Agenda 06-03-2025; 8-q - Approval to Increase in the Letter of Credit Required from Travelers Indemnity Company for Secure Payment of Workers Compensation Deductibles

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DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 27 of the cause,extent or responsibility for the injury,disease,or damage, including evaluation and settlement of covered claims;and • Expenses which are defined as either an indemnity or medical loss. 2. Medical cost containment expenses consist of the following components, which apply to Workers Compensation claims with a date of accident beginning with the first date of the Program Term of the applicable Program Exhibit. A. There is a 27%charge applied to any savings resulting from the following medical bill repricing, pharmacy bill repricing and hospital bill audit activity: • Application of preferred provider network discounts to physicians'bills,hospital bills and pharmacy bills,including: 1. Repricing as a result of negotiation of out-of-network physicians'bills,pharmacy bills and hospital bills;and 2. Repricing of medical bills,pharmacy bills and hospital bills by reviewing the bills and applying state rules/edits and proprietary rules/edits. • Repricing of medical bills,pharmacy bills and hospital bills by manual bill review by our medical review team B. Savings realized from medical bill,pharmacy bill and hospital bill review to which the 27%charge is not applied are: 1. Savings realized from the detection and elimination of duplicate bills 2. Savings achieved by the claim case manager,i.e.bills containing unrelated/unauthorized treatment 3. Savings achieved by the medical case manager,i.e.bills containing unapproved medical treatment 4. Savings realized from medical bill repricing, pharmacy bill repricing and hospital bill audit activity achieved by applying any state-mandated schedule 5. Savings realized from the elimination of non-compensable bills. For purposes of this Exhibit, the term "savings" shall refer to the difference between the amount billed by physician, hospital, pharmacy and other medical providers and the amount ultimately paid. adhere to state-mandated fee schedules and/or usual and customary pricing for certain procedures, may contract with preferred provider networks which have contractual arrangements with certain of those providers to perform certain procedures at pre-determined rates (which may be below fee schedule), and may utilize other fee negotiation resources determine are necessary and appropriate to determine the amount that should pay on any given medical bill. C. The 27%charge will be capped at$10,000 per bill and charged to the claim file as an Allocated Loss Adjustment Expense, unless required by state law to charge it to the claim file as a different component of the applicable rating plan. The $10,000 per bill cap applies to bills with a date of service beginning with the first day of the Program Term set forth in the applicable Program Exhibit. D. Certain items are still charged separately to the claim file as Allocated Loss Adjustment Expenses. These items include but are not limited to: 1. Utilization Review(pre-certification and concurrent review)services charged on a per activity basis; 2. Independent medical examinations*; 3. Second opinions by a physician*; 4. Chiropractic reviews;and 5. Physician advisor programs. *unless ordered by an industrial board or state equivalent,in which case it is treated as Medical. TRAVELERS Version 09.16.19 ALAE Exhibit Orange County Page 20 CA Form-W041V16F19 ©(2019)The Travelers Indemnity Company.All rights reserved.