182609 - Notice - Sole Source Determination (and Exhibits) - InterQual (CHC) - FINAL - 20240814.pdf

ODHS | OHA SHARED SERVICES

Office of Contracts and Procurement

SOLE-SOURCE DETERMINATION MEMORANDUM

and BRAND NAME SPECIFICATION

SOLE SOURCE NOTICE # S-44300-00011273

Date: 13 August 2024 Internal Tracking #: CSTAT-182609-0

To: Kirk N. Rhoades, Designated Procurement Officer ODHS Office of Contracts & Procurement

From: OHA – Oregon State Hospital (OSH), hereinafter referred to as “Agency” OSH / Business Services Requestor: Jeremy Sichley / Ryan Knapp OC&P PCS: David Kleinsmith

Re: Sole Source Determination for: InterQual™ Product (see Attachment 1, Section 1.2)

• Estimated Total Price: $229,000 (for current renewal term - 02/08/2024 - 02/07/2027) $646,000 (for total price/spend - 02/08/2018 - 02/08/2027)

1. REQUEST SUMMARY AND AUTHORITY.

1.1 Request Summary. This sole source determination applies to renewing Agency’s subscription to the InterQual™ Product, a subscription-based, cloud-based software as a service (SaaS) used by OSH to evaluate physician documentation to determine whether the documentation meets medical necessity criteria for Medicare. Unlike prior year purchases through Oregon’s Software Value- Added Reseller (SVAR) statewide price agreement #6454 from reseller SHI International, LLC, and due to a business change, Agency is renewing its InterQual™ Product subscriptions through direct purchase from the Vendor (see Section 2.3), and has made the attached brand name specification for the InterQual™ Product (see Attachment 1) in accordance with applicable authority. As Vendor is currently the only seller for the InterQual™ Product (see Attachment 1 (Section 1.3); Attachment 2), Agency determined Vendor is the sole source for renewing Agency’s subscription to the InterQual™ Product.

1.2 Sole Source Authority. Oregon Revised Statutes (ORS) 413.033, Oregon Administrative Rules (OAR) 125-246-0170, and Amendment 1 to Delegation Agreement No. REQ-10000-00020921 authorize OHA to award a contract resulting from a sole-source procurement that complies with ORS 279.075 and OAR 125-247-0275.

2. PURCHASE HISTORY AND INFORMATION.

2.1. Background.

In early 2018, Agency initially purchased a one-year subscription to the InterQual™ Product from a reseller (i.e., SHI International, L.L.C.) of Vendor’s InterQual™ Product through statewide software value added reseller (SVAR) price agreement #6454. This initial term started 2/8/2018. Agency then renewed the subscription through purchase under SVAR 6454, with the last renewal being through 2/7/2024. Since the last renewal, SVAR 6454 was replaced with SVAR #PO-10700- 00014971, and Agency learned that, due to a recent business change, the InterQual™ Product is no longer available for purchase under statewide price agreement and must be purchased directly from the Vendor. Purchasing a renewal subscription at this time is critical to avoid serious disruption to Agency’s OSH provision of psychiatric inpatient services. In compliance with applicable authority, Agency has made a brand name specification for the InterQual™ Product for the reasons given in Attachment 1 and now seeks to purchase the InterQual™ Product from Vendor as the sole seller thereof.

2.2. Current Purchase and Procurement Method.

Agency will issue a Purchase Order (PO) to Vendor to renew the subscription (each renewal being a 1 year term, renewable for up to 3 total years; 594 beds) associated with the InterQual™ Product for the non-cancellable, 3-year term running from 02/08/2024 through 02/07/2027.

Agency will post notice of this Sole Source Determination, including Attachment 1 (Determination of Brand Name Specification) and Attachment 2 (Letter / Email from Vendor Dated 22 July 2024), on OregonBuys for seven (7) days. If no protests are timely received, Agency will award a contract to Vendor at the end of that time, subject to the PO and applicable law and regulations.

At end of 3 total years, Agency will re-evaluate its requirements to align its going forward planning to utilize a statewide price agreement (if available), to perform an open market solicitation, or to otherwise procure its requirements under available procurement and budgetary authorities.

