obligation and is not a prerequisite for making a proposal, however, it is necessary to ensure receipt of RFP amendments and other communications regarding the RFP (refer to RFP Sections 1.5, et seq., above).

1.7 Proposal Deadline

4

RFP-309.01-121

5

Proposals must be submitted no later than the Proposal Deadline time and date detailed in the RFP Section 2, Schedule of Events. A proposal must respond to the written RFP and any RFP exhibits, attachments, or amendments. A late proposal shall not be accepted, and a Proposer's failure to submit a proposal before the deadline shall cause the proposal to be disqualified.

1.8 Pre-Proposal Conference A Pre-Proposal Conference will be held at the time and date detailed in the RFP Section 2, Schedule of Events. The purpose of the conference is to discuss the RFP scope of services. While questions will be entertained, the response to any question at the Pre-Proposal Conference shall be considered tentative and non-binding with regard to this RFP. Questions concerning the RFP should be submitted in writing prior to the Written Comments Deadline date detailed in the RFP Section 2, Schedule of Events. To ensure accurate, consistent responses to all known potential Proposers, the official response to questions will be issued by the State as described in RFP Sections 1.5, et seq., above and on the date detailed in the RFP Section 2, Schedule of Events. Pre-Proposal Conference attendance is not mandatory, and each potential Proposer may be limited to a maximum number of attendees depending upon overall attendance and space limitations. The conference will be held at: Treasury Department, 11th Floor Conference Room 11th Floor Andrew Jackson State Office Building 502 Deaderick Street Nashville, Tennessee 37243

RFP-309.01-121

2 RFP SCHEDULE OF EVENTS

The following Schedule of Events represents the State's best estimate of the schedule that will be followed. Unless otherwise specified, the time of day for the following events will be between 8:00 a.m. and 4:30 p.m., Central Time.

RFP SCHEDULE OF EVENTS

NOTICE: The State reserves the right, at its sole discretion, to adjust this schedule as it deems necessary. The State will communicate any adjustment to the Schedule of Events to the potential proposers from whom the State has received a Notice of Intent to Propose.

EVENT TIME DATE (all dates are state business days)

1. State Issues RFP April 14, 2008

2. Disability Accommodation Request Deadline April 22, 2008

3. Pre-proposal Conference 2:00 p.m. April 25, 2008

4. Notice of Intent to Propose Deadline April 29, 2008

5. Written Comments Deadline May 2, 2008

6. State Responds to Written Comments May 12, 2008

7. Proposal Deadline 2:00 p.m. May 19, 2008

8. State Completes Technical Proposal Evaluations May 28, 2008

9. State Opens Cost Proposals and Calculates Scores 9:00 a.m. May 29, 2008

10. State Issues Evaluation Notice and Opens RFP Files for Public Inspection 9:00 a.m. May 30, 2008

11. Contract Signing June 11, 2008

12. Contract Signature Deadline June 18, 2008

13. Contract Start Date September 1, 2008

6

RFP-309.01-121

3 PROPOSAL REQUIREMENTS

Each Proposer must submit a proposal in response to this RFP with the most favorable terms that the Proposer can offer. There will be no best and final offer procedure.

3.1 Proposal Form and Delivery

3.1.1 Each response to this RFP must consist of a Technical Proposal and a Cost Proposal (as described below).

3.1.2 Each Proposer must submit one (1) original and five (5) copies of the Technical Proposal to the State in a sealed package that is clearly marked:

“Technical Proposal in Response to RFP- 309.01-121-- Do Not Open”

3.1.3 Each Proposer must submit one (1) Cost Proposal to the State in a separate, sealed package that is clearly marked:

“Cost Proposal in Response to RFP- 309.01-121-- Do Not Open”

3.1.4 If a Proposer encloses the separately sealed proposals (as detailed above) in a larger package for mailing, the Proposer must clearly mark the outermost package:

“Contains Separately Sealed Technical and Cost Proposals for RFP- 309.01-121”

3.1.5 The State must receive all proposals in response to this RFP, at the following address, no later than the Proposal Deadline time and date detailed in the RFP Section 2, Schedule of Events.

State of Tennessee Treasury Department ATTN: Dawn Rochelle RFP Coordinator, RFP Number 309.01-121 502 Deaderick Street Nashville, TN 37243-0225

3.1.6 A Proposer may not deliver a proposal orally or by any means of electronic transmission.

3.2 Technical Proposal

3.2.1 The RFP Attachment 6.3, Technical Proposal and Evaluation Guide details specific requirements for making a Technical Proposal in response to this RFP. This guide includes mandatory and general requirements as well as technical queries requiring a written response.

NOTICE: No pricing information shall be included in the Technical Proposal. Inclusion of Cost Proposal amounts in the Technical Proposal shall make the proposal non-responsive and the State shall reject it.

3.2.2 Each Proposer must use the Technical Proposal and Evaluation Guide to organize, reference, and draft the Technical Proposal. Each Proposer should duplicate the Technical Proposal and Evaluation Guide and use it as a table of contents covering the Technical Proposal (adding proposal page numbers as appropriate).

3.2.3 Each proposal should be economically prepared, with emphasis on completeness and clarity of content. A proposal, as well as any reference material presented, must be written in English and must be written on standard 8 1/2" x 11" paper (although foldouts containing charts, spreadsheets, and oversize exhibits are permissible). All proposal pages must be numbered.

3.2.4 All information included in a Technical Proposal should be relevant to a specific requirement detailed in the Technical Proposal and Evaluation Guide. All information must be incorporated into a response

7

RFP-309.01-121

8

to a specific requirement and clearly referenced. Any information not meeting these criteria will be deemed extraneous and will in no way contribute to the evaluation process.

3.2.5 The State may determine a proposal to be non-responsive and reject it if the Proposer fails to organize and properly reference the Technical Proposal as required by this RFP and the Technical Proposal and Evaluation Guide.

3.2.6 The State may determine a proposal to be non-responsive and reject it if the Technical Proposal document fails to appropriately address/meet all of the requirements detailed in the Technical Proposal and Evaluation Guide.

3.3 Cost Proposal

3.3.1 The Cost Proposal must be submitted to the State in a sealed package separate from the Technical proposal.

3.3.2 Each Cost Proposal must be recorded on an exact duplicate of the RFP Attachment 6.4, Cost Proposal and Scoring Guide.

3.3.3 Each Proposer shall ONLY record the proposed cost exactly as required by the Cost Proposal and Evaluation Guide and shall NOT record any other rates, amounts, or information.

3.3.4 The proposed cost shall incorporate all costs for services under the contract for the total contract period.

3.3.5 The Proposer must sign and date the Cost Proposal.

3.3.6 If a Proposer fails to submit a Cost Proposal as required, the State shall determine the proposal to be non-responsive and reject it.

RFP-309.01-121

4 GENERAL REQUIREMENTS & CONTRACTING INFORMATION

4.1 Proposer Required Review and Waiver of Objections

Each Proposer must carefully review this RFP and all attachments, including but not limited to the pro forma contract, for comments, questions, defects, objections, or any other matter requiring clarification or correction (collectively called “comments”). Comments concerning RFP objections must be made in writing and received by the State no later than the Written Comments Deadline detailed in the RFP Section 2, Schedule of Events. This will allow issuance of any necessary amendments and help prevent the opening of defective proposals upon which contract award could not be made.

Protests based on any objection shall be considered waived and invalid if these comments/objections have not been brought to the attention of the State, in writing, by the Written Comments Deadline.

4.2 RFP Amendment and Cancellation

The State reserves the unilateral right to amend this RFP in writing at any time. If an RFP amendment is issued, the State will convey such amendment to the potential proposers who submitted a Notice of Intent to Propose. Each proposal must respond to the final written RFP and any exhibits, attachments, and amendments.

The State of Tennessee reserves the right, at its sole discretion, to cancel and reissue this RFP or to cancel this RFP in its entirety in accordance with applicable laws and regulations.

4.3 Proposal Prohibitions and Right of Rejection

4.3.1 The State of Tennessee reserves the right, at its sole discretion, to reject any and all proposals in accordance with applicable laws and regulations.

4.3.2 Each proposal must comply with all of the terms of this RFP and all applicable State laws and regulations. The State may reject any proposal that does not comply with all of the terms, conditions, and performance requirements of this RFP. The State may consider any proposal that does not meet the requirements of this RFP to be non-responsive, and the State may reject such a proposal.

4.3.3 A proposal of alternate services (i.e., a proposal that offers services different from those requested by this RFP) shall be considered non-responsive and rejected.

4.3.4 A Proposer may not restrict the rights of the State or otherwise qualify a proposal. The State may determine such a proposal to be a non-responsive counteroffer, and the proposal may be rejected.

4.3.5 A Proposer may not submit the Proposer's own contract terms and conditions in a response to this RFP. If a proposal contains such terms and conditions, the State may determine, at its sole discretion, the proposal to be a non-responsive counteroffer, and the proposal may be rejected.

4.3.6 A Proposer shall not submit more than one proposal. Submitting more than one proposal shall result in the disqualification of the Proposer.

4.3.7 A Proposer shall not submit multiple proposals in different forms. This prohibited action shall be defined as a Proposer submitting one proposal as a prime contractor and permitting a second Proposer to submit another proposal with the first Proposer offered as a subcontractor. This restriction does not prohibit different Proposers from offering the same subcontractor as a part of their proposals, provided that the subcontractor does not also submit a proposal as a prime contractor. Submitting multiple proposals in different forms may result in the disqualification of all Proposers knowingly involved.

4.3.8 The State shall reject a proposal if the Cost Proposal was not arrived at independently without collusion, consultation, communication, or agreement as to any matter relating to such prices with any

9

RFP-309.01-121

other Proposer. Regardless of the time of detection, the State shall consider any of the foregoing prohibited actions to be grounds for proposal rejection or contract termination.

4.3.9 The State shall not contract with or consider a proposal from:

4.3.9.1 An individual who is, or within the past six months has been, an employee or official of the State of Tennessee;

4.3.9.2 A company, corporation, or any other contracting entity in which an ownership of two percent (2%) or more is held by an individual who is, or within the past six months has been, an employee or official of the State of Tennessee (this shall not apply either to financial interests that have been placed into a “blind trust” arrangement pursuant to which the employee does not have knowledge of the retention or disposition of such interests or to the ownership of publicly traded stocks or bonds where such ownership constitutes less than 2% of the total outstanding amount of the stocks or bonds of the issuing entity);

4.3.9.3 A company, corporation, or any other contracting entity which employs an individual who is, or within the past six months has been, an employee or official of the State of Tennessee in a position that would allow the direct or indirect use or disclosure of information, which was obtained through or in connection with his or her employment and not made available to the general public, for the purpose of furthering the private interest or personal profit of any person; or,

4.3.9.4 Any individual, company, or other entity involved in assisting the State in the development, formulation, or drafting of this RFP or its scope of services shall be considered to have been given information that would afford an unfair advantage over other Proposers, and such individual, company, or other entity may not submit a proposal in response to this RFP.

4.3.9.5 For the purposes of applying the requirements of RFP subsection 4.3.9, et. seq., an individual shall be deemed an employee or official of the State of Tennessee until such time as all compensation for salary, termination pay, and annual leave has been paid.

4.3.10 The State reserves the right, at its sole discretion, to waive a proposal’s variances from full compliance with this RFP. If the State waives minor variances in a proposal, such waiver shall not modify the RFP requirements or excuse the Proposer from full compliance with such. Notwithstanding any minor variance, the State may hold any Proposer to strict compliance with this RFP.

4.4 Incorrect Proposal Information

If the State determines that a Proposer has provided, for consideration in this RFP process or subsequent contract negotiations, incorrect information that the Proposer knew or should have known was materially incorrect, that proposal shall be determined non-responsive and shall be rejected.

4.5 Proposal of Additional Services

If a proposal offers services in addition to those required by and described in this RFP, the additional services may be added to the contract before contract signing at the sole discretion of the State. Notwithstanding the foregoing, a Proposer shall not propose any additional cost amount(s) or rate(s) for additional services.

NOTICE: The Proposer’s Cost Proposal shall record only the proposed cost as required in this RFP and shall not record any other rates, amounts, or information. If a Proposer fails to submit a Cost Proposal as required, the State shall determine the proposal to be non-responsive and shall reject the proposal.

4.6 Assignment and Subcontracting

4.6.1 The Proposer awarded a contract pursuant to this RFP may not subcontract, transfer, or assign any portion of the contract without the State’s prior, written approval.

10

RFP-309.01-121

4.6.2 A subcontractor may only be substituted for a proposed subcontractor at the discretion of the State and with the State’s prior, written approval.

4.6.3 At its sole discretion, the State reserves the right to refuse approval of any subcontract, transfer, or assignment.

4.6.4 Notwithstanding State approval of each subcontractor, the Proposer, if awarded a contract pursuant to this RFP, shall be the prime contractor and shall be responsible for all work performed.

4.7 Right to Refuse Personnel

At its sole discretion, the State reserves the right to refuse any personnel, of the prime contractor or a subcontractor, for use in the performance of a contract pursuant to this RFP.

4.8 Insurance

The State may require the apparent successful Proposer to provide proof of adequate worker’s compensation and public liability insurance coverage before entering into a contract. Additionally, the State may require, at its sole discretion, the apparent successful Proposer to provide proof of adequate professional malpractice liability or other forms of insurance. Failure to provide evidence of such insurance coverage is a material breach and grounds for termination of the contract negotiations. Any insurance required by the State shall be in form and substance acceptable to the State.

4.9 Licensure

Before a contract pursuant to this RFP is signed, the apparent successful Proposer must hold all necessary, applicable business and professional licenses. The State may require any or all Proposers to submit evidence of proper licensure.

4.10 Service Location and Work Space

The service pursuant to this RFP is to be performed, completed, managed, and delivered as detailed in the RFP Attachment 6.1, Pro Forma Contract. Work space on the State’s premises may be available for contractor use in accordance with the pro forma contract or at the State’s discretion. Any work performed on the State’s premises shall be completed during the State’s standard business hours.

4.11 Proposal Withdrawal

A Proposer may withdraw a submitted proposal at any time up to the Proposal Deadline time and date detailed in the RFP Section 2, Schedule of Events. To do so, a proposer must submit a written request, signed by a Proposer’s authorized representative to withdraw a proposal. After withdrawing a previously submitted proposal, a Proposer may submit another proposal at any time up to the Proposal Deadline.

4.12 Proposal Errors and Amendments

Each Proposer is liable for all proposal errors or omissions. A Proposer will not be allowed to alter or amend proposal documents after the Proposal Deadline time and date detailed in the RFP Section 2, Schedule of Events unless such is formally requested, in writing, by the State.

4.13 Proposal Preparation Costs

The State will not pay any costs associated with the preparation, submittal, or presentation of any proposal.

4.14 Disclosure of Proposal Contents

11

RFP-309.01-121

Each proposal and all materials submitted to the State in response to this RFP shall become the property of the State of Tennessee. Selection or rejection of a proposal does not affect this right. All proposal information, including detailed price and cost information, shall be held in confidence during the evaluation process. Notwithstanding, a list of actual proposers submitting timely proposals may be available to the public, upon request, directly after technical proposals are opened by the state.

Upon the completion of the evaluation of proposals, indicated by public release of an Evaluation Notice, the proposals and associated materials shall be open for review by the public in accordance with Tennessee Code Annotated, Section 10-7-504(a)(7). By submitting a proposal, the Proposer acknowledges and accepts that the full proposal contents and associated documents shall become open to public inspection.

4.15 Contractor Registration

While registration with the state is not required to make a proposal, a service provider must be registered to do business with the state of Tennessee before approval of an awarded contract. To meet this prerequisite, an unregistered service provider must simply register as required prior to contract approval. Fast and easy access to Online Contractor Registration is available at the following Internet URL: www.state.tn.us/finance/rds/ocr/register.html (For more information about registration, please contact the Department of General Services at (615) 741-1035 or vendor.registration@state.tn.us

4.16 Contract Approval

The RFP and the contractor selection processes do not obligate the State and do not create rights, interests, or claims of entitlement in either the Proposer with the apparent best-evaluated proposal or any other Proposer. Contract award and State obligations pursuant thereto shall commence only after the contract is signed by the Contractor and the head of the procuring state agency and after the contract is approved and signed by all other State officials as required by State laws and regulations.

4.17 Contract Payments

All contract payments shall be made in accordance with the contract’s Payment Terms and Conditions provisions (refer to RFP Attachment 6.1, Pro Forma Contract, Section C). No payment shall be made until the contract is approved as required by State laws and regulations. Under no conditions shall the State be liable for payment of any type associated with the contract or responsible for any work done by the Contractor, even work done in good faith and even if the Contractor is orally directed to proceed with the delivery of services, if it occurs before contract approval by State officials as required by applicable statutes and rules of the State of Tennessee or before the contract start date or after the contract end date specified by the contract.

4.18 Contractor Performance

The Contractor shall be responsible for the completion of all work set out in the contract. All work is subject to inspection, evaluation, and acceptance by the State. The State may employ all reasonable means to ensure that the work is progressing and being performed in compliance with the contract. At reasonable times, the State may inspect those areas of the Contractor's place of business that are related to the performance of the contract. If the State requires such an inspection, the Contractor shall provide reasonable access and assistance.

4.19 Contract Amendment

During the course of this contract, the State may request the Contractor to perform additional work for which the Contractor would be compensated. That work shall be within the general scope of this RFP. In such instances, the State shall provide the Contractor a written description of the additional work, and the Contractor shall submit a time schedule for accomplishing the additional work and a price for the additional work based on the rates included in the Contractor’s proposal to this RFP. If the State

12

RFP-309.01-121

13

and the Contractor reach an agreement regarding the work and associated compensation, such agreement shall be effected by means of a contract amendment. Any such amendment requiring additional work must be mutually agreed upon by the parties and signed by the Contractor and the head of the procuring state agency and must be approved by other State officials as required by State laws and regulations. The Contractor shall not commence additional work until the State has issued a written contract amendment and secured all required approvals.

4.20 Severability

If any provision of this RFP is declared by a court to be illegal or in conflict with any law, said decision shall not affect the validity of the remaining RFP terms and provisions, and the rights and obligations of the State and Proposers shall be construed and enforced as if the RFP did not contain the particular provision held to be invalid.

RFP-309.01-121

5 PROPOSAL EVALUATION & CONTRACT AWARD

5.1 Evaluation Categories and Maximum Points

The State will consider qualifications and experience, technical approach, and cost in the evaluation of proposals. The maximum points that shall be awarded for each of these categories are detailed below.

CATEGORY MAXIMUM POINTS POSSIBLE

Qualifications and Experience 30

Technical Approach 40

Cost Proposal 30

5.2 Evaluation Process

The proposal evaluation process is designed to award the contract not necessarily to the Proposer of least cost, but rather to the Proposer with the best combination of attributes based upon the evaluation criteria.

5.2.1 The RFP Coordinator will use the RFP Attachment 6.3, Technical Proposal and Evaluation Guide to manage the Technical Proposal Evaluation and maintain evaluation records.

5.2.1.1 The RFP Coordinator will review each Technical Proposal to determine compliance with mandatory requirements (refer to RFP Attachment 6.3, Technical Proposal and Evaluation Guide, Technical Proposal Section A). If the RFP Coordinator determines that a proposal may have failed to meet one or more of the mandatory requirements, the Proposal Evaluation Team will review the proposal and document its determination of whether: (1) the proposal meets requirements for further evaluation; (2) the State will request clarifications or corrections; or, (3) the State will determine the proposal non-responsive to the RFP and reject it.

5.2.1.2 A Proposal Evaluation Team, made up of three or more State employees, will evaluate each Technical Proposal that appears responsive to the RFP.

5.2.1.3 Each Proposal Evaluation Team member will independently, evaluate each proposal against the evaluation criteria in this RFP, rather than against other proposals, and will score each in accordance with the RFP Attachment 6.3, Technical Proposal and Evaluation Guide.

5.2.1.4 The State reserves the right, at its sole discretion, to request Proposer clarification of a Technical Proposal or to conduct clarification discussions with any or all Proposers. Any such clarification or discussion shall be limited to specific sections of the proposal identified by the State. The subject Proposer shall put any resulting clarification in writing as may be required by the State.

5.2.2 After Technical Proposal evaluations are completed, the RFP Coordinator will open the Cost Proposals and use the RFP Attachment 6.4, Cost Proposal and Evaluation Guide to calculate and document the Cost Proposal scores.

5.2.3 For each responsive proposal, the RFP Coordinator will add the average Technical Proposal score to the Cost Proposal score (refer to RFP Attachment 6.5, Proposal Score Summary Matrix).

5.3 Contract Award Process

5.3.1 The RFP Coordinator will forward the results of the proposal evaluation process to the head of the procuring agency who will consider the proposal evaluation process results and all pertinent

14

RFP-309.01-121

15

information available to make a determination about the contract award. The State reserves the right to make an award without further discussion of any proposal. Notwithstanding the foregoing, to effect a contract award to a proposer other than the one receiving the highest evaluation score, the head of the procuring agency must provide written justification for such an award and obtain the written approval of the Commissioner of Finance and Administration and the Comptroller of the Treasury.

5.3.2 After the agency head’s determination, the State will issue an Evaluation Notice to identify the apparent best-evaluated proposal on the Evaluation Notice date detailed in the RFP Section 2, Schedule of Events.

NOTICE: The Evaluation Notice shall not create rights, interests, or claims of entitlement in either the Proposer with apparent best-evaluated proposal or any other Proposer.

5.3.3 The State will also make the RFP files available for public inspection on the Evaluation Notice date detailed in the RFP Section 2, Schedule of Events.

5.3.4 The Proposer with the apparent best-evaluated proposal must agree to and sign a contract with the State which shall be substantially the same as the RFP Attachment 6.1, Pro Forma Contract. However, the State reserves the right, at its sole discretion, to add terms and conditions or to revise pro forma contract requirements in the State’s best interests subsequent to this RFP process. No such terms and conditions or revision of contract requirements shall materially affect the basis of proposal evaluations or negatively impact the competitive nature of the RFP process.

5.3.5 The Proposer with the apparent best-evaluated proposal must sign and return the contract drawn by the State pursuant to this RFP no later than the Contract Signature Deadline date detailed in the RFP Section 2, Schedule of Events. If the Proposer fails to provide the signed contract by the deadline, the State may determine that the Proposer is non-responsive to the terms of this RFP and reject the proposal.

5.3.6 If the State determines that the apparent best-evaluated proposal is non-responsive and rejects the proposal after opening Cost Proposals, the RFP Coordinator will re-calculate scores for each responsive Cost Proposal to determine the new, apparent best-evaluated proposal.

RFP-309.01-121

ATTACHMENT 6.1

PRO FORMA CONTRACT

The pro forma contract detailed in this attachment contains some “blanks” (signified by descriptions in capital letters) that will be completed with appropriate information in the final contract resulting from this RFP.

CONTRACT BETWEEN THE STATE OF TENNESSEE,

DEPARTMENT OF TREASURY AND

CONTRACTOR NAME This Contract, by and between the State of Tennessee, Department of Treasury, hereinafter referred to as the “State” and CONTRACTOR LEGAL ENTITY NAME, hereinafter referred to as the “Contractor,” is for the provision of workers’ compensation third party administrative services to the State, as further defined in the "SCOPE OF SERVICES." The Contractor is A/AN INDIVIDUAL, FOR-PROFIT CORPORATION, NON-PROFIT CORPORATION, SPECIAL PURPOSE CORPORATION OR ASSOCIATION, PARTNERSHIP, JOINT VENTURE, OR LIMITED LIABILITY COMPANY. Contractor Federal Employer Identification or Social Security Number: ID NUMBER Contractor Place of Incorporation or Organization: LOCATION A. SCOPE OF SERVICES: A.1. The Contractor shall provide all service and deliverables as required, described, and

detailed by this Scope of Services and shall meet all service and delivery timelines specified in the Scope of Services section or elsewhere in this Contract.

A.2. In General. The Contractor’s responsibilities under this Contract include, but are not

limited to, workers’ compensation claims investigation and determination of compensability, ongoing claims management, payment of medical and indemnity benefits, coordination with the State’s vendor for state mandated fee schedule repricing services, subrogation recoveries, reserving, facilitation of early return to work and modified duty, referral to the State’s managed care vendor for appropriate utilization review and medical case management, attendance at benefit review conferences across the state of Tennessee, and data capturing and reporting. The Contractor shall perform such responsibilities in accordance with this Contract.

A.3. Claims Administration.

a. Determination of Claims. The Contractor shall review all workers' compensation claims assigned to the Contractor by the State during the term of this Contract and process each such claim in accordance with Tennessee Code Annotated, Sections 9-8-307, 9-8-402 and Title 50, Chapter 6.

b. Claim Adjudication Decisions.

(1) The Contractor is authorized to make decisions regarding workers' compensation cases in accordance with Tennessee law, except that the following claims adjudication decisions shall require prior approval of the State:

(A) denials of the compensability of an accident/injury;

16

RFP-309.01-121

(B) approvals to use rehabilitative services; (C) approvals of death claims; (D) approvals of heart attack/hypertension claims; (E) discontinuance of overpayment collection efforts; (F) discontinuance of subrogation collection efforts; (G) initiations of surveillance/investigation services; (H) approvals or denials of National Guard claims; and (I) prior to entering into settlement discussions with a claimant/counsel, the

Contractor shall obtain the State’s approval of the settlement conditions to be proposed.

Notwithstanding the above, the State may authorize the Contractor to approve certain classes of claims falling within sub-items (A) through (I) above without the necessity of obtaining the prior approval of the State. Any such authorization will be in writing and set forth the classes of claims involved. It is understood and agreed that any decision made by the Contractor regarding a workers' compensation case is subject to review and modification by the State.

(2) If the Contractor recommends denial of a claim, the Contractor shall so notify the

State and inform the State of the reasons therefore. The State shall have final authority to determine whether a claim should be denied. If the State approves the denial recommendation, the Contractor shall so notify the claimant by letter. Said letter shall be substantially in the same form as the sample letter which shall be jointly developed by the State and the Contractor. If the Contractor approves the claim, the Contractor shall so notify the claimant by letter. Said letter shall be substantially in the same form as the sample letter which shall be jointly developed by the State and the Contractor. The Contractor shall also send a copy of the denial or approval letter, whichever is applicable, to the representative of the specific agency or department where the claimant was working at the time of the alleged injury. Any approval letter shall further be sent to the State’s group insurance division. The Contractor shall thereafter, without further authorization, process and pay all approved claims for workers' compensation benefits and all appropriate medical bills related to such workers' compensation injury as provided in Sections A.7 and A.10 of this Contract.

(3) Notwithstanding Sections A.3.b(1) and A.3.b(2) to the contrary, the State may

authorize the Contractor to approve certain classes of claims without the necessity of obtaining the prior approval of the State. Any such authorization shall be in writing and shall set forth the classes of claims involved.

(4) The files of claims closed by the Contractor shall be archived by the Contractor in

such manner, format, and frequency as shall be mutually agreed to by the parties. The integrity of each file shall be maintained during archiving and shall include all documents, papers, letters, and other material made or received by the Contractor in connection with the particular claim. All file documents, papers, letters and other material shall be archived in the order of their occurrence, with the most recent material appearing first. Prior to archiving, the Contractor shall ensure that the claim number assigned to the file is marked at the top of each page.

(5) The Contractor assumes entire responsibility for any loss occasioned by reason

of misplaced, lost, damaged, destroyed or stolen files while such files are in the possession or custody of the Contractor, or while such files are in the possession of any carrier en route from the Contractor to the State.

17

RFP-309.01-121

c. Claim Handling Requirements. The Contractor shall develop, in consultation with the State, Claim Handling Requirements for workers' compensation claims assigned by the State to the Contractor. At a minimum, such Requirements shall include the Claim Handling Requirements set forth in Attachment 1.

d. Telephonic and Electronic Claims Intake Services. The Contractor shall provide

telephonic and electronic claims intake services, which allow the filing of workers’ compensation claims over the telephone and electronically. The Contractor shall make such services available twenty-four (24) hours a day, seven (7) days a week. The Contractor shall provide notification of each such telephonic and electronic filing to the injured employee’s agency contact within two (2) business days of filing.

e. Integration with Cost Containment and Medical Management Vendors. The

Contractor shall integrate, at its own expense, with vendors who provide cost containment services and medical management services on behalf of the State. Such services include various types of utilization review (such as inpatient, outpatient, and high-tech diagnostic), case management and a preferred provider arrangement. The Contractor acknowledges that pre-established case management guidelines exist with respect to such vendors, as set forth in Attachments 1 and 2, and agrees to work and coordinate with such vendors based upon such guidelines. Specifically, but not by way of limitation, the Contractor shall identify claims which meet those guidelines and make the appropriate vendor referrals. Any referrals for medical management services shall be at the sole discretion of the Contractor.

f. Communications Between Contractor and State.

(1) Meetings. The Contractor shall meet with the State in Nashville, Tennessee on a

monthly basis to discuss such issues as strategies on open claims, reserve changes, upcoming hearings, general claims administration and other issues as determined by the State. Claim adjudication decisions subject to State approval shall also be discussed at these meetings. If a claim decision requiring State approval should not be delayed until the next monthly meeting, the Contractor shall so notify the State. The Contractor shall also meet with the State and the State’s medical management vendors on a quarterly basis.

(2) Reports.

(A) Daily. On a daily basis, the Contractor shall provide a detailed listing of the

payment activity, including check serial numbers and ACH payment identifiers, payee names, payment amounts and associated claim numbers, and balancing to the required funding amount for that day.

(B) Weekly. On a weekly basis, the Contractor shall provide an aging report for

all claims pending a decision on compensability and a report for new claims that require chiropractic treatment option.

(C) Monthly. The Contractor shall further provide to the State monthly reports

containing the following information: (i) loss run information summarizing the number of claims opened, closed and pending; (ii) the amounts paid and reserved; (iii) loss analysis by agency showing number of claims, amount paid, amount incurred, body part, type of injury, location and etc.; (iv) check reconciliation reports that provide detail (check number, issue date, payee name, claim number, check amount, paid or cancel date) of all checks issued, paid or cancelled during the month, and a detailed listing of outstanding checks at each month-end; (v) payment activity report by department/division code and location; (vi) temporary total disability report

18

RFP-309.01-121

by department/division code transmitted by secure e-mail to each state agency contact; (vii) payment report by type of payment (medical, permanent disability, temporary disability and death); (viii) caseload count by adjuster; and (ix) subrogation recoveries and refunds. The monthly report shall be due on the last business day of the month and shall cover the information described in this subparagraph as of the previous month end.

(D) Quarterly. On a quarterly basis, the Contractor shall provide the State with a

listing of all reserve changes over $25,000, a loss analysis showing claims by body part, type of injury, location of injury and etc., and a listing of the average accident reporting time (i.e., from the date of injury to the date reported to the employer to the date of filing a claim). The listings and analysis shall cover the information described in this subparagraph occurring since the previous quarter.

(E) Statement of Auditing Standards. On at least an annual basis, the

Contractor shall have a Type II Independent Service Auditor’s report prepared for its service organization in accordance with Statement on Auditing Standards (SAS) Number 70, and provide copies of each such report to the State during the Contract term.

(F) Miscellaneous. The Contractor shall further provide written status reports to

the State on a monthly basis for all claims exceeding the dollar amount specified in Section 6 of Attachment 1 hereto, unless the State directs that such reports be provided less frequently. The reports shall contain the information specified in Section 6 of Attachment 1, and such additional information as shall be mutually agreed to by the parties.

A.4. Subrogation and Surveillance. The Contractor shall identify claims wherein subrogation

opportunities may arise for which follow-up on such opportunities will be required using the process described in pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTION C.47 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal. The Contractor shall also identify claims wherein surveillance or activity checks may be useful and notify the State of such claims. The Contractor shall use the process described in pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTION C.37 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal in identifying such claims. Upon the State's approval, the Contractor shall assign the identified claims for surveillance or activity checks.

A.5. Return to Work and Rehabilitation. The Contractor shall monitor the treatment programs

recommended for employees by physicians, specialists and other health care providers by reviewing all reports prepared by them and maintaining such contact with these providers as may be appropriate in the judgment of the Contractor. As the State directs, the Contractor shall assist in interpreting medical reports to consider the circumstances under which an ill or injured employee could return to work in the shortest period of time and shall assist the State, at the State's request, in arranging for rehabilitation or retraining of employees in appropriate cases.