2.3. Vendor Information.

Legal Entity: Change Healthcare Technologies, LLC Address: 5995 Windward Parkway, Alpharetta, GA 30005 Contact: General Counsel with a copy to:

Legal Entity: Change Healthcare Technologies, LLC Address: 275 Grove Street, Suite 1-210, Newton, MA 02466 Contact: Vice President of Product Operations / Sales Executive (Dana Spiel) Phone: 602-369-1179 Email: dana.spiel@optum.com

The Vendor does not make InterQual™ Product available for purchase through a reseller under any existing State of Oregon statewide price agreement, and purchase of InterQual™ Product is only available to the State of Oregon through direct purchase from the Vendor. See Attachment 2 (Letter / Email from Vendor Dated 22 July 2024).

3. PROTESTS, INQUIRIES, and SOLE POINT OF CONTACT.

Protests are due not later than seven (7) calendar days after the first date the notice is posted on OregonBuys, by the closing time stated in the notice summary. Protests must be in writing--protests via telephone will not be accepted. For this purpose, “writing” includes email as well as mailto:dana.spiel@optum.com paper documentation received by mail or hand-delivery by the indicated time and date at the following address.

Inquiries must be in writing or by phone or by email.

All protests and questions must be timely submitted to the sole point of contact, David Kleinsmith. The contact information for the sole point of contact is:

Mail or Hand-delivery:

Oregon Department of Human Services Office of Contracts & Procurement Attn: David Kleinsmith 500 Summer St, Suite E03 Salem, OR 97301

Email: david.kleinsmith@odhsoha.oregon.gov Phone: 503-931-9690 (for inquiries only - no protests will be accepted by telephone)

4. FINDINGS OF FACT.

Pursuant to ORS 279B.075, Agency has determined that the InterQual™ Product is available from only one source, namely Vendor. Agency further makes the following ORS-required findings, taken individually or in combination, to support this determination:

Pursuant to ORS 279B.075 (2)(a), the following support Agency’s finding that the efficient utilization of existing goods requires the acquisition of compatible goods or services from only one source:

• Per Attachment 1 (Determination of Brand Name Specification), o the InterQual™ Product currently is embedded in internal OSH systems to support determinations of whether the documentation meets medical necessity criteria for Medicare and, alternatively or additionally, determinations of which setting of care is most appropriate for the patients at OSH;

o Failure to continue the InterQual™ Product would put at risk OSH provision of psychiatric inpatient services, with no suitable product to replace it; and, o In consideration of the investment in the InterQual™ Product to date and the fact that use of the InterQual™ Product is embedded in OSH daily processes, OSH seeks to continue use and benefit from efficiencies and financial investments made.

• Per Attachment 1 (Determination of Brand Name Specification), because the InterQual™ Product is compatible with itself, efficient utilization of the existing InterQual™ Product requires acquisition of more of the same.

• Per Attachment 1 (Determination of Brand Name Specification) (Section 1.3) and Attachment 2 (Letter / Email from Vendor Dated 22 July 2024), Vendor is the sole manufacturer and authorized supplier of the InterQual™ Product, and does not make the InterQual™ Product available for purchase through a reseller under any existing State of Oregon statewide price agreement;

mailto:david.kleinsmith@odhsoha.oregon.gov purchase of the InterQual™ Product is only available to the State of Oregon through direct purchase from Vendor.

Or, Pursuant to ORS 279B.075 (2)(d), the following are Agency other findings that support the conclusion that the goods or services are available from only one source:

• Per Attachment 1 (Determination of Brand Name Specification) (Section 1.3) and Attachment 2

(Letter / Email from Vendor Dated 22 July 2024), Vendor is the sole manufacturer and authorized supplier of the InterQual™ Product, and does not make the InterQual™ Product available for purchase through a reseller under any existing State of Oregon statewide price agreement;

purchase of the InterQual™ Product is only available to the State of Oregon through direct purchase from Vendor.

APPROVED BY:

Signed by DPO electronically via OregonBuys

Kirk N. Rhoades or acting DPO

ATTACHMENT 1

DETERMINATION OF BRAND NAME SPECIFICATION,

In Support Of

Agency: Oregon Health Authority (OHA) Program/Office: Oregon State Hospital (OSH) Approved by: Karen Jamieson

Authority: OHA has authority under ORS 413.033 to use a Brand Name Specification for a procurement in compliance with ORS 279B.215.

1. Brand Name: InterQual™ Product (defined in Section 1.2 (Product Description), below)

1.1 Estimated Product Cost.

Term Term Amount Total Prior Spend (total from 02/08/2018 – 02/07/2024)

$ 416,373.39

Current Renewal Proposed Spend (total from 02/08/2024 – 02/07/2027; non-cancellable)

$ 228,829.11

$ 645,202.50

Future Renewal Proposed Spend

$ TBD

$ TBD

Future renewal terms (i.e., up to six (6) additional years) will be based on continued need. The estimated product cost may grow over time as OSH continues its use or expanded use of the InterQual™ Products.