A.6. Cooperation in Litigation. The Contractor shall fully cooperate with the state of

Tennessee in any hearing or trial involving a workers' compensation claim. Such cooperation shall include assisting the State, if requested, in preparing the defense of litigated cases, negotiating settlements, pursuing subrogation or contributions actions and the presentation at trial of factual information concerning the activities of particular individuals or any other information possessed by the Contractor that may be useful in the enforcement of the Tennessee Workers' Compensation Act or resolution of any related dispute.

19

RFP-309.01-121

A.7. Process Workers' Compensation Medical Bills. Upon approval of a workers'

compensation claim as provided above, the Contractor shall process for payment all medical bills related to such workers' compensation injury submitted by or on behalf of the authorized physicians and hospitals.

a. The Contractor shall review all medical bills to ensure that each bill is reasonable,

necessary, related to the treatment of the approved injury, and meets the requirements of Tennessee Code Annotated, Title 50, Chapter 6 (Tennessee Workers' Compensation Act).

b. The Contractor agrees to perform the above process in accordance with pages

[PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTIONS C.15, C.29 and C.30 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal and to process such medical bills for payment pursuant to said pages.

c. The State maintains the right to audit individual claims and the claim payment

procedures of the Contractor at any time, with reasonable notification to the Contractor.

d. The Contractor shall perform quarterly audits of randomly selected medical bills that

have been repriced to the state mandated fee schedule by the State’s repricing vendor, and advise the State of its findings. Such audits shall be performed in accordance with pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTION C.17 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal.

A.8. Telephone, Emergency Service and Post Office Box.

a. General Toll-Free Telephone Number. The Contractor, at its own expense, shall maintain a toll-free telephone number to respond to inquiries from claimants and providers concerning the status of claims, medical bills, and panels of physicians. Upon proper identification, the Contractor shall, to the extent possible, answer inquiries over the telephone.

b. Telephone System. In addition to the above toll-free telephone number, the

Contractor shall maintain a system that will cause all phone calls made to the Contractor relating to the services hereunder to go directly to the Contractor's claims management division through a dedicated toll-free phone. All such telephone calls shall be answered by a Contractor claims technician rather than a receptionist. The claims technicians must be able to answer most routine questions and provide information needed for patient referrals. Should the technician not be able to address the needs of the caller or if the caller is inquiring about a particular claim, the caller shall be referred immediately by the technician to the adjuster assigned by the Contractor to handle the claim. Should the adjuster be unavailable, the caller shall be given a choice of either a voice mail system or going back to a claims technician to address the needs of the caller. The direct toll-free number shall be answered by at least four (4) Contractor claims technicians. Should all these lines be in use, calls shall then be answered by an automated system that will ask the callers to hold for the next available technician. The Contractor shall, to the maximum extent possible, return all phone calls by the next business day.

c. Emergency Service. The Contractor shall provide State employees and State

service providers a twenty-four (24) hour emergency service system to assist in situations that need immediate attention. Such system shall require at least one (1)

20

RFP-309.01-121

Contractor adjuster to carry a pager at all times. If a call is made to the Contractor after hours, the caller shall be advised of the Contractor's normal office hours and provided information that will allow the caller to either leave a message or have an adjuster paged should it be an emergency situation. All such calls received by the adjuster shall be documented and, upon request, the State shall be provided information concerning each emergency call made. The information shall include the name of the caller, the time the call was made, when the call was returned, the reason of the call, and how the call was resolved.

d. Post Office Box. The Contractor shall maintain a unique post office box number for

the purpose of receiving claims, medical bills and other correspondence in relation to this Contract.

A.9. Offices and Personnel. The Contractor shall maintain at least one (1) claims

management office in Tennessee. Notwithstanding the number of offices maintained by the Contractor in Tennessee, the Contractor agrees to travel to any place deemed necessary by the Contractor to perform the services outlined herein and to maintain sufficient personnel to enable the Contractor to fulfill its responsibilities under this Contract.

A.10. Claims Payment and Reconciliation Process.

a. For payment of all approved claims for workers’ compensation and all appropriate medical bills, the Contractor shall issue payments in the form of checks and/or Automated Clearing House (ACH) electronic funds transfer against the Contractor’s own bank account. Unless otherwise mutually agreed to in writing by the parties, the check mailing/delivery process, including the location and timing for the printing and mailing of the checks shall be in the manner described in pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTIONS C.40, C.44, and C.45 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal. The Contractor shall maintain security and quality controls over the design, printing and mailing of checks, as well as any fraud prevention feature of check stock in the manner described in pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTION C.43 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal.

b. The State shall fund the Contractor for the total issue amount of the payments, net of

cancellations, voids or other payment credit adjustments, daily or at the time of each issuance of checks or ACH, provided the Contractor’s payment process includes timely delivery of checks and settlement of ACH transactions. Unless otherwise mutually agreed to in writing by the parties, the Contractor shall notify the State of the day’s funding requirement amount in the manner described in pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTION C.42 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal. The State shall fund the Contractor as provided under this Section A.10 upon receipt of an ACH debit from the Contractor to a designated State bank account. The Contractor acknowledges and agrees that since the State intends to fund payments at the time of issuance, the State shall not maintain a separate bank account or an escrow account with the Contractor or to otherwise pre-fund an account.

c. The Contractor further acknowledges the State will monitor and age the outstanding

check balance and the Contractor agrees, upon request of the State, to conduct a review and/or cancel-reissue of stale dated outstanding items. Pursuant to Section A.3.f (2)(A), the Contractor shall provide to the State, on a daily basis and in the manner described in pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTIONS C.40 and C.41 OF ATTACHMENT 6.3 OF THE

21

RFP-309.01-121

RFP] of the Contractor’s Proposal, a detailed listing of the payment activity, including check serial numbers and ACH payment identifiers, payee names, payment amounts and associated claim numbers, and balancing to the required funding amount for that day. Said listing shall enable the State to reconcile the payment detail to the required funding amount, while providing related payment information needed to record the necessary accounting entries by expense classifications. The Contractor shall further provide to the State the monthly check reconciliation reports described in Section A.3.f (2)(C)(iv) hereof.

d. The Contractor shall issue all related Internal Revenue Service (IRS) Form 1099

reports, submit required 1099 information directly to the IRS and maintain responsibility in matters relating to such information provided to payees and to the IRS, including the payment of any penalties or fees related to such 1099 reporting.

e. Overpayments resulting from the negligent, reckless, or willful acts or omissions of

the Contractor, its officers, agents or employees shall be the responsibility of the Contractor, regardless of whether or not such overpayments can be recovered by the Contractor. The Contractor shall repay the State the amount of any such overpayment within thirty (30) calendar days of discovery of the overpayment. Overpayments due to provider fraud or fraud of any other type, other than fraud by employees or agents of the Contractor, will not be considered overpayments for purposes of this Section. The Contractor agrees to assist in identifying fraud and make reasonable efforts, in consultation with the State, to recover overpayments due to fraud. The State will not hold the Contractor responsible for overpayments caused by the State's errors or errors caused by any other agency or department of the state of Tennessee; however, the Contractor shall assist the State in recovery of such overpayments. The requirement that the Contractor assist the State in identifying or recovering overpayments as provided in this Section does not require the Contractor to become a party to any legal proceeding as a result thereof.

A.11. Reserving. The Contractor shall establish reserves on open claims in accordance with

approved insurance standards and in accordance with pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTION C.48 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal, or as otherwise agreed to by the parties. Unless authorized by the State in writing, the Contractor shall not charge against experience those claim payments not authorized under the workers' compensation plan of the State of Tennessee if such payments were the result of error, negligence, reckless or willful acts or omissions by the Contractor, its officers, agents, or employees. At the State's request, the Contractor shall furnish the reserve information to the State's Risk Management Actuarial Vendor to enable the Vendor to determine the funding required for the State's Claims Award Fund.

A.12. Consulting Services. At the State's direction, the Contractor shall provide information to

State employees and to State departments and agencies regarding the benefits available under the State's workers' compensation program and to counsel any such department or agency regarding policies and procedures to meet the needs of the State. Further, the Contractor shall consult with the State, at the State's request, on the establishment and coordination of necessary procedures and practices to meet any applicable laws or regulations. The Contractor shall also participate in the orientation of the State's personnel who are directly or indirectly involved in the processing of workers' compensation claims.

A.13. Attendance at Benefit Review Conferences. Unless otherwise directed by the State, the

Contractor shall physically attend and participate in benefit review conferences held pursuant to Tennessee Code Annotated, Section 50-6-239 relative to workers' compensation claims assigned to the Contractor by the State during the term of this

22

RFP-309.01-121

Contract. Should the State direct that the Contractor’s physical presence at any such conference is unnecessary, the Contractor shall, at the State’s request, participate in the conference by telephone or other State approved electronic means provided the Contractor is given at least two (2) business days’ advance notice of the conference.

A.14. Performance Standards.

a. Standards. The Contractor agrees that the following performance standards shall be met or exceeded:

(1) Eighty percent (80%) of lost time claims shall be decided within fourteen (14)

calendar days from the date received by the Contractor; (2) Ninety-nine percent (99%) of all medical payments shall have a medical bill in

the file to document the charge for which payment was made; (3) Ninety-five percent (95%) of all lost time files shall contain a copy of the notice of

termination of lost time benefits which was sent to the injured employee’s department/agency; and

(4) Ninety-five percent (95%) of all lost time files must have 3 point contact (employee, employer, physician) within 24 hours of receipt of the claim.

b. Guarantee. To confirm that such standards have been met, the State or its designee

shall have the right to conduct file audits of a statistically significant random sample of files at least two (2) times each year. The State reserves the right, however, to conduct such audits on a more frequent basis. If the files reviewed do not meet or exceed all of the above performance standards, the Contractor shall refund to the State two percent (2%) of the total compensation earned by the Contractor for services rendered hereunder during the previous six-month period. This obligation by the Contractor shall not be construed to limit the liability of the Contractor for damages sustained by the State by virtue of any breach of this Contract by the Contractor nor shall such obligation be construed to limit any other remedies available to the State in equity, at law or otherwise.

A.15. Claims Management Database System.

a. Access to System. At no additional cost to the State, the Contractor shall provide the State on-line computer access to [NAME OF SUCCESSFUL PROPOSER’S WORKERS’ COMPENSATION CLAIMS SYSTEM] which is a data processing facility designed to provide the claims management data base and reports needed for effective claims management, and which is more fully described in pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTIONS C.20 – C.23 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal. Access to said System shall include access to the Contractor’s adjusters’ file notes and shall be through a secure Internet connection or a private network connection supplied to the State by the Contractor and shall be accessible by the State twenty-four (24) hours a day, three hundred sixty-five (365) days a year, except for reasonable down time for back-up and maintenance. The network shall include support for concurrent access for a certain number of users on the State’s network, which number shall be mutually agreed upon by the State and the Contractor provided that such number shall not be less than eight (8) users for the State. The network shall include any necessary connection or equipment for host directed print from the Contractor’s claims management system to the State. Further, the System shall provide secure on-line computer access for two (2) users each to the Tennessee Department of Human Resources and the Tennessee Department of Finance and Administration with the exception of the Contractor’s adjusters’ file notes. The System shall restrict such users so that the adjusters’ file notes are not available for viewing, printing or otherwise. The Contractor shall, at its own expense,

23

RFP-309.01-121

maintain and keep the private network or its Internet connection in good working order and condition so that it will perform its functions properly. Any private network connection shall be furnished to the State at the 11th Floor of the Andrew Jackson State Office Building located at 502 Deaderick Street, Nashville, Tennessee 37243 ("the Facility Location"). If redundant private network connections are provided, the alternate connection shall be furnished at 901 Fifth Avenue North, Nashville, Tennessee 37247 (“the OIR Data Center”).

b. Grant of License. Upon the Contractor's installation of the network connection, the

Contractor agrees the State shall have a nontransferable and nonexclusive right, revocable in accordance with the terms herein, to use the System solely in connection with the internal operation of the State's business. The State acknowledges that the license to use the System granted herein transfers no title or right to the System other than the right to use the System for particular transactions or particular advisory or management situations occurring in the normal conduct of the State's business.

c. Network Connection Replacement. When installed, the State agrees not to relocate

any private network connection from its Facility Location or the OIR Data Center without the Contractor's prior written consent, which consent shall not be unreasonably withheld. Upon the State's receipt of such consent, the Contractor agrees, at its own expense, to provide off-site consultation and advice to the State in relocating or modifying the network connection.

d. Observation of System Use. The State agrees that during normal business working

hours, or during a prearranged time, any person or persons designated by the Contractor shall have access to the State's Facility Location and shall have the right to observe the use made of the System and the network connection, and to examine and inspect all instruments and any apparatus used in connection with the System and the network connection in said place.

e. Maintenance and Consulting Services. The Contractor shall provide the following

maintenance and consulting services at no additional cost to the State:

(1) Maintenance. The Contractor shall provide on a timely basis to the State maintenance service to any private network connection. Said service shall include telephone support to ensure that the network connection and System perform the requirements specified in Section A.15.a hereof. As part of such service, the Contractor shall provide to the State any improvements, enhancements and new releases of the System developed by the Contractor along with explanatory reference documentation. Such modified software shall not degrade current performance levels.

(2) Training and Operations Manual Services. The Contractor shall, at the State's

facilities and during regular State business hours, conduct a one (1) day training class annually for State user and operations staff. The class shall consist of a lecture and hands-on training in the use and operation of the various System functions and their related documentation. The Contractor shall further establish an on-going capability for training new users by providing to the State at least four (4) hard copies of the Systems User's Guide suitable for reproducing.

(3) Problem Resolution. The Contractor shall initiate System problem resolution

within four (4) business hours after telephone notification by the State. The Contractor shall provide to the State off-site network problem reporting and resolution each business day from 8:00 a.m., Central Time, through 4:30 p.m., Central Time. The Contractor shall also provide the capability to accept problem

24

RFP-309.01-121

reports during those times when the Contractor’s problem resolution staff is not available. The State shall submit to the Contractor a listing of output and all such other data which the Contractor reasonably may request in order to reproduce operating conditions similar to those present when the error, defect or opinion unreasonably degrades System performance.

(4) Consulting. The Contractor shall provide to the State off-site telephone support

each business day from 8:00 a.m., Central Time, through 4:30 p.m., Central Time, in the form of consultation, assistance and advice on the use of the System. The Contractor and the State shall from time to time designate a telephone number for a Maintenance and Consulting Contact Point. The State shall have the right to call such telephone number for assistance with the use or maintenance of the network connection and System.

(5) Problem Resolution Contact. The Contractor shall maintain a world wide web

page, which contains current problem resolution and consulting contact information. Such information shall include the respective contact names, telephone numbers, telefax numbers, street addresses and e-mail addresses.

f. Network Security/Confidentiality. If the State’s access to the System requires a

network connection (the “Network Connection”) between the State’s wide area network and the Contractor’s wide area network, the parties shall take reasonable and customary precautions to prevent unauthorized access to or use of the Network Connection through their respective networks. The parties agree, however, that each party is responsible for the security of its own network. Neither party shall be liable to the other for unauthorized access to the Network Connection, so long as the accused party shall have taken reasonable and customary precautions to prevent such unauthorized access.

A.16. Conversion Project Management Plan; Back-Up Procedures and Disaster

Recovery Plan; Information Project Security Plan; and Business Continuity Management Plan. The Contractor shall provide the following services at no additional cost to the State:

a. Conversion Project Management Plan. The Contractor shall transition takeover

claims, conduct System training, develop and implement a System conversion plan, and perform post-implementation review services in accordance with pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTIONS C.3, C.35, AND C.36 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal. At the request of either party, the Contractor and the State shall meet to discuss the status of such services, and to resolve any issues in consummating the services. Any such meeting shall take place at a time mutually agreed to by the parties, and shall be held at the State’s facilities in Nashville, Tennessee, or, with the State’s approval, via telephone conference. The party requesting the meeting shall set the meeting agenda, and prepare a brief report summarizing the issues raised at the meeting and the decisions made in addressing those issues.

b. Back-Up Procedures and Disaster Recovery Plan. The Contractor shall maintain

contingency plans for systems back-up in the event of disaster or malfunction. At a minimum, this shall be accomplished by the Contractor backing-up all claims data nightly and maintaining at least two (2) back-up cycles off-site in a commercial business storage facility. The Contractor shall resume services hereunder within seventy-two (72) hours of the disaster or malfunction. The Contractor shall provide notification of an incident to both the Director of the Division of Claims Administration and to the State’s Information Systems Operations Group within two (2) hours after

25

RFP-309.01-121

the beginning of operation of the Contractor’s Emergency Operations Command Post.

c. Information Project Security Plan. The Contractor shall maintain an Information

Project Security Plan in accordance with pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTIONS C.7, AND C.8 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal.

d. Business Continuity Management Plan. The Contractor shall maintain a Business

Continuity Management Plan as described in pages [PAGE NUMBERS FROM SUCCESSFUL PROPOSAL WHICH RESPOND TO SECTION C.13 OF ATTACHMENT 6.3 OF THE RFP] of the Contractor’s Proposal.

B. CONTRACT TERM: This Contract shall be effective for the period commencing on September 1, 2008 and

ending on August 31, 2013. The State shall have no obligation for services rendered by the Contractor which are not performed within the specified period.

C. PAYMENT TERMS AND CONDITIONS: C.1. Maximum Liability. In no event shall the maximum liability of the State under this

Contract exceed WRITTEN DOLLAR AMOUNT ($NUMBER). The payment rates in Section C.3 shall constitute the entire compensation due the Contractor for the Service and all of the Contractor's obligations hereunder regardless of the difficulty, materials or equipment required. The payment rates include, but are not limited to, all applicable taxes, fees, overheads, and all other direct and indirect costs incurred or to be incurred by the Contractor. The Contractor is not entitled to be paid the maximum liability for any period under the Contract or any extensions of the Contract for work not requested by the State. The maximum liability represents available funds for payment to the Contractor and does not guarantee payment of any such funds to the Contractor under this Contract unless the State requests work and the Contractor performs said work. In which case, the Contractor shall be paid in accordance with the payment rates detailed in Section C.3. The State is under no obligation to request work from the Contractor in any specific dollar amounts or to request any work at all from the Contractor during any period of this Contract.

C.2. Compensation Firm. The payment rates and the maximum liability of the State under this

Contract are firm for the duration of the Contract and are not subject to escalation for any reason unless amended.

C.3. Payment Methodology. The Contractor shall be compensated based on the payment

rates herein for units of service authorized by the State in a total amount not to exceed the Contract Maximum Liability established in Section C.1.

a. The Contractor’s compensation shall be contingent upon the satisfactory completion

of units, milestones, or increments of service defined in Section A.

b. The Contractor shall be compensated for said units, milestones, or increments of service based upon the following payment rates:

26

RFP-309.01-121

Amount

(per compensable increment) SERVICE

DESCRIPTION

September 1, 2008 – August 31, 2009

September 1, 2009 – August 31, 2010

September 1, 2010 – August 31, 2011

September 1, 2011 – August 31, 2012

September 1, 2012 – August 31, 2013

For all services set forth in Sections A.1 through A.14 of this Contract for Medical Only Claims

$AMOUNT per claim assigned during above period

$AMOUNT per claim assigned during above period

$AMOUNT per claim assigned during above period

$AMOUNT per claim assigned during above period

$AMOUNT per claim assigned during above period

For all services set forth in Sections A.1 through A.14 of this Contract for Lost Time Claims

$AMOUNT per claim assigned during above period

$AMOUNT per claim assigned during above period

$AMOUNT per claim assigned during above period

$AMOUNT per claim assigned during above period

$AMOUNT per claim assigned during above period

For all services set forth in Sections A.1 through A.14 of this Contract for the Assumption of Take-Over Claims (Medical Only)

Note: Assumption of Take-Over Claims will be for the first year only

$AMOUNT per claim assigned

N/A N/A N/A N/A

For all services set forth in Sections A.1 through A.14 of this Contract for the Assumption of Take-Over Claims (Lost Time)

Note: Assumption of Take-Over Claims will be for the first year only

$AMOUNT per claim assigned

N/A

N/A N/A N/A

The services set forth in Sections A.15 through A.16 of this Contract shall be provided by the Contractor at no additional cost to the State. c. Definition of Lost Time Claim. "Lost time claim" means a claim filed by an employee

who has been absent from work for over seven (7) calendar days by authority of a

27

RFP-309.01-121

physician due to an alleged work related injury, any claim involving indemnity payments, or any claim on which the Contractor physically attends a benefits review conference pursuant to Section A.13 above.

d. Definition of Take-Over Claim. “Take-Over claim” means a claim already received by

the State prior to the commencement date of this Contract for which a decision as to compensability has been made but which is still open.

C.4. Travel Compensation. The Contractor shall not be compensated or reimbursed for

travel, meals, or lodging. C.5. Invoice Requirements. The Contractor shall invoice the State at the end of each month

covering all claims assigned by the State to the Contractor during that month and for the amount stipulated in Section C.3, above, and as required below prior to any payment. a. The Contractor shall submit invoices no more often than monthly, with all

necessary supporting documentation, to: Tennessee Treasury Department

Division of Accounting 9th Floor, Andrew Jackson State Office Building 502 Deaderick Street

Nashville, Tennessee 37243-0206 b. The Contractor agrees that each invoice submitted shall clearly and accurately

(all calculations must be extended and totaled correctly) detail the following required information.

(1) Invoice/Reference Number (assigned by the Contractor); (2) Invoice Date; (3) Invoice Period (period to which all invoiced charges are applicable); (4) Contract Number (assigned by the State to this Contract); (5) Account Name: Tennessee Treasury Department, Division of Claims

Administration; (6) Account/Customer Number (uniquely assigned by the Contractor to the

above-referenced Account Name); (7) Contractor Name; (8) Contractor Federal Employer Identification Number or Social Security

Number (as referenced in this Contract); (9) Contractor Contact (name, phone, and/or fax for the individual to contact

with billing questions); (10) Contractor Remittance Address; (11) Complete Itemization of Charges, which shall detail the following:

i. Service or Milestone Description (including name /title as applicable) of each service invoiced;

ii. A listing of each claim assigned by the State to the Contractor for the period for which the Contractor is requesting payment. Said list shall be provided to the State in both hardcopy and diskette form;

iii. Applicable Payment Rate (as stipulated in Section C.3.) of each service invoiced;

iv. Amount Due by Service; and v. Total Amount Due for the invoice period.

28

RFP-309.01-121

c. The Contractor understands and agrees that an invoice to the State under this Contract shall:

(1) include only charges for service described in Contract Section A and in

accordance with payment terms and conditions set forth in Contract Section C;

(2) not include any future work but will only be submitted for claims assigned by the State to the Contractor during the month covered by the invoice period; and

(3) not include sales tax or shipping charges. d. The Contractor agrees that timeframe for payment (and any discounts) begins

when the State is in receipt of each invoice meeting the minimum requirements above.

e. The Contractor shall complete and sign a "Substitute W-9 Form” provided to the

Contractor by the State. The taxpayer identification number contained in the Substitute W-9 submitted to the State shall agree to the Federal Employer Identification Number or Social Security Number referenced in this Contract for the Contractor. The Contractor shall not invoice the State for services until the State has received this completed form.

C.6. Payment of Invoice. The payment of the invoice by the State shall not prejudice the

State's right to object to or question any invoice or matter in relation thereto. Such payment by the State shall neither be construed as acceptance of any part of the work or service provided nor as an approval of any of the amounts invoiced therein.

C.7. Invoice Reductions. The Contractor's invoice shall be subject to reduction for amounts

included in any invoice or payment theretofore made which are determined by the State, on the basis of audits conducted in accordance with the terms of this Contract, not to constitute proper remuneration for compensable services.

C.8. Deductions. The State reserves the right to deduct from amounts which are or shall

become due and payable to the Contractor under this or any Contract between the Contractor and the State of Tennessee any amounts which are or shall become due and payable to the State of Tennessee by the Contractor.

C.9. Automatic Deposits. The Contractor shall complete and sign an "Authorization

Agreement for Automatic Deposit (ACH Credits) Form." This form shall be provided to the Contractor by the State. Once this form has been completed and submitted to the State by the Contractor all payments to the Contractor, under this or any other Contract the Contractor has with the State of Tennessee shall be made by Automated Clearing House (ACH). The Contractor shall not invoice the State for services until the Contractor has completed this form and submitted it to the State.

D. STANDARD TERMS AND CONDITIONS: D.1. Required Approvals. The State is not bound by this Contract until it is approved by the

appropriate State officials in accordance with applicable Tennessee State laws and regulations.

D.2. Modification and Amendment. This Contract may be modified only by a written

amendment executed by all parties hereto and approved by the appropriate Tennessee State officials in accordance with applicable Tennessee State laws and regulations.

29

RFP-309.01-121

D.3. Termination for Convenience. The State may terminate this Contract without cause for any reason. Said termination shall not be deemed a Breach of Contract by the State. The State shall give the Contractor at least thirty (30) days written notice before the effective termination date. The Contractor shall be entitled to receive compensation for satisfactory, authorized service completed as of the termination date, but in no event shall the State be liable to the Contractor for compensation for any service which has not been rendered. Upon such termination, the Contractor shall have no right to any actual general, special, incidental, consequential, or any other damages whatsoever of any description or amount.

D.4. Termination for Cause. If the Contractor fails to properly perform its obligations under

this Contract in a timely or proper manner, or if the Contractor violates any terms of this Contract, the State shall have the right to immediately terminate the Contract and withhold payments in excess of fair compensation for completed services. Notwithstanding the above, the Contractor shall not be relieved of liability to the State for damages sustained by virtue of any breach of this Contract by the Contractor.

D.5. Subcontracting. The Contractor shall not assign this Contract or enter into a subcontract

for any of the services performed under this Contract without obtaining the prior written approval of the State. If such subcontracts are approved by the State, they shall contain, at a minimum, sections of this Contract below pertaining to "Conflicts of Interest," "Nondiscrimination," and “Records” (as identified by the section headings). Notwithstanding any use of approved subcontractors, the Contractor shall be the prime contractor and shall be responsible for all work performed.

D.6. Conflicts of Interest. The Contractor warrants that no part of the total Contract Amount

shall be paid directly or indirectly to an employee or official of the State of Tennessee as wages, compensation, or gifts in exchange for acting as an officer, agent, employee, subcontractor, or consultant to the Contractor in connection with any work contemplated or performed relative to this Contract.

D.7. Nondiscrimination. The Contractor hereby agrees, warrants, and assures that no person

shall be excluded from participation in, be denied benefits of, or be otherwise subjected to discrimination in the performance of this Contract or in the employment practices of the Contractor on the grounds of disability, age, race, color, religion, sex, national origin, or any other classification protected by Federal, Tennessee State constitutional, or statutory law. The Contractor shall, upon request, show proof of such nondiscrimination and shall post in conspicuous places, available to all employees and applicants, notices of nondiscrimination.

D.8. Prohibition of Illegal Immigrants. The requirements of Public Acts of 2006, Chapter

Number 878, of the state of Tennessee, addressing the use of illegal immigrants in the performance of any Contract to supply goods or services to the state of Tennessee, shall be a material provision of this Contract, a breach of which shall be grounds for monetary and other penalties, up to and including termination of this Contract.

a. The Contractor hereby attests, certifies, warrants, and assures that the

Contractor shall not knowingly utilize the services of an illegal immigrant in the performance of this Contract and shall not knowingly utilize the services of any subcontractor who will utilize the services of an illegal immigrant in the performance of this Contract. The Contractor shall reaffirm this attestation, in writing, by submitting to the State a completed and signed copy of the document at Attachment 3, hereto, semi-annually during the period of this Contract. Such attestations shall be maintained by the Contractor and made available to state officials upon request.

30

RFP-309.01-121

b. Prior to the use of any subcontractor in the performance of this Contract, and semi-annually thereafter, during the period of this Contract, the Contractor shall obtain and retain a current, written attestation that the subcontractor shall not knowingly utilize the services of an illegal immigrant to perform work relative to this Contract and shall not knowingly utilize the services of any subcontractor who will utilize the services of an illegal immigrant to perform work relative to this Contract. Attestations obtained from such subcontractors shall be maintained by the Contractor and made available to state officials upon request.

c. The Contractor shall maintain records for all personnel used in the performance

of this Contract. Said records shall be subject to review and random inspection at any reasonable time upon reasonable notice by the State.

d. The Contractor understands and agrees that failure to comply with this section

will be subject to the sanctions of Public Chapter 878 of 2006 for acts or omissions occurring after its effective date. This law requires the Commissioner of Finance and Administration to prohibit a contractor from contracting with, or submitting an offer, proposal, or bid to contract with the State of Tennessee to supply goods or services for a period of one year after a contractor is discovered to have knowingly used the services of illegal immigrants during the performance of this Contract.

e. For purposes of this Contract, "illegal immigrant" shall be defined as any person

who is not either a United States citizen, a Lawful Permanent Resident, or a person whose physical presence in the United States is authorized or allowed by the federal Department of Homeland Security and who, under federal immigration laws and/or regulations, is authorized to be employed in the U.S. or is otherwise authorized to provide services under the Contract.

D.9. Records. The Contractor shall maintain documentation for all charges under this

Contract. The books, records, and documents of the Contractor, insofar as they relate to work performed or money received under this Contract, shall be maintained for a period of three (3) full years from the date of the final payment and shall be subject to audit at any reasonable time and upon reasonable notice by the State, the Comptroller of the Treasury, or their duly appointed representatives. The financial statements shall be prepared in accordance with generally accepted accounting principles.

D.10. Monitoring. The Contractor’s activities conducted and records maintained pursuant to

this Contract shall be subject to monitoring and evaluation by the State, the Comptroller of the Treasury, or their duly appointed representatives.

D.11. Progress Reports. The Contractor shall submit brief, periodic, progress reports to the

State as requested. D.12. Strict Performance. Failure by any party to this Contract to insist in any one or more

cases upon the strict performance of any of the terms, covenants, conditions, or provisions of this Contract shall not be construed as a waiver or relinquishment of any such term, covenant, condition, or provision. No term or condition of this Contract shall be held to be waived, modified, or deleted except by a written amendment signed by the parties hereto.

D.13. Independent Contractor. The parties hereto, in the performance of this Contract, shall

not act as employees, partners, joint venturers, or associates of one another. It is expressly acknowledged by the parties hereto that such parties are independent contracting entities and that nothing in this Contract shall be construed to create an employer/employee relationship or to allow either to exercise control or direction over the

31

RFP-309.01-121

manner or method by which the other transacts its business affairs or provides its usual services. The employees or agents of one party shall not be deemed or construed to be the employees or agents of the other party for any purpose whatsoever. The Contractor, being an independent contractor and not an employee of the State, agrees to carry adequate public liability and other appropriate forms of insurance, including adequate public liability and other appropriate forms of insurance on the Contractor’s employees, and to pay all applicable taxes incident to this Contract.

D.14. State Liability. The State shall have no liability except as specifically provided in this

Contract. D.15. Force Majeure. The obligations of the parties to this Contract are subject to prevention

by causes beyond the parties’ control that could not be avoided by the exercise of due care including, but not limited to, acts of God, natural disasters, riots, wars, epidemics or any other similar cause.

D.16. State and Federal Compliance. The Contractor shall comply with all applicable State and

Federal laws and regulations in the performance of this Contract. D.17. Governing Law. This Contract shall be governed by and construed in accordance with

the laws of the State of Tennessee. The Contractor agrees that it will be subject to the exclusive jurisdiction of the courts of the State of Tennessee in actions that may arise under this Contract. The Contractor acknowledges and agrees that any rights or claims against the State of Tennessee or its employees hereunder, and any remedies arising therefrom, shall be subject to and limited to those rights and remedies, if any, available under Tennessee Code Annotated, Sections 9-8-101 through 9-8-407.

D.18. Completeness. This Contract is complete and contains the entire understanding

between the parties relating to the subject matter contained herein, including all the terms and conditions of the parties’ agreement. This Contract supersedes any and all prior understandings, representations, negotiations, and agreements between the parties relating hereto, whether written or oral.