1.2 Product Description: The InterQual™ Product comprises:

A. subscription licenses (1 year term, renewable for up to 3 total years; 594 beds) for a cloud-based subscription software as a service (SaaS), including all related modules, updates, enhancements, and releases that are developed by the Brand Name Owner (or its affiliate) as identified in Section 1.3, below, such licenses being used by OSH to evaluate physician documentation to determine whether the documentation meets medical necessity criteria for Medicare, and

B. associated (i) implementation, validation, and upgrade services, (ii) support and maintenance services, (iii) diagnostics and defect analysis services, and (iii) consulting, education and training services (to include instructor recertification renewal services and fees).

Subscription licenses of (A) include (Product Code in parentheses next to Product Name):

i. InterQual(R) Adult and Geriatric Psychiatry Criteria (72031163);

ii. InterQual(R) Behavioral Health Services Criteria (72031161);

iii. InterQual(R) Substance Use Disorders Criteria (72031164);

iv. InterQual(R) View (Included) (72035426);

v. InterQual(R) View (SQL) (72020947);

vi. InterQual(R) Anonymous Review – Cloud (72026320);

vii. InterQual(R) Mobile (72034985); and,

viii. AMA CPT Codes IQ (72035433).

1.3 Brand Name Owner:

Legal Entity: Change Healthcare Technologies, LLC Address: 5995 Windward Parkway, Alpharetta, GA 30005 Contact: General Counsel with a copy to:

Legal Entity: Change Healthcare Technologies, LLC Address: 275 Grove Street, Suite 1-210, Newton, MA 02466 Contact: Vice President of Product Operations / Sales Executive (Dana Spiel) Phone: 602-369-1179 Email: dana.spiel@optum.com

The Brand Name Product Owner identified in this Section 1.3, namely Change Healthcare Technologies, LLC (“CHC”), an affiliate of OptumInsight, Inc. (“Optum”), is the sole manufacturer and authorized supplier of the InterQual™ Product(see Attachment 2 to Sole Source Determination).

2. BACKGROUND.

The InterQual™ Product provides OSH with thorough criteria / guidelines to assist OSH in evaluating physician documentation and are used in the utilization review process to determine whether the documentation meets medical necessity criteria for Medicare and to determine which setting of care is most appropriate for the patients at OSH. OSH is required to house patients in the least restrictive care setting possible (see, e.g., OAR 309-088-0105).

Pursuant to ORS 279B.075, Agency must conduct market research that supports the assertion that there is only one source that can provide the goods or services. Prior to selecting the InterQual™ Product in 2017, OSH performed market research around June 2017 and compared similar products / services directed to providing sets of care guideline criteria for psychiatric inpatient services. OSH determined after this comparison that the InterQual™ Product was cheaper, was then available for procurement under statewide price agreement, provided more thorough criteria / guidelines, and met the standard of Federal regulations governing medical necessity determination for Medicare beneficiaries. OSH's primary payer is Medicare, which requires enrolled hospitals to determine medical necessity, and bill only for medically necessary treatment. In addition, the InterQual™ Product is used by many of the insurers that OSH bills for its services (thus reducing risk of denied insurance claims and increasing internal OSH efficiencies). OSH selected the InterQual™ Product in late 2017/early 2018, with the knowledge that should OSH needs no longer be met by the InterQual™ Product, OSH would return to the marketplace and solicit for a better fit product / service.

mailto:dana.spiel@optum.com

Though the InterQual™ Product was purchased under State of Oregon statewide price agreement for all past procurements thereof from 2018 through 2023, due to a recent business change the InterQual™ Product is no longer available for purchase under statewide price agreement and must be purchased directly from the Brand Name Product Owner identified in Section 1.3, above.

Now that the use of this cloud-based subscription system has been fully integrated into the utilization review process at OSH, it would take an extraordinary amount of resources to switch providers to one that provides analogous functionality: Replacing this cloud-based subscription system with a different product / service that provides analogous functionality at this time would halt OSH’s ability to continue to gain efficiencies and return on their investment to date with a system that currently meets their requirements. Switching to a competitor product would require significant time and additional resources from DAS, OHA OIS, and OSH staff at various levels without necessarily yielding a desired outcome as the current service meets needs.