D.19. Severability. If any terms and conditions of this Contract are held to be invalid or

unenforceable as a matter of law, the other terms and conditions hereof shall not be affected thereby and shall remain in full force and effect. To this end, the terms and conditions of this Contract are declared severable.

D.20. Headings. Section headings of this Contract are for reference purposes only and shall

not be construed as part of this Contract. E. SPECIAL TERMS AND CONDITIONS: E.1. Conflicting Terms and Conditions. Should any of these special terms and conditions

conflict with any other terms and conditions of this Contract, these special terms and conditions shall control.

E.2. Communications and Contacts. All instructions, notices, consents, demands, or other

communications required or contemplated by this Contract shall be in writing and shall be made by certified, first class mail, return receipt requested and postage prepaid, by overnight courier service with an asset tracking system, or by EMAIL or facsimile transmission with recipient confirmation. Any such communications, regardless of method of transmission, shall be addressed to the respective party at the appropriate mailing address, facsimile number, or EMAIL address as set forth below or to that of such other party or address, as may be hereafter specified by written notice.

32

RFP-309.01-121

The State:

Division of Claims Administration Anne Adams, Director 9th Floor, Andrew Jackson State Office Building 502 Deaderick Street Nashville, Tennessee 37243 – 0202 Anne.adams@state.tn.us Telephone # (615) 741-2734 FAX # (615) 532-4979

The Contractor: NAME & TITLE OF CONTRACTOR CONTACT PERSON CONTRACTOR NAME ADDRESS EMAIL ADDRESS Telephone # NUMBER FAX # NUMBER All instructions, notices, consents, demands, or other communications shall be considered effectively given upon receipt or recipient confirmation as may be required.

E.3. Subject to Funds Availability. The Contract is subject to the appropriation and availability

of State and/or Federal funds. In the event that the funds are not appropriated or are otherwise unavailable, the State reserves the right to terminate the Contract upon written notice to the Contractor. Said termination shall not be deemed a breach of Contract by the State. Upon receipt of the written notice, the Contractor shall cease all work associated with the Contract. Should such an event occur, the Contractor shall be entitled to compensation for all satisfactory and authorized services completed as of the termination date. Upon such termination, the Contractor shall have no right to recover from the State any actual, general, special, incidental, consequential, or any other damages whatsoever of any description or amount.

E.4. Tennessee Consolidated Retirement System. The Contractor acknowledges and

understands that, subject to statutory exceptions contained in Tennessee Code Annotated, Section 8-36-801, et. seq., the law governing the Tennessee Consolidated Retirement System (TCRS), provides that if a retired member of TCRS, or of any superseded system administered by TCRS, or of any local retirement fund established pursuant to Tennessee Code Annotated, Title 8, Chapter 35, Part 3 accepts state employment, the member's retirement allowance is suspended during the period of the employment. Accordingly and notwithstanding any provision of this Contract to the contrary, the Contractor agrees that if it is later determined that the true nature of the working relationship between the Contractor and the State under this Contract is that of “employee/employer” and not that of an independent contractor, the Contractor may be required to repay to TCRS the amount of retirement benefits the Contractor received from TCRS during the period of this Contract.

E.5. Confidentiality of Records. Strict standards of confidentiality of records shall be

maintained in accordance with the law. All material and information, regardless of form, medium or method of communication, provided to the Contractor by the State or acquired by the Contractor on behalf of the State shall be regarded as confidential information in accordance with the provisions of State law and ethical standards and shall not be disclosed, and all necessary steps shall be taken by the Contractor to safeguard the confidentiality of such material or information in conformance with State law and ethical

33

RFP-309.01-121

standards. The Contractor will be deemed to have satisfied its obligations under this section by exercising the same level of care to preserve the confidentiality of the State’s information as the Contractor exercises to protect its own confidential information so long as such standard of care does not violate the applicable provisions of the first paragraph of this section. The Contractor’s obligations under this section do not apply to information in the public domain; entering the public domain but not from a breach by the Contractor of this Contract; previously possessed by the Contractor without written obligations to the State to protect it; acquired by the Contractor without written restrictions against disclosure from a third party which, to the Contractor’s knowledge, is free to disclose the information; independently developed by the Contractor without the use of the State’s information; or, disclosed by the State to others without restrictions against disclosure. It is expressly understood and agreed the obligations set forth in this section shall survive the termination of this Contract.

E.6 Printing Authorization. The Contractor agrees that no publication coming within the

jurisdiction of Tennessee Code Annotated, Section 12-7-101, et. seq., shall be printed unless a printing authorization number has been obtained and affixed as required by Tennessee Code Annotated, Section 12-7-103 (d).

E.7. Incorporation of Additional Documents. Included in this Contract by reference are the

following documents: a. The Contract document and its attachments b. All Clarifications and addenda made to the Contractor’s Proposal c. The Request for Proposal and its associated amendments d. Technical Specifications provided to the Contractor e. The Contractor’s Proposal In the event of a discrepancy or ambiguity regarding the Contractor’s duties, responsibilities, and performance under this Contract, these documents shall govern in order of precedence detailed above.

E.8. Prohibited Advertising. The Contractor shall not refer to this Contract or the Contractor’s

relationship with the State hereunder in commercial advertising in such a manner as to state or imply that the Contractor or the Contractor's services are endorsed. It is expressly understood and agreed that the obligations set forth in this section shall survive the termination of this Contract in perpetuity.

E.9. Contractor Commitment to Diversity. The Contractor shall comply with and make

reasonable business efforts to exceed the commitment to diversity represented by the Contractor’s proposal responding to RFP-309.01-121 (Attachment 6.3, Section B, Item B.13.) and resulting in this Contract. The Contractor shall assist the State in monitoring the Contractor’s performance of this commitment by providing, as requested, a quarterly report of participation in the performance of this Contract by small business enterprises and businesses owned by minorities, women, and persons with a disability. Such reports shall be provided to the

34

RFP-309.01-121

state of Tennessee Governor’s Office of Business Diversity Enterprise in form and substance as required by said office.

E.10. Title to System. The Contractor warrants it has complete ownership of the claims

management database system described in Section A.15 hereof except for portions of such System licensed from and copyrighted by other software suppliers, and that it has full rights to grant to the State the uses of and the privileges to the System granted herein. Based on the Contractor's warranty, the State acknowledges title to the System shall remain in the Contractor.

E.11. Authorized Individuals. Each party hereto has provided the other party hereto with a list

identifying the individuals from whom the other party is authorized to accept any notices, requests, demands, or other advice which may be given hereunder by the party providing such list. Said lists, which are attached hereto as Attachment 4, shall be valid until revoked or amended by further written notice. The parties hereto shall only be entitled to rely on notices, requests, demands, or other advice given by such individuals.

E.12. Record Retention/Data Ownership. The Contractor shall maintain all pertinent records

for seven (7) years from the date of activity. All data is the property of the State and shall be provided to the State by the Contractor upon request in a reasonable format specified by the State.

E.13. Use of Additional Vendors. The Contractor acknowledges and agrees that the State may

select and utilize additional claims management services, such as rehabilitation, medical cost containment, legal and private investigation, according to criteria set by the State. The Contractor further agrees to work with any such additional contractors based on pre-established guidelines or procedures.

E.14. Legal Representation. The State is represented in contested workers' compensation

cases by the Tennessee State Attorney General and Reporter or his delegate. The Contractor shall cooperate with the Attorney General and Reporter or his delegate in defense of contested workers' compensation cases. With the approval of the Attorney General and Reporter and the concurrence of the Governor and Secretary of State, the State may elect to utilize legal representation services available through the Contractor. If legal representation through the resources of the Contractor is elected, such representation shall be supervised and monitored by the Attorney General and Reporter.

E.15. Transition of Subsequent Claims. Upon expiration of this Contract or in the event of its

termination for any reason, the Contractor shall provide a copy of the workers' compensation claim history and other pertinent data to the State or its designated agent. The information shall be furnished on an electronic data processing tape or such other data processing format as is reasonably compatible with the data processing system maintained by the State. Additionally, the Contractor shall provide all information necessary to properly interpret the data supplied. To insure continuous operation of the workers' compensation program and upon thirty (30) calendar days notice, this information shall be provided to the State or its designated agent at least forty-five (45) calendar days prior to the termination or expiration date of this Contract. Further, the State may require the Contractor to provide this information at various other times prior to or after the termination or expiration date of this Contract. It shall be the responsibility of the Contractor to process all medical bills delivered to it before the termination or expiration of this Contract. Medical bills delivered after the termination or expiration of this Contract shall be forwarded to the State or its designated agent.

E.16. Insurance. The Contractor shall carry adequate liability and other appropriate forms of

insurance.

35

RFP-309.01-121

a. The Contractor shall maintain, at minimum, the following insurance coverage:

(1) Comprehensive Commercial General Liability (including personal injury & property damage, premises/operations, independent contractor, contractual liability and completed operations/products) with a bodily injury/property damage combined single limit not less than one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) aggregate.

(2) Errors and Omissions Coverage not less than one million dollars ($1,000,000)

per occurrence and two million dollars ($2,000,000) aggregate.

b. At any time, the State may require the Contractor to provide a valid Certificate of Insurance detailing Coverage Description; Insurance Company & Policy Number; Exceptions and Exclusions; Policy Effective Date; Policy Expiration Date; Limit(s) of Liability; and Name and Address of Insured. Failure to provide required evidence of insurance coverage shall be a material breach of this Contract.

IN WITNESS WHEREOF:

CONTRACTOR LEGAL ENTITY NAME:

CONTRACTOR SIGNATURE DATE

PRINTED NAME AND TITLE OF CONTRACTOR SIGNATORY (above)

DEPARTMENT OF TREASURY:

DALE SIMS, STATE TREASURER DATE

APPROVED:

M. D. GOETZ, JR., COMMISSIONER DEPARTMENT OF FINANCE AND ADMINISTRATION

DATE

36

RFP-309.01-121

DEBORAH E. STORY, COMMISSIONER DEPARTMENT OF HUMAN RESOURCES

DATE

JOHN G. MORGAN, COMPTROLLER OF THE TREASURY DATE

37

RFP-309.01-121

ATTACHMENT 1

CLAIM HANDLING REQUIREMENTS 1. Receipt and Assignment

• All mail is to be date stamped upon receipt at the TPA on the front of the document.

• The receipt date for claims filed through the claim call center will be captured on the claim system.

• For claims filed through the claim call center, notification of each claim will be sent within two (2) business days to the state agency for which the injured employee works.

• The claim unit supervisor will review all loss notices on the day received. Medical only claims should receive the same initial review as lost time claims. Specific written instructions will be given to the assigned adjuster regarding:

- Additional information required for compensability determination

- Medical reports/input from medical resources

- Possible "red flags" (e.g., unwitnessed accidents, late reporting, etc.)

- Subrogation/other offset potential

- Jurisdictional issues

- Other specific claim management issues

• Claims will be provided to the appropriate adjuster within one work day of receipt.

2. File Review and Initial Contact

• Claim information will be reviewed by the adjuster on the day received with any outstanding data highlighted.

• Initial contact (employer, claimant/attorney, physician, and witnesses if applicable) will be made on the assignment date as well (within 24 hours of the claim's receipt). Both lost time claims and selected medical only claims will receive telephone contact. If the adjuster is unable to reach the claimant/physician within the set time period, written contact will be made and the employer notified of the difficulty. Content of initial contact will be thoroughly documented. Information obtained will address the following topics in addition to missing data from the first report of injury:

- Thorough description of accident, extent of injury, and any investigation findings.

- Attitude of employee regarding accident, employer, knowledge of workers' compensation process.

38

RFP-309.01-121

ATTACHMENT 1

- Attitude of employer regarding employee, work history, other pertinent information.

- If appropriate, verify that a physician from the EPO network was used. If not, redirect treatment.

- Availability of modified duty/job description, etc.

3. Medical Management

• Medical information will be reviewed upon receipt of the initial claim and during the life of the claim. Special attention will be given to the following "red flags":

- Back injury (strain/sprain) - neck, thoracic or lumbar

- Reference made to need for surgical intervention by treatment provider

- Cumulative trauma/repetitive motion disorders (e.g., tendonitis, carpal tunnel syndrome)

- Chiropractic treatment

- Work-related exposure illnesses (exposure to inhalants, etc.)

- Physical therapy treatment exceeding 30 days

- Stress/psychiatric - primary or "related"

- Complicating medical conditions (e.g. history of hypertension, obesity, heart disease, etc.)

- Nonspecific diagnosis or prognosis (e.g. "Will be unable to return to work for an undetermined length of time.")

- Subjective complaints without objective findings

- Use of multiple medications, particularly addictive drugs

- Serious fractures - major members; multiple fractures; fractures at joint sites; fractured skulls, hands or feet

• Medical review is also required in the following circumstances:

- If a modified duty position is available that appears to be consistent with the employee's disability but the treating provider determines "totally disabled"

- Any other cases with extenuating circumstances (e.g., layoff or facility shutdown, probation, unwitnessed/questionable accident, etc.)

- Any catastrophic injury/illness

39

RFP-309.01-121

ATTACHMENT 1

4. Ongoing Claim Management

• Supervisors will review claims every 25-30 days and provide specific written instructions to the adjuster. Review will include:

- Appropriateness of reserves

- "Red flags"

- Quality of medical documentation - history and physical, proposed treatment plan, anticipated result

- Status of subrogation/offsets investigation - Adjuster's plan of action to reach case closure - Need for rehabilitation/IME/disability management/investigation

• Claim adjuster will thoroughly document:

- 3 point contact within 24 hours - Ongoing contact with claimant, employer, physician, attorney - Any medical input provided - Confirmation of use of EPO network provider - For low back strains, whether the claimant was given the option of chiropractic

treatment. If not, why? - Referral(s) to appropriate utilization review and medical case management, with

appropriate progress updates - Follow up with rehabilitation/IME/disability management regarding any of their

activities and their plan for future action - Follow up with employer/physician regarding return to work and modified duty

availability - Plan of action for claim resolution - Termination of any benefits - Whether claimant is represented by legal counsel - Reason for denial of claim

• Claim adjuster will follow up on outstanding medical documentation. No bill will be

paid unless the corresponding medical report has been received and reviewed, confirming the medical necessity of the treatment. Medical reports should be expected within 2 weeks of the treatment or at least by the time the claim is received. Reports from IMEs should be expected within 1 week. The adjuster will diary scheduled appointments and follow up after the specified day to see if the claimant

40

RFP-309.01-121

kept the appointment and to advise the provider that bills will not be paid until medical

ATTACHMENT 1

• information is received. If the claimant misses an appointment, he/she will be called to determine why the appointment was not kept.

Medical reports should indicate, at a minimum, objective findings, progress and treatment plan with anticipated result.

• The State requires that the following medical only claims be thoroughly investigated

prior to acceptance or denial (i.e. obtain appropriate medical records, contact the claimant, supervisor and/or witnesses):

- back injuries - carpal tunnel syndrome - hypertension - repeat claimants - aggravation of pre-existing conditions - any claims with questionable circumstances

5. Reserves

• Initial reserves will be set within 48 hours of the claim's receipt. Within 90 days, reserves are established based on guidelines agreed upon with the State.

• Justification for all reserve calculations and modifications will be documented and

maintained. • Reserve advisory will be provided to the State after 90 days, and any time the

reserve change is greater than $25,000. 6. Communication Between Vendor and State

• The Vendor will meet with the State on a monthly basis to discuss claim management issues.

• Status reports will be provided to the State on a monthly basis for all claims

exceeding $25,000.00

• These reports must include: name of claimant, job title, claimant's ssn, date of injury, claims examiner, claim number, client location, date claim reported, next diary review date, description of accident, nature of injury and medical summary, adjuster's most recent status report, supervisor's most recent comments, indemnity and medical reserves, subrogation, and litigation.

7. DCA Oversight

• The DCA will act in an oversight capacity for all claims services. • The DCA must have on-line computer capacity to review claims daily.

Documentation on all files must be complete to allow the DCA full knowledge of the claim without the benefit of the hard copy file.

41

RFP-309.01-121

• There will be documentation on all medical only claims to include a minimum description of the accident and injury, why it is compensable, and if an EPO facility was used.

ATTACHMENT 1

• The TPA will be required to obtain prior approval from the DCA for the following

claims adjudication decisions: - Denials of the compensability of an accident/injury;

- Approvals to use rehabilitative services; - Approvals of death claims; - Approvals of heart attack/hypertension claims; - Discontinuance of overpayment collection efforts; - Discontinuance of subrogation collection efforts; - Initiations of surveillance/investigation services; - Approvals or denials of National Guard claims; and - Prior to entering into settlement discussions with a claimant/counsel, the TPA will

obtain the State's approval of the settlement conditions to be proposed.

Notwithstanding the above, the State may authorize the TPA to approve certain classes of claims without the necessity of obtaining the prior approval of the State. Any such authorization will be in writing and set forth the classes of claims involved.

• The DCA will conduct on-site case file audits at least every six (6) months at the

TPA's office. The DCA will issue a report of the audit findings. The TPA will review and respond in writing to each finding.

8. EPO Bill Paying Process

• The current TPA pays approximately 2,300 bills per month. • Medical bills are mailed / faxed to the TPA from the provider or claimant. • Bills are reviewed by the appropriate adjuster to determine relatedness to the claim.

That determination must be based on relevant medical records. • If applicable, adjuster will return the bill with a request for medical records.

• Approved bills are forwarded by TPA to the state’s managed care vendor for

repricing in accordance with the State mandated fee schedule.

• Upon return of a repriced bill, the TPA adjuster will promptly process payment.

9. Miscellaneous Requirements: • Send written notice to the claimant on every claim (both LT and MO) when approved

or denied. • Send a copy of every approval notice to the state's group insurance division. • Send a copy of every approval and denial notice to employee's state agency. • Send a notice of termination of temporary total disability benefits to the agency of

employment whenever benefits are terminated.

42

RFP-309.01-121

43

• TPA will retain a copy of all files which have been transferred to the Attorney General's Office for litigation. The original file is sent to the AGO, with a file summary prepared by the TPA adjuster. Written notice of the appeal is also prepared for the Tennessee Claims Commission.

ATTACHMENT 1

• Special procedures as established by the DCA will be followed on all blood borne

pathogens claims. These claims are not workers’ compensation claims; however, the DCA processes payment of bills in certain circumstances through the established WC payment process. On the average, forty (40) blood borne pathogens claims are filed per year. These claims must be maintained on a separate account.

• All blood borne pathogens claims will be assigned to the same examiner. • Special procedures as established by the DCA will be followed on Military / National

Guard claims. During the past three (3) years, sixteen (16).National Guard claims were filed.

• Military / National Guard claims will be assigned to the same examiner.

RFP-309.01-121

44

ATTACHMENT 2

CASE MANAGEMENT GUIDELINES

Medical Management Service Criteria

1. Preadmission Certification/Continued Stay Review

The TPA will notify the state's medical management vendor of any hospital admission or proposed admission via toll-free number or telefax. The TPA may, at its discretion, have outpatient procedures precertified.

2. Ambulatory Care Review (i.e., physical therapy, chiropractic or otherwise) / Continued Treatment Review

At its discretion, the TPA will notify the state's medical management vendor of the need for ambulatory review based upon the treatments involved, and the amount of the medical expenses, or, in the case of psychiatric treatment, immediately upon request of the treatment.

3. High Tech Diagnostic Procedures Review At its discretion, the TPA will notify the state’s medical management vendor of proposed high tech diagnostic procedures needing precertification via toll-free number or telefax. High tech diagnostic procedures include, but are not limited to, CT scans involving head or spine, and all MRIs.

4. Discharge Planning The TPA will be responsible for giving approval to the state's medical management vendor to proceed with discharge planning activity.

RFP-309.01-121

45

ATTACHMENT 2

5. Large Case and Rehabilitation Management At its discretion, the TPA will notify the state’s medical management vendor of the need for large case management based on the following guidelines:

• fractures or dislocations which involve a major joint area;

• crush injuries; • major amputations; • head injuries requiring hospitalization; • injuries resulting in paralysis; • 2nd or 3rd degree burns on 25% or more of

the body • catastrophic injuries; • cervical, thoracic, lumbar disc disorders

when surgery is required; • injuries exceeding 30 days lost time.

The TPA will forward the first report of injury and any other available medicals to the medical management vendor.

6. Outpatient Procedure Review The TPA will notify the state’s medical management vendor of the need for outpatient case review as determined in the TPA’s sole discretion for back and neck disorders (if not returned to work in two (2) weeks), carpal tunnel syndrome or stress related disorders.

7. Pharmacy Bill Audit The TPA will forward to the state’s medical management vendor any pharmacy bill which the TPA believes may require a Pharmacy Bill Audit.

8. Hospital Bill Review The TPA will forward to the state's medical management vendor any hospital bill which the TPA believes may require a Hospital Bill Review.

9. On-site Case Management On-site case management services may be performed at the request of the state, the TPA or the state's medical management vendor. All requests for on-site case management shall be approved by the state.

10. Retrospective Review At its discretion, the TPA will notify the state’s medical management vendor of the need for retrospective review based upon questions regarding the appropriateness of treatment already

RFP-309.01-121

46

rendered.

RFP-309.01-121

ATTACHMENT 3

ATTESTATION RE PERSONNEL USED IN CONTRACT PERFORMANCE

SUBJECT CONTRACT NUMBER:

CONTRACTOR LEGAL ENTITY NAME:

FEDERAL EMPLOYER IDENTIFICATION NUMBER: (or Social Security Number)

The Contractor, identified above, does hereby attest, certify, warrant, and assure that the Contractor shall not knowingly utilize the services of an illegal immigrant in the performance of this Contract and shall not knowingly utilize the services of any subcontractor who will utilize the services of an illegal immigrant in the performance of this Contract.

CONTRACTOR SIGNATURE NOTICE: This attestation MUST be signed by an individual empowered to contractually bind the Contractor. If said individual is not the chief executive or president, this document shall attach evidence showing the individual’s authority to contractually bind the Contractor.

PRINTED NAME AND TITLE OF SIGNATORY

DATE OF ATTESTATION

47

RFP-309.01-121

48

ATTACHMENT 4 Pursuant to Section E.11 of the Contract between the State of Tennessee, Department of Treasury, hereinafter referred to as the “State”, and CONTRACTOR LEGAL ENTITY NAME, hereinafter referred to as the “Contractor”, each party has outlined below the individuals from whom the other party is authorized to accept any notices, requests, demands, or other advice which may be given under the Contract. This Attachment shall be valid until revoked or amended by further written notice. The parties shall only be entitled to rely on notices, requests, demands, or other advice given by such individuals.

AUTHORIZED INDIVIDUALS OF STATE

Authorized Individual Position

Anne Adams Director of Division of Claims Admin. Monica Fuqua Senior Claims Examiner Mary Roberts-Krause General Counsel Larissa Dills Executive Secretary Steve Curry Assistant to the Treasurer

Attorneys employed with the Office of the Attorney General and Reporter Attorneys employed with the University of Tennessee For purposes of Section A.16, the State’s Information Systems Operations Group

The individuals listed above, auditors employed by the state of Tennessee, and the following individuals are authorized to make inquires concerning Claims Payment and Reconciliation Process.

Authorized Individual Position

Kim Morrow Director of Accounting Connie Gibson Assistant Director of Accounting Kimberly Whaley Manager Linda Baker Accounting Technician II All State department and agency designated workers’ compensation contacts or their authorized representatives.

Date Effective Dale Sims, State Treasurer

AUTHORIZED INDIVIDUALS OF CONTRACTOR

Authorized Individual Position

Date Effective (Signature and Title of Authorized Officer)

RFP-309.01-121

ATTACHMENT 6.2

PROPOSAL TRANSMITTAL AND STATEMENT OF CERTIFICATIONS AND ASSURANCES The Proposer must complete and sign this Proposal Transmittal and Statement of Certifications and Assurances. It must be signed, in the space below, by an individual empowered to bind the proposing entity to the provisions of this RFP and any contract awarded pursuant to it. If said individual is not the Proposer’s chief executive or president, this document shall attach evidence showing the individual’s authority to bind the proposing entity. Any contract resulting from this RFP process shall incorporate this Proposal Transmittal and Statement of Certifications and Assurances by reference as a part of said contract (refer to pro forma contract “Special Terms and Conditions”).

PROPOSER LEGAL ENTITY NAME:

PROPOSER FEDERAL EMPLOYER IDENTIFICATION NUMBER: (or Social Security Number)

The Proposer does hereby affirm and expressly declare confirmation, certification, and assurance of the following:

1) This proposal constitutes a commitment to provide all services as defined in the RFP Attachment 6.1, Pro Forma Contract Scope of Services for the total contract period and confirmation that the Proposer shall comply with all of the provisions in this RFP and shall accept all terms and conditions set out in the RFP Attachment 6.1, Pro Forma Contract.

2) The information detailed in the proposal submitted herewith in response to the subject RFP is accurate.

3) The proposal submitted herewith in response to the subject RFP shall remain valid for at least 120 days subsequent to the date of the Cost Proposal opening and thereafter in accordance with any contract pursuant to the RFP.

4) The Proposers shall comply with:

a) the laws of the State of Tennessee;

b) Title VI of the federal Civil Rights Act of 1964;

c) Title IX of the federal Education Amendments Act of 1972;

d) the Equal Employment Opportunity Act and the regulations issued there under by the federal government;

e) the Americans with Disabilities Act of 1990 and the regulations issued there under by the federal government;

f) the condition that the submitted proposal was independently arrived at, without collusion, under penalty of perjury; and,

g) the condition that no amount shall be paid directly or indirectly to an employee or official of the State of Tennessee as wages, compensation, or gifts in exchange for acting as an officer, agent, employee, subcontractor, or consultant to the Proposer in connection with the Procurement under this RFP.

SIGNATURE & DATE:

PRINTED NAME & TITLE:

_______________________________________________________________________

49

RFP-309.01-121

ATTACHMENT 6.3

TECHNICAL PROPOSAL & EVALUATION GUIDE — SECTION A

PROPOSER NAME:

SECTION A — MANDATORY REQUIREMENTS

The Proposer must address ALL Mandatory Requirements section items and provide, in sequence, the information and documentation as required (referenced with the associated item references). The RFP Coordinator will review all general mandatory requirements, including but not limited to the following:

Proposal received on or before the Proposal Deadline.

Technical Proposal copies and Cost Proposal packaged separately.

Technical Proposal contains NO cost data.

Proposer did NOT submit alternate proposals.

Proposer did NOT submit multiple proposals in a different form.

Technical Proposal does NOT contain any restrictions of the rights of the State or other qualification of the proposal.

The RFP Coordinator will also review the proposal to determine if the Mandatory Requirement Items (below) are met and mark each with pass or fail. For each requirement that is not met, the Proposal Evaluation Team must review the proposal and attach a written determination. Any contract resulting from this RFP process shall incorporate by reference the respective proposal responses to all items below as a part of said contract (refer to pro forma contract “Special Terms and Conditions”). NOTICE: In addition to these requirements, the State will also evaluate compliance with ALL RFP requirements.

State Use ONLY Proposal Page # (to be

completed by Proposer)

Mandatory Requirement Items Pass/Fail

A.1 Provide the Proposal Transmittal and Statement of Certifications and Assurances (detailed in RFP Attachment 6.2) completed and signed, in the space provided, by an individual empowered to bind the Proposer to the provisions of this RFP and any resulting contract.

Each Proposer must sign the Proposal Transmittal and Statement of Certifications and Assurances without exception or qualification.

A.2 Provide the following as documentation of financial responsibility and stability.

a current written bank reference, in the form of a standard business letter, indicating that the proposer’s business relationship with the financial institution is in positive standing

two current written, positive credit references, in the form of standard business letters, from vendors with which the proposer has done business or, documentation of a positive credit rating determined by a accredited credit bureau within the last 6 months

copies of valid certificates of insurance as follows:

50

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Mandatory Requirement Items Pass/Fail

51

a. The Contractor shall maintain, at minimum, the

following insurance coverage:

(1) Comprehensive Commercial General Liability (including personal injury & property damage, premises/operations, independent contractor, contractual liability and completed operations/products) with a bodily injury/property damage combined single limit not less than one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) aggregate.

(2) Errors and Omissions Coverage not less than one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) aggregate.

A.3 The Proposer must provide a statement of whether the Proposer or any individual who shall perform work under the contract has a possible conflict of interest (e.g., employment by the State of Tennessee) and, if so, the nature of that conflict.

Any questions of conflict of interest shall be solely within the discretion of the State, and the State reserves the right to cancel any award.

A.4 The Proposer must currently adjudicate at least 20,000 workers’ compensation claims per year. Provide the following information on a sufficient number of companies for which you handle workers' compensation claims to establish that you meet this requirement: • name of company (or companies); • total number of claims handled for each company; • a contact name for each company.

A.5 The Proposer must provide a statement that it will interface (i.e. telephonic, facsimile) with one (1) or more medical management vendors as selected by the state and as outlined in Attachment 2 of the Pro Forma Contract

A.6 The Proposer must provide a statement that there will be a resumption of service to the State and to claimants within seventy-two (72) hours in the event of a disaster which affects the primary claims office(s).

A.7 The Proposer must provide a statement that it will provide the State with a Type II Independent Service Auditor’s report prepared for its service organization in accordance with Statement on Auditing Standards (SAS) Number 70 on at least an annual basis. The Proposer shall comply with any changes in the standards that may occur during the life of the contract.

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Mandatory Requirement Items Pass/Fail

52

A.8 The Proposer must provide a statement that it will provide secure on-line computer access to the State including but not limited to the Department of Human Resources and the Department of Finance & Administration (F&A). The Proposer’s system must be able to restrict access to the adjusters’ file notes by user so that they are available only to Treasury personnel.

A.9 The Proposer must provide a statement that it will make an

adjuster available 24 hours per day, 7 days per week.

A.10 The Proposer must provide a statement that it will meet with the DCA in Nashville on a monthly basis to discuss open claims, and review any outstanding issues and general claims administration issues. The Proposer will also be required to meet quarterly with the DCA and the State's medical management vendors.

A.11 The Proposer must provide a statement that it will make telephonic and electronic claim intake service available 24 hours per day, 7 days per week. The Proposer will provide notification of each filing to the injured employee’s agency contact within 2 business days of filing.

A.12 The Proposer must provide a statement that it will interface with the State’s payroll and leave system for the purposes of reporting temporary disability payments.

A.13 The Proposer must provide a statement that it will perform quarterly audits of randomly selected medical bills that have been repriced to the state mandated fee schedule by the State’s repricing vendor.

A.14. In 2007, the State participated in 46 benefit review conferences: eighteen (18) were in West Tennessee, nineteen (19) were in Middle Tennessee and nine (9) were in East Tennessee. The Proposer must provide a statement that the proposer's staff will travel throughout the State to attend benefit review conferences and, upon request, to participate in employer/employee education, training and customer service meetings.

RFP-309.01-121

TECHNICAL PROPOSAL & EVALUATION GUIDE — SECTION B

PROPOSER NAME:

SECTION B — QUALIFICATIONS & EXPERIENCE

The Proposer must address ALL Qualifications and Experience section items and provide, in sequence, the information and documentation as required (referenced with the associated item references). A Proposal Evaluation Team, made up of three or more State employees, will independently evaluate and score the proposal’s “qualifications and experience” responses. Any contract resulting from this RFP process shall incorporate by reference the respective proposal responses to all items below as a part of said contract (refer to pro forma contract “Special Terms and Conditions”).

Proposal Page # (to be completed

by Proposer) Qualifications & Experience Items

B.1 Describe the Proposer’s form of business (i.e., individual, sole proprietor, corporation, non-profit corporation, partnership, limited liability company) and detail the name, mailing address, and telephone number of the person the State should contact regarding the proposal.

B.2 Provide a statement of whether there have been any mergers, acquisitions, or sales of the Proposer company within the last ten years, and if so, an explanation providing relevant details.

B.3 Provide a statement of whether the Proposer or any of the Proposer’s employees, agents, independent contractors, or subcontractors have been convicted of, pled guilty to, or pled nolo contendere to any felony, and if so, an explanation providing relevant details.