OSH has made significant investment in the InterQual™ Product to date, with a total spend to date (including this proposed renewal) in excess of $645,202. OSH seeks to renew its cloud-based subscription of the InterQual™ Product. OSH access to the InterQual™ Product is crucial for the reasons listed above and must continue in order to ensure quality care for OSH patients and supporting evaluation of physician documentation.

3. DETERMINATIONS.

Agency, through OSH, determines that only the InterQual™ Product will meet the needs of Agency based on one or more of the following:

Written Determinations to satisfy required standards:

Use of a brand name specification is unlikely to encourage favoritism in the awarding of public contracts or substantially diminish competition for public contracts:

Purchases of the InterQual™ Product from first procurement (i.e., 2018) through 2023 were through a statewide Software Value Added Reseller (SVAR) Participating Agreement (PA), which was awarded pursuant to a competitive process. Competition will not be substantially diminished by use of the InterQual™ Product brand name specification because in the event OSH determines over time that the InterQual™ Product no longer satisfies OSH requirements, then movement to support a re-solicitation process for replacement product(s) or service(s) will be completed in accordance with a method selection under ORS 279B.050.

or, Use of a brand name specification would result in substantial cost savings to the agency or the public:

or, There is only one manufacturer or seller of the product of the quality, performance or functionality required:

The Brand Name Product Owner identified in Section 1.3, above, namely Change Healthcare Technologies, LLC, is the sole manufacturer and authorized supplier,of the InterQual™ Product, and does not make the InterQual™ Product available for purchase through a reseller under any existing State of Oregon statewide price agreement; purchase of the InterQual™ Product is only available to the State of Oregon through direct purchase from such Brand Name Product Owner.

or, The efficient utilization of existing goods requires the acquisition of compatible goods or services:

The InterQual™ Product currently is embedded in internal OSH systems to support determinations of whether the documentation meets medical necessity criteria for Medicare and, alternatively or additionally, determinations of which setting of care is most appropriate for the patients at OSH.

Because the InterQual™ Product is compatible with itself, efficient utilization of the existing InterQual™ Product requires acquisition of more of the same. Failure to continue the InterQual™ Product would put at risk OSH provision of psychiatric inpatient services, with no suitable product to replace it. In consideration of the investment in the InterQual™ Product to date and the fact that use of the InterQual™ Product is embedded in OSH daily processes, OSH seeks to continue use and benefit from efficiencies and financial investments made.

APPROVED BY:

OSH-Executed Copy Retained In Procurement File Oregon State Hospital (OSH) Date

ATTACHMENT 2

LETTER / EMAIL FROM VENDOR DATED 22 JULY 2024,

(The Letter / Email from Vendor Dated 22 July 2024 follows the last page of this Sole Source Notice, consists of two (2) additional pages, and is included in the Sole Source Notice PDF file)

From: Spiel, Dana To: Rockwell Margaret; Kleinsmith David ("dahVEED"); Fouts Laura Cc: OSH - Contracts; Johnson Karen J; Alameda Nancy I; Sichley Jeremy J; Jamieson Karen M Subject: RE: CHC Amendment-next steps Date: Monday, July 22, 2024 5:04:23 PM Attachments: image001.png image003.png Oregon State Hospital - CHC-Optum Sole Source Letter (07.22.24) WD (002).pdf

Attached please find a sole source letter. Thank you, Dana

From: Spiel, Dana Sent: Monday, July 22, 2024 1:56 PM To: Rockwell Margaret <Margaret.Rockwell@oha.oregon.gov>; Kleinsmith David ("dahVEED") <David.Kleinsmith@odhsoha.oregon.gov>; Fouts Laura <Laura.Fouts@oha.oregon.gov> Cc: OSH - Contracts <OSH.Contracts@odhsoha.oregon.gov>; Johnson Karen J <Karen.J.Johnson@doj.oregon.gov>; Alameda Nancy I <NANCY.I.ALAMEDA@odhsoha.oregon.gov>;

Sichley Jeremy J <Jeremy.J.Sichley@odhsoha.oregon.gov>; Jamieson Karen M <Karen.M.Jamieson@oha.oregon.gov> Subject: RE: CHC Amendment-next steps

Great legal is in the process of having the sole source letter signed so I should be able to send it soon. Dana

From: Rockwell Margaret <Margaret.Rockwell@oha.oregon.gov> Sent: Monday, July 22, 2024 1:54 PM To: Spiel, Dana <dana.spiel@optum.com>; Kleinsmith David ("dahVEED") <David.Kleinsmith@odhsoha.oregon.gov>; Fouts Laura <Laura.Fouts@oha.oregon.gov> Cc: OSH - Contracts <OSH.Contracts@odhsoha.oregon.gov>; Johnson Karen J <Karen.J.Johnson@doj.oregon.gov>; Alameda Nancy I <NANCY.I.ALAMEDA@odhsoha.oregon.gov>;

Sichley Jeremy J <Jeremy.J.Sichley@odhsoha.oregon.gov>; Jamieson Karen M <Karen.M.Jamieson@oha.oregon.gov> Subject: RE: CHC Amendment-next steps

Caution: External email. Do not open attachments or click on links if you do not recognize the sender.

Dana We are working on a 3 year renewal term.

Margaret Rockwell | Contracts and Procurement Analyst

Oregon State Hospital – Salem Campus | O H A Cell: 503-979-8784| Email: margaret.rockwell@oha.oregon.gov Work Hours: Monday through Friday 6:30am-3:00pm mailto:dana.spiel@optum.com mailto:Margaret.Rockwell@oha.oregon.gov mailto:David.Kleinsmith@odhsoha.oregon.gov mailto:Laura.Fouts@oha.oregon.gov mailto:OSH.Contracts@odhsoha.oregon.gov mailto:Karen.J.Johnson@doj.oregon.gov mailto:NANCY.I.ALAMEDA@odhsoha.oregon.gov mailto:Jeremy.J.Sichley@odhsoha.oregon.gov mailto:Karen.M.Jamieson@oha.oregon.gov mailto:Margaret.Rockwell@oha.oregon.gov mailto:dana.spiel@optum.com mailto:David.Kleinsmith@odhsoha.oregon.gov mailto:Laura.Fouts@oha.oregon.gov mailto:OSH.Contracts@odhsoha.oregon.gov mailto:Karen.J.Johnson@doj.oregon.gov mailto:NANCY.I.ALAMEDA@odhsoha.oregon.gov mailto:Jeremy.J.Sichley@odhsoha.oregon.gov mailto:Karen.M.Jamieson@oha.oregon.gov mailto:margaret.rockwell@oha.oregon.gov

July 22, 2024

Oregon State Hospital 2600 Center Street NE Salem, Oregon 97310

RE: Change Healthcare Technologies, LLC (“CHC”) an affiliate of OptumInsight, Inc., (“Optum”) Authorized Provider of Services and Products

Please be advised that Change Healthcare Technologies, LLC, an affiliate of OptumInsight, Inc., is the sole manufacturer and authorized supplier of InterQual, including all related CHC and/or Optum developed owned modules, updates, enhancements, and releases as described in your agreement. The software, technology, and functionality were developed by CHC and/or Optum and only CHC, or its affiliate, Optum, is authorized to supply you with (a) implementation, validation, and upgrade services; (b) support and maintenance services; (c) diagnostics and defect analysis;

and (d) consulting, education, and training for InterQual.

Please let me know if you have any question or if you need additional information.

Sincerely, David Oliphant

David Oliphant, Sr. Director Sales 11000 Optum Circle Eden Prairie, MN 55344 Attn: Optum Insight General Counsel cc: Dana Spiel, Solution Sales Executive (dana.spiel@optum.com)

July 22, 2024

Oregon State Hospital 2600 Center Street NE Salem, Oregon 97310

RE: Change Healthcare Technologies, LLC (“CHC”) an affiliate of OptumInsight, Inc., (“Optum”) Authorized Provider of Services and Products

Please be advised that Change Healthcare Technologies, LLC, an affiliate of OptumInsight, Inc., is the sole manufacturer and authorized supplier of InterQual, including all related CHC and/or Optum developed owned modules, updates, enhancements, and releases as described in your agreement. The software, technology, and functionality were developed by CHC and/or Optum and only CHC, or its affiliate, Optum, is authorized to supply you with (a) implementation, validation, and upgrade services; (b) support and maintenance services; (c) diagnostics and defect analysis;

and (d) consulting, education, and training for InterQual.

Please let me know if you have any question or if you need additional information.

Sincerely, David Oliphant

David Oliphant, Sr. Director Sales 11000 Optum Circle Eden Prairie, MN 55344 Attn: Optum Insight General Counsel cc: Dana Spiel, Solution Sales Executive (dana.spiel@optum.com)