B.4 Provide a statement of whether there is any pending litigation against the Proposer; and if such litigation exists, an attached opinion of counsel as to whether the pending litigation will impair the Proposer’s performance in a contract under this RFP.

B.5 Provide a statement of whether, in the last ten years, the Proposer has filed (or had filed against it) any bankruptcy or insolvency proceeding, whether voluntary or involuntary, or undergone the appointment of a receiver, trustee, or assignee for the benefit of creditors, and if so, an explanation providing relevant details.

B.6 Provide a statement of whether there are any pending Securities Exchange Commission investigations involving the Proposer, and if such are pending or in progress, an explanation providing relevant details and an attached opinion of counsel as to whether the pending investigation(s) will impair the Proposer’s performance in a contract under this RFP.

B.7 Provide a brief, descriptive statement indicating the Proposer’s credentials to deliver the services sought under this RFP.

B.8 Briefly describe how long the Proposer has been performing the services required by this RFP and include the number of years in business.

B.9 Describe the Proposer organization’s number of employees, client base, and location of offices.

53

RFP-309.01-121

Proposal Page # (to be completed

by Proposer) Qualifications & Experience Items

54

B.10 Provide a narrative description of the proposed project team, its members, and organizational structure.

B.11 Provide a personnel roster and resumes of key people who shall be assigned by the Proposer to perform duties or services under the contract (include estimated number of hours to be worked on the contract for each person, and the resumes shall detail each individual’s title, education, current position with the Proposer, and employment history) as well as an organizational chart highlighting the key people who shall be assigned to accomplish the work required by this RFP and illustrating the lines of authority and designate the individual responsible for the completion of each service component and deliverable of the RFP. The chart should also include the lines of authority and the unit/people responsible for system security, contingency planning and operations, and for IT networks.

B.12 Provide a statement of whether the Proposer intends to use subcontractors, and if so, the names and mailing addresses of the committed subcontractors and a description of the scope and portions of the work the subcontractors will perform.

B.13 Provide documentation of Proposer commitment to diversity as represented by its business strategy, business relationships, and workforce — this documentation should detail:

a description of the Proposer’s existing programs and procedures designed to encourage and foster commerce with business enterprises owned by minorities, women, persons with a disability and small business enterprises

a listing of the Proposer’s current contracts with business enterprises owned by minorities, women, persons with a disability and small business enterprises, including the following information

o contract description and total value

o contractor name and ownership characteristics (i.e., ethnicity, sex, disability)

o contractor contact and telephone number

an estimate of the level of participation by business enterprises owned by minorities, women, persons with a disability and small business enterprises in a contract awarded to the Proposer pursuant to this RFP, including the following information:

o participation estimate (expressed as a percent of the total contract value that will be dedicated to business with subcontractors and supply contractors having such ownership characteristics)

o descriptions of anticipated contracts

o names and ownership characteristics (i.e., ethnicity, sex, disability) of anticipated subcontractors and supply contractors anticipated

the percent of the Proposer’s total current employees by ethnicity, sex, and disability

Proposers that demonstrate a commitment to diversity will advance State efforts to expand opportunity to do business with the State as contractors and sub-contractors. Proposal evaluations will recognize the positive qualifications and experience of a Proposer that does business with enterprises owned by minorities, women, persons with a disability and small business enterprises and that offers a diverse workforce to

RFP-309.01-121

Proposal Page # (to be completed

by Proposer) Qualifications & Experience Items

55

meet service needs.

B.14 Provide customer references for between three to six similar projects either currently serviced by the vendor or completed within the previous 5 year period, as well as a list, if any, of all current contracts with the State of Tennessee and all those completed within the previous five year period. In addition, provide at least one terminated account. Do not include references for accounts that terminated due to mergers, acquisitions, or going out of business.

The references shall be provided to the State in the form of questionnaires that have been fully completed by the individual providing the reference. The State has included the reference information questionnaire to be used, as RFP Attachment 6.8. The Proposer must use this form, or an exact duplicate thereof.

The Proposer will be solely responsible for obtaining the fully completed reference information questionnaires, and for including them within the Proposer’s sealed Technical Proposal. In order to obtain and submit the completed reference information questionnaire, the Proposer shall follow the process detailed below exactly:

Proposer makes an exact duplicate (paper or Word electronic document) of the State’s form, as it appears in RFP Attachment 6.8;

Proposer sends the copy of the form to the reference it has chosen, along with a new, standard #10 envelope that is capable of being sealed;

Proposer directs the person providing the reference to complete the form in its entirety, sign and date it, and seal it within the provided envelope. The person may prepare a manual document or complete the exact duplicate Word document and print the completed copy for submission. After sealing the envelope, the person providing the reference must sign his or her name in ink across the sealed portion of the envelope and return it directly to the Proposer.The Proposer will give the reference provider a deadline such that the Proposer will be able to collect all references in time to include them within its sealed Technical Proposal.

When the Proposer receives the sealed envelopes from the reference providers, the Proposer will not open them. Instead, the Proposer will enclose all of the unopened reference envelopes in an easily identifiable larger envelope, and will include this envelope as a part of the written Technical Proposal. Therefore, when the State opens the Technical Proposal box, the State will find a clearly labeled envelope enclosed, which contains all of the sealed reference envelopes.

The State will base its reference check evaluation on the contents of these envelopes. THE STATE WILL NOT ACCEPT LATE REFERENCES OR REFERENCES SUBMITTED THROUGH ANY OTHER CHANNEL OF SUBMISSION OR MEDIUM, WHETHER WRITTEN, ELECTRONIC, VERBAL OR OTHERWISE.

Each completed questionnaire must include:

Proposer’s name;

Organization name;

Name and title of the organization contact knowledgeable about the project work;

RFP-309.01-121

Proposal Page # (to be completed

by Proposer) Qualifications & Experience Items

56

Date reference form was completed; and

Responses to numbered items in RFP Attachment 6.8

Each evaluator will generally consider the results of reference inquiries by the State regarding all references provided (both state and non-state). Current or prior contracts with the State are not a prerequisite and are not required for the maximum evaluation score possible, and the existence of such contracts with the State will not automatically result in the addition or deduction of evaluation points.

B.15 Provide as of January 1, 2008, the total number of contracts in force, total number of employees covered and total number of workers’ compensation claims administered in 2007 for insured and self-insured clients. Provide separate totals for your business within the State of Tennessee.

B.16 What percentage of your company's overall total revenues is from the administration of workers' compensation claims?

B.17 Have you or any of your clients been penalized for late payments or any other workers’ compensation statutory issue due to your actions? If so, describe.

B.18 Identify who will be responsible for managing this account and where he/she will be located. Include a brief biography including education, years of experience in various assignments, and the names of the three (3) largest accounts he/she supervises.

B.19 What will be the minimum qualifications for the staff who will be assigned to this account? How many employees do you anticipate will be assigned to this account?

B.20 Provide job descriptions that differentiate supervisor, senior, and junior level adjusters’ responsibilities.

B.21 Provide the average caseload for your claims adjudication staff at any given time. Specify medical only vs. lost time claims and supervisors vs. specific adjuster levels. State what number you would propose as a maximum caseload for lost time claims and for medical only claims.

B.22 What was your employee turnover rate for calendar years 2006 and 2007 for the claims handling staff in the office you propose to manage this account?

B.23 Describe the training the staff receives prior to assuming a caseload. Describe ongoing staff training and education.

(Maximum Section B Score = 30)

SCORE (for all Section B items above, B.1 through B.23):

RFP-309.01-121

57

TECHNICAL PROPOSAL & EVALUATION GUIDE — SECTION C

PROPOSER NAME:

SECTION C — TECHNICAL APPROACH

The Proposer must address ALL Technical Approach section items and provide, in sequence, the information and documentation as required (referenced with the associated item references). A Proposal Evaluation Team, made up of three or more State employees, will independently evaluate and score the proposal’s response to each item. Each evaluator will use the following whole number, raw point scale for scoring each item:

0 = little value 1 = poor 2 = fair 3 = satisfactory 4 = good 5 = excellent

The RFP Coordinator will multiply each item score by the assigned weight with the product being the item’s raw weighted score for purposes of calculating the section score as detailed at the end of this table. Any contract resulting from this RFP process shall incorporate by reference the respective proposal responses to all items below as a part of said contract (refer to pro forma contract “Special Terms and Conditions”).

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

C.1 Provide a narrative that illustrates the Proposer’s understanding of the State’s requirements and project schedule.

3

C.2 Provide a narrative that illustrates how the Proposer will complete the scope of services, accomplish required objectives, and meet the State’s project schedule.

3

C.3 Proposers must provide a comprehensive narrative, captioned “Project Management,” that illustrates how the Proposer will manage the project, ensure completion of the scope of services, and accomplish required objectives within the State’s project schedule. Provide an implementation outline and schedule that you would propose for the State with a September 1, 2008 start date, including specific time-frames and completion dates for the following project milestones: 1) transition of takeover claims, 2) conducting system training, and 3) developing and implementing system conversion plan, and performing post-implementation review services.

5

C.4 Describe how the Proposer will provide the following

required claims services:

• Workers’ compensation claim investigation and compensability determination of claims;

• Ongoing file management of approved claims;

10

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

58

• Identification of claims requiring field investigation, as well as the provision of field investigation services;

• Ongoing claimant, employer, and medical provider contact;

• Semi-monthly payment of indemnity benefits based on pre-established procedures with the State’s payroll department

• Electronic transmission of semi-monthly indemnity payment data to the State’s Enterprise Resource Plan (ERP) system.

• Medicare set-aside arrangements on permanent disability settlements

C.5 Do you have secure electronic interface from your call center service system to your claims system? How frequently is your claims system updated once a claim is reported?

4

C.6 Describe the process you have or will put in place that assures that only authorized employees could report claims.

3

C.7 Briefly describe your Information Security Management process. Discuss the involvement of Director-level and senior management ("C" level) personnel in setting policy and direction and in reviewing security incidents, audits, and assessments related to your security program. Who does your most senior IT/Information Security officer report to?

3

C.8 How often is there an audit/assessment of your IT/Information System Security program? Discuss briefly the use of external assessments and/or audits versus internal assessments by your organization. When was your last IT/Information Security program audit/assessment? Discuss the resolution status of any findings or recommendations resulting from your last audit/assessment that were addressed to senior management.

4

C.9 Briefly discuss both your privacy safeguards and your security safeguards for maintaining confidentiality of personally identifiable data and associated medical records. When was your last Security Audit/Assessment that covered the system being proposed for the State? Approximately when

5

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

59

should the next Security Assessment occur that would include the system being proposed?

C.10 Briefly discuss your capability and approach to securing personally identifiable personal or medical data when it is extracted from your primary system for local use or during movement/transmission to another location. Specifically address how backup files are secured during movement. Discuss your use or planned use of encryption to protect data both at rest and in motion.

5

C.11 In the last 24 months has there been any audit exception addressed to senior management relating to the confidentiality of claimant's claim data or medical information that remains unresolved? In the last 24 months has there been a breach of security that would have required notification of claimants pursuant to T.C.A. 47-18-2107?

4

C.12 Describe your data backup procedures and disaster recovery plan. Does your planning for continuity of operations include plans for the Claims Management staff and also for restoring telecommunications capability? Is there an existing contractual or fail-over arrangement for processing at another site in the event of a disaster at your primary site? How soon after a disaster event would you expect the back-up processing site to be operational? When was your last DR test involving recovery of the system being proposed for the State? When is the next DR test scheduled that will involve this system?

5

C.13 Briefly describe your Business Continuity Management process and the identification of risk areas to be addressed. Discuss the involvement of Director-level and senior management ("C" level) personnel in setting policy and direction and in reviewing incidents, audits, and assessments related to your Business Continuity program. Who does the most senior person dedicated to Business Continuity report to? Describe how you manage customization for each separate facility. Briefly discuss the ability of the plan to address a regional disaster affecting multiple offices, the Claims Management staff, and telecommunications capabilities. Are there any facilities or functions that you do not plan to have functioning again within 72 hours which would provide any services under this proposal? If so, describe how the functions would be supported.

4

C.14 When were the last Business Continuity/DR tests involving recovery of the system and facilities being

4

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

60

proposed for the State? When is the next Business Continuity/DR test scheduled that will involve the proposed system and supporting facilities? Discuss briefly the use of external assessments and/or audits of your Business Continuity program versus internal assessments and tests by your organization. When was your last Business Continuity program audit/assessment? Discuss the resolution status of any findings or recommendations resulting from your last Business Continuity audit/assessment that were addressed to senior management.

C.15 Describe step by step what happens when a medical bill is received at the TPA. Include such steps as: • bill receipt • forwarding to bill review vendor • medical report matching • claim system input • provider verification • handling of missing information • check preparation and distribution • bill filing and record retention

4

C.16 Describe how you will collect and track the following information: • diagnosis code • CPT code • number of visits to provider • length of hospital stay • use of network provider (Yes/No)

3

C.17 Explain how you will audit medical bills that have been repriced to the state mandated fee schedule by the State’s repricing vendor.

4

C.18 Attachment 6.7 provides a comprehensive list of claim data requirements for the State of Tennessee. Please indicate any data elements which your system cannot currently capture on a submitted bill.

3

C.19 The Proposer selected to provide TPA services must integrate with Vendors who provide cost containment, medical bill repricing and provider network services for the State. Services include various types of utilization review (e.g. inpatient, outpatient, high-tech diagnostic), case management, and a preferred provider arrangement. The DCA has pre-existing case management criteria (see Attachment 2 of the Pro Forma Contract and it will be the Proposer's

4

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

61

responsibility to identify claims which meet those criteria and make the appropriate referral to the State's managed care vendor. Describe your ability to:

• send all bills to the State’s selected Vendor for bill repricing on a daily basis

• coordinate specific lost time claims that are sent to the State’s Vendor for large case management

• assist the State’s Vendor in referring state employees to proper medical providers

• monitor compliance by state employees with the State’s preferred provider network

• meet quarterly with the State’s Vendors to discuss any issues

C.20 Briefly describe your current workers' compensation claims system and its architecture. How long has this system been in production? Briefly describe significant system revisions during the last three years. Briefly discuss planned major system revisions expected during the next two years. Discuss your current or planned use of document imaging capabilities and work flow processing. Describe how you envision image archives being transferred to a successor vendor for takeover and claim research. Discuss the system's current or planned use of and integration with insurance data standards and automated interfaces with business partners. If applicable, identify any dependency on host directed print from your system to the State's network environment.

4

C.21 The State manages its PC inventory using a 3 or 4 year replacement cycle to update its hardware capabilities. Is the user interface proposed for the State web based? Briefly list any desktop operating system dependencies for the proposed user interface to operate satisfactorily. Specifically address any version dependencies or issues with Windows XP or Vista, Internet Explorer 6 or 7, .Net, or Java,

5

C.22 Does the proposed system use role-based authorization? Describe any involvement by the State's security administrators in establishing or maintaining security authentication or authorizations for State staff to access your system.

3

C.23 How long does the Proposer retain detailed claims information in its system?

3

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

62

C.24 Attachment 1 of the Pro Forma Contract outlines specific Claims Handling Requirements. The Proposer must agree to adhere to these standards. Please make an affirmative statement to that effect.

5

C.25 How frequently are adjusters required to review their files? How do supervisors assure that adjusters follow-up on their comments and recommendations? How are these reviews documented in the file?

4

C.26 Discuss your procedures for handling medical only claims. Include monitoring procedures and the steps your staff must take to complete an investigation of a medical only claim.

3

C.27 Describe the procedures you have in place to “red flag” medical only claims that may become lost time claims.

3

C.28 Describe how your files are maintained and organized (e.g. diary system, adjusters’ notes, etc.). Include how files are stored (hard copy or paperless) and how files can be obtained within 24 hours after requested.

3

C.29 Describe what steps you take to ensure prompt, accurate payment of compensation and medical bills. Do you require medical reports prior to issuing payments? State employees have the option of using personal leave in lieu of temporary total disability benefits or may be eligible for assault pay. Prior to issuing a temporary disability check, how will you confirm that the employee is off from work and is without pay?

5

C.30 Indicate who is responsible for reviewing claims for medical appropriateness/relatedness to injury.

4

C.31 Describe your enterprise risk management process including fraud risk management.

4

C.32 Describe your quality review procedures including how claims are selected for this process and who conducts the review. Indicate if the results are available to clients.

3

C.33 Discuss your settlement practices with specific emphasis on the impact of Tennessee statutes.

3

C.34 What is your litigation rate for accounts in Tennessee?

2

C.35 The State estimates that there will be 1300 lost time 5

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

63

and 600 medical only takeover files. Describe your proposed action for takeover files that provides for timely and effective claims management of these claims. Provide a detailed transition plan to include data conversion, timely medical and lost time payments, and coordination with other Vendors. What will you need from the State of Tennessee to complete the transfer of takeover claims?

C.36 The State anticipates conversion of all claims opened since January 1, 2001. Provide a detailed data conversion plan for the State’s historical data, including how the State will be able to access data, if needed, that is not converted.

5

C.37 Describe how you determine when a surveillance investigation is necessary on a workers’ compensation claim.

2

C.38 Are you a member of the Claim Index Bureau reporting system? If so, describe your claim indexing process.

3

C.39 Do you routinely issue client satisfaction surveys? If so, provide a sample of your survey.

2

Claims Payment and Reconciliation Process For payment of all approved claims for workers’ compensation and all appropriate medical fees, the State requests that the Contractor issue payments in the form of checks and/or Automated Clearing House (ACH) electronic funds transfer against the Contractor’s own bank account. The State will fund the Contractor for the total issue amount of the payments, net of cancellations, voids or other payment credit adjustments, daily or at the time of each issuance of checks or ACH, provided the Contractor’s payment process includes timely delivery of checks and settlement of ACH transactions. The preferred funding method for the State is to receive daily an Automated Clearing House (ACH) debit from the Contractor. Since the State intends to fund payments at the time of issuance, it does not intend to maintain a separate bank account or an escrow account with the Contractor or to pre-fund an account. In addition, the State will monitor and age the outstanding check balance and may periodically request the Contractor to conduct a review and/or cancel-reissue of stale dated outstanding items. At the time of payment issuance or check cancellation, the State requires access to information or reports providing a detailed listing of the payment activity, including check serial numbers and ACH payment identifiers, payee names, payment amounts and

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

64

associated claim numbers balancing to the required funding amount for the day.

The Contractor issues all related Internal Revenue Service Form 1099 reports, submits required 1099 information directly to the IRS and maintains responsibility in matters relating to such information provided to payees and to the IRS.

C.40 Provide a general overview of the Proposer’s capability to provide claims payment processing, check reconciliation, funding options and IRS 1099 processing in the manner described above. More specific information is requested in the following sections.

7

C.41 Describe how the State will access or be provided with the specified daily and monthly check reconciliation and payment activity reports or information. Provide sample reports if available.

5

C.42 Discuss how and when the State is notified of the day’s funding requirement amount, and the process the State can perform for reconciling to the day’s funding requirement amount based on the daily payment information.

5

C.43 Discuss security and quality controls over the design, printing and mailing of checks, as well as any fraud prevention features of check stock.

3

C.44 Describe the check mailing or delivery process, including the current location and timing for the printing and mailing of checks.

3

C.45 Discuss the Proposer’s current utilization, or any plans for the future utilization, of the ACH network or other electronic fund transfer vehicles as a remittance method for medical and/or indemnity payments.

2

C.46 Describe your process for handling outstanding and stale-dated checks and compliance with the State’s Unclaimed Property law pursuant to T.C.A. 66-29-101.

4

C.47 Subrogation

Discuss your policy and procedures for subrogation claims. How do you identify claims for the purposes of subrogation and how do you monitor the adjusters’ efforts to collect subrogation.

How does your system capture subrogation payment information? How will recoveries be

4

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

65

returned to the State?

What percent of paid claims did subrogation savings represent for your entire book of workers’ compensation business in 2007?

C.48 Reserving Describe your company’s method and philosophy of reserving for ultimate exposure. Will you accommodate the State’s reserving methods?

Are reserve amounts captured in your claim system?

What documentation is maintained which justifies the original reserve amount and any subsequent adjustments? Provide an example of how an adjustment is justified.

How do you audit your reserve accuracy?

4

C.49 Communication

What is your policy regarding returning phone calls? What time frame will you guarantee that phone calls will be returned? How do you monitor your staff’s adherence to your policy?

3

C.50 Data Reporting and Analysis

Provide a complete description of the reporting package the Proposer proposes to deliver at the fee included in the cost proposal, including any unique features of the Proposer’s standard and custom reporting package. What information is provided on-line and in hard copy form daily, as well as monthly? Provide copies of the reports available to clients.

How many different report formats do you offer? Provide a sample from an unidentified client.

Discuss the timeliness of delivery of reports by hard copy and by electronic delivery.

Discuss the types and timing of data available by electronic delivery:

• On-line view • On-line manipulation • On-line download of formatted reports • On-line download of raw data • Report writer access

10

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

66

How long is historical data available on-line and in hard copy?

The State will require at a minimum the following reports from the vendor. Describe your method and ability to provide:

Quarterly

• Report listing all reserve changes over $25,000

• Loss analysis showing claims by body part, type of injury, location of injury, etc.

• Report by agency listing average reporting time (from date of injury to date reported to employer and to date of filing)

Monthly

• Loss run information summarizing number of claims opened, closed, and pending, amounts paid and reserves

• Loss analysis by agency showing number of claims, amount paid, amount incurred, body part, type of injury, location, etc.

• Check reconciliation reports

• Payment activity report by Department/Division code and location

• Temporary Total Disability reports by Department/Division code transmitted by secure email to each state agency contact

• Payment report by type of payment (medical, permanent disability, temporary disability and death)

• Caseload count by adjuster

• Subrogation recoveries and refunds

Weekly

• aging report for all claims pending a decision on compensability

RFP-309.01-121

State Use ONLY Proposal Page # (to be

completed by Proposer)

Technical Approach Items Score Item

Weight

Raw Weighted

Score

67

• report for new claims that require chiropractic treatment option

Daily

• Detailed listing of payments with totals by payment type as described in the narrative that precedes Section C.38.

Ad hoc reports

C.51 What risk management data reporting capabilities can you provide in addition to your claims management system?

4

C.52 Describe the ad hoc reporting capabilities in both your claims management system and risk management data system that the Proposers will provide to the State.

4

Total Raw Weighted Score:(sum of Raw Weighted Scores above)

Total Raw Weighted Score:

1045 X 40

(maximum section score) = SCORE:

RFP-309.01-121

68

ATTACHMENT 6.4 COST PROPOSAL & SCORING GUIDE

NOTICE TO PROPOSER: This Cost Proposal MUST be completed EXACTLY as required.

PROPOSER NAME:

SIGNATURE & DATE:

NOTE: The signatory must be an individual or a company officer empowered to contractually bind the Proposer. If the Signatory is not the Proposer’s chief executive or president, this Statement of Certifications and Assurances SHALL attach evidence showing the Signatory’s authority to bind the Proposer.

COST PROPOSAL SCHEDULE The proposed cost, detailed below, shall indicate the proposed price for providing the entire scope of service including all services as defined in the RFP Attachment 6.1, Pro Forma Contract Scope of Services for the total contract period. The proposed cost and the submitted technical proposal associated with this cost shall remain valid for at least 120 days subsequent to the date of the Cost Proposal opening and thereafter in accordance with any resulting contract between the Proposer and the State. All monetary amounts are United States currency.

Proposed Cost State Use ONLY Cost Item

Description 09/01/08 to 08/31/09

09/01/09 to 08/31/10

09/01/10 to 08/31/11

09/01/11 to 08/31/12

09/01/12 to 08/31/13

Sum of all years

* Estimated # of Claims

Weighted Cost

For all services set forth in Sections A.1 through A.14 of this Contract for Medical Only Claims

$_______ per claim assigned during above period

$_______ per claim assigned during above period

$_______ per claim assigned during above period

$_______ per claim assigned during above period

$_______ per claim assigned during above period

X 2800

For all services set forth in Sections A.1 through A.14 of this Contract for Lost Time Claims

$_______ per claim assigned during above period

$_______ per claim assigned during above period

$_______ per claim assigned during above period

$_______ per claim assigned during above period

$_______ per claim assigned during above period

X 900

RFP-309.01-121

69

For all services set forth in Sections A.1 through A.14 of this Contract for the Assumption of Take Over Claims (Medical only)

$_______ per claim assigned

X 400

For all services set forth in Sections A.1 through A.14 of this Contract for the Assumption of Take Over Claims (Lost Time)

$_______ per claim assigned

Assumption of Take Over Claims will be for the first year only.

X 1300

* NOTE. Estimated # of Claims is an assumption to be used for evaluation purposes only.

The RFP Coordinator shall use the evaluation cost amount derived from the proposed cost amounts above and the following formula to calculate the COST PROPOSAL SCORE. Calculations shall result in numbers rounded to two decimal places.

Evaluation Cost Amount:(sum of all weighted cost amounts above)

Lowest Evaluation Cost Amount from all Proposals

Evaluation Cost Amount Being Evaluated X 30

(maximum section score)

= SCORE:

RFP-309.01-121

ATTACHMENT 6.5

PROPOSAL SCORE SUMMARY MATRIX

RFP Coordinator Date

QUALIFICATIONS & EXPERIENCE Maximum Points: 30

PROPOSER NAME PROPOSER NAME PROPOSER NAME

EVALUATOR NAME

EVALUATOR NAME

EVALUATOR NAME

EVALUATOR NAME

REPEAT AS NECESSARY

AVERAGESCORE:

AVERAGESCORE:

AVERAGE SCORE:

TECHNICAL APPROACH Maximum Points: 40

EVALUATOR NAME

EVALUATOR NAME

EVALUATOR NAME

EVALUATOR NAME

REPEAT AS NECESSARY

AVERAGE SCORE:

AVERAGESCORE:

AVERAGE SCORE:

COST PROPOSAL Maximum Points: 30 SCORE: SCORE: SCORE:

PROPOSAL SCORE Maximum Points: 100

TOTALSCORE:

TOTALSCORE:

TOTAL SCORE:

70

RFP-309.01-121

71

ATTACHMENT 6.6

STATE OF TENNESSEE CLAIM EXPERIENCE AND INFORMATION

RFP # 309.01-121

Fiscal Year (ending June 30) 2004 2005 2006 2007 Average Number of Employees:

72,058

74,472

76,127 76,755

Number of Claims Received During FY:

MO 2,958 LT 926

2,710 1,020

2,829 830

2,830750

Total Medical Expenses:*

$10,840,378

$12,423,094

$10,645,745 $10,587,088

Temporary Total Payments:*

$1,626,028

$1,497,685

$1,661,706 $2,066,577

Permanent Disability Payments:*

$7,896,598

$6,911,648

$7,250,563 $6,441,543

Death Payments: $496,244 $304,040 $362,168 $431,084 Number of Open Files at FY end:

MO 364 LT 1,328

312 1,464

423 1,439

6511,317

* Represents total payments made during the fiscal year on all claims, including claims filed

prior to the date indicated.

RFP-309.01-121

ATTACHMENT 6.7 CLAIM DATA REQUIREMENTS

RFP # 309.01- 121

A. Member/Patient Data

1. Employee Social Security Number 2. Workers’ Compensation Claim Number 3. Employee Name 4. Employee Sex 5. Employee Date of Birth 6. Employee Residential Zip Code* 7. Job Classification 8. Department, Division 9. Hire Date 10. Employment Status (Full/Part/Other) 11. County of Employment

B. Disability Management Data

1. Date of Injury 2. Date Reported to Employer 3. Zip Code of Accident Site* 4. Part of Body 5. Nature of Injury 6. Cause of Injury 7. Pre-Injury Weekly Wage 8. Claims Status (Open, Re-Open, Closed, Medical Only, Temporary Total

Disability, Denied) 9. Date of Closing 10. Date Lost Time Began 11. Date of Return to Work 12. Benefit Type (Temporary Total, Permanent Partial, Etc.) 13. Benefit Paid to Date 14. Weekly Benefit 15. Reserve Worksheets 16. Reserve Change Justification 17. Date of Maximum Medical Improvement 18. Attorney Involved 19. Attending Physician of Record 20. Compensability Decision Date 21. Appeal / Litigation Code 22. Date of Appeal 23. Final Resolution 24. Date of Final Resolution

C. Provider Data

1. Provider Name 2. Provider Identification (Tax I.D. Number) 3. Provider Type/Zip Code* 4. Provider Type/Specialty

a. Hospital b. M.D.

72

RFP-309.01-121

ATTACHMENT 6.7 c. Chiropractor** d. Laboratory e. Alcoholic Treatment Facility f. Dentist**/Oral Surgeon** g. Ph.D.* h. Nursing i. Extended Care Facility j. Outpatient Surgery Department k. Radiology l. Ambulance m. Home Health Care n. Optometrist** o. Physical Therapist p. Other

D. Service Type

1. Hospital 2. Emergency Room 3. Hospital Outpatient (Other than Emergency Room, X-Ray, Lab) 4. Extended Care Facility 5. Chemical Dependency Facilities 6. Psychiatric Hospital 7. Outpatient Surgical Center 8. Professional Fees, Visits and Number of Procedures

a. Inpatient Surgery b. Outpatient Surgery c. Inpatient Physician Visit d. Hospital Outpatient Physician Visit e. Physician Office and Home Visits f. Chiropractor Office Visit g. Chiropractor X-Ray h. Psychiatric Office Visit i. Psychiatric Inpatient Visit j. Anesthesiologist k. Home Health Care l. Radiologist Inpatient m. Other

9. Nursing 10. Ambulance 11. Prescription Drugs 12. Outpatient Lab 13. Outpatient X-Ray 14. Non-Hospital Equipment and Supplies 15. Vision Care – Hardware 16. All Other

E. For Each Service Type

1. Total Billed Charges 2. Ineligible Expense Amounts 3. Ineligible Reason Codes 4. Eligible Covered Charges 5. Amount Paid

73

RFP-309.01-121

ATTACHMENT 6.7

74

6. Discounts/Fee Schedule Reductions/UCR Reductions 7. Diagnostic Code (ICD-9-CM) (Hospital/Professional)*** 8. DRG* 9. Procedure Code (CPT-4) (Professional Only)*** 10. Location of Service 11. Number of Days, Visits, Units, etc. 12. Treatment Dates 13. Discharge Diagnosis (ICDE-9-CM)*** 14. Discharge Status (i.e., dead or alive)

F. For Inpatient Hospital Service Type

1. Admission Type 2. Date Confined 3. Date Discharged 4. Length of Stay* 5. Date of Surgery 6. Admitting Physician ID 7. Number of Admissions* 8. DRG*

* Desirable, not required ** Indicate provider name *** Multiple codes, if applicable

RFP-309.01-121

ATTACHMENT 6.8

75

REFERENCE INFORMATION QUESTIONNAIRE

Proposer’s/Vendor’s Name: Reference (Client Organization) Name: Person Responding To This Request for Reference Information: Printed Name

Signature (MUST BE THE SAME AS THE SIGNATURE ACROSS THE ENVELOPE SEAL)

Person’s Title: Contact Phone: Date Reference Form Was Completed: NOTE: Reference should complete responses to the eight items that appear on the following pages. If completed using a Word document, use as much space as required. If completed manually, record response in space provided.

RFP-309.01-121

ATTACHMENT 6.8

76

1. Describe the services provided by the vendor to your organization. How long has the vendor provided you with workers’ compensation third party administrator services?

2. Please rate your overall satisfaction with the vendor on a scale of 1 to 5, with 1 being “least satisfied” and 5 being “most satisfied”.

3. What could the vendor do (or have done )to improve its rating?

4. Using a scale of 1 to 5, with 1 being “least satisfied”, and 5 being “most satisfied”, please indicate your level of satisfaction with each of the following:

a. Overall Management: ______ b. Systems Management: ______ c. Claims Staff: ______ d. Account Manager: ______ e. Overall customer service: ______

5. As far as you know, has the vendor remained (or did the vendor remain) in

compliance with the contract throughout their provision of services to your organization? If not, please explain.

6. Was the vendor responsive to your needs and willing to accommodate special requests?

7. What feedback have you received from injured employees and other personnel about their experience with the vendor?

8. Would you use the services of the vendor again? Indicate on a scale of 1 to 5; with 1

being “absolutely not” and 5 being “absolutely yes”.