D.1_Statement_of_Work.docx

CENTERS FOR MEDICARE & MEDICAID SERVICES

Commercial Banking Services for the Centers for Medicare & Medicaid Services: Medicare Claims Processing Contractors and Demonstration Projects

STATEMENT OF WORK

I. BACKGROUND

Title XVIII of the Social Security Act authorizes the Centers for Medicare & Medicaid Services (CMS) to use claims processing contractors to authorize and make payments for Medicare services. A Medicare Administrative Contractor (MAC) is an organization that has entered into an agreement with the CMS to perform specified functions under the Hospital Insurance Program (HI) (Part A) and under the Supplemental Medical Insurance Program (SMI) (Part B). These functions include, but are not limited to, authorizing payments to providers of Part A and Part B services and authorizing payments to physicians and suppliers furnishing Part B medical services. Currently, the Medicare claims processing contractors include Part A and B MACs and Part B Durable Medical Equipment (DME)/Durable Medical Equipment MACs (DME MACs). Currently there are 12 A/B MACs and 4 DME MACs.

CMS also sponsor a variety of demonstration projects, programs and other special initiatives which serve to study health care applications, alternative service delivery models, and other concepts. While the subjects of these studies differ, the process used by CMS to make demonstration payments is standardized.

In 2010, CMS changed its Medicare banking policies by discontinuing the use of time accounts to pay for banking service charges and awarded five year commercial services contracts through full and open competition to two Financial Institutions; these two Financial Institutions disburse MAC authorized payments and Demonstration project payments for CMS. In accordance with this SOW, CMS awarded new contracts through full and open competition to two Financial Institutions that shall provide the required banking services over a five year period of performance.

Each Financial Institution shall provide both MAC payment services and Demonstration payment services. Financial Institutions shall be designated Financial Agents of the U.S. Department of the Treasury (hereinafter referred to as the Treasury).

The commercial banking services required under this SOW shall be provided by Financial Institutions with experience in large scale commercial banking transactions; management of substantial government and non- government funding/deposits; and electronic funds transfer (EFT) and government reporting functions. Only those services described in this Statement of Work (SOW) shall be included in the evaluation of the costs to the government. Additional services may be added or negotiated as necessary by CMS. It is not the intent of CMS to entertain creative or alternative solutions to the business issues detailed in this SOW at this time. The structure of the payment architecture, claims processing systems, systems communication architecture, and funding are not subject to modification. Therefore, proposed changes to these systems and processes should not be included as assumptions or recommendations in the Respondent’s technical understanding and approach. The Government reserves the right to request process improvements that lead to efficiencies as separate options not to be priced.

A. Medicare Payments Authorized by the MACs CMS shall utilize commercial Financial Institutions meeting our requirements to process payment files and disburse Medicare payments. Using a Letter of Credit (LOC) authorized by CMS in coordination with the Treasury, the designated commercial Financial Institutions shall draw funds utilizing an authorized LOC from the Medicare Trust Fund and deposit these funds into Part A and Part B Medicare bank accounts; these bank accounts are referred to as Federal Health Insurance Benefits Accounts (FHIBAs). The funds deposited into these FHIBA accounts are used to cover the electronic and paper check Medicare payments that are authorized by the MAC and presented for payment each day. Separate FHIBA accounts are required for Part A, Part B and DME claims payments. A funding account is established for each disbursement account for each MAC and Medicare Part A/B workload. The Financial Institutions are required to conduct both a weekly and monthly reconciliation of each FHIBA as well as invoice CMS on a monthly basis for the fees associated with servicing these accounts.

B. CMS Demonstration Projects CMS sponsors a variety of Demonstration projects which serve to study health care applications and concepts. While the subjects of these studies differ, the payment processes are similar. In all cases pertinent to this SOW, a payment file is created and forwarded to the Financial Institution for processing by a demonstration project payment contractor. Funding for disbursement is provided separately by a CMS payment request to the Treasury which deposits the requested funds into the account established at the Financial Institution for each respective demonstration project. Although each Demonstration project is unique and requires individual attention, payment processing is consistent between Demonstration projects and follows commercial standards. Currently CMS has 18 operational demonstration projects to be paid through commercial banking services; during the five year term of this contract, the total number of Demonstration projects is expected to increase.

II. AUTHORITIES

Because CMS has a unique authority to initiate a substantial volume of payments and manages a significant cash flow of Federal funds, it has been determined that the same criteria utilized by the Treasury for managing Federal funds should be imposed on those Financial Institutions responsible for managing Medicare funding. Therefore, CMS is requiring that the Financial Institutions providing these banking services be designated Financial Agents by the Treasury in order to be eligible to process and manage this substantial flow of Medicare funds. The Financial Institutions shall fully understand and comply with 31 CFR PART 202 - DEPOSITARIES AND FINANCIAL AGENTS OF THE FEDERAL GOVERNMENT. The Treasury authority to designated financial agents can be found at 31 CFR 202.2 https://www.fiscal.treasury.gov/fsservices/gov/rvnColl/tcmm/31cfr202.txt The designated Financial Institutions shall be provided Federal funds to be used solely for payment of Medicare items and services established under Title 18 of the Social Security Act or other Medicare programs as required. These Federal program funds shall be deposited in a FHIBA or Demonstration Project Account in compliance with the Federal Deposit Insurance Corporation (FDIC) Act of August 23, 1935 49 Stat. 684 as amended 12 U.S.C 264 and kept separate from funding in other accounts.

III. SCOPE

The purpose of this SOW is to contract with two Financial Institutions capable of providing the full range of commercial banking services required by CMS to support the MACs and Demonstration projects as well as other commercial banking services with a specific focus on payment processing. In order to enhance efficiency and safeguard the Medicare payment system, CMS intends to award contracts to two Financial Institutions and divide the payment volumes as evenly as practical between them. All services provided to CMS under this SOW represent services that are commercially available.

IV. INVOICE RECONCILIATION

CMS utilizes a banking data base system to reconcile invoices received monthly; therefore, all invoices received from the Financial Institutions for commercial services provided shall be submitted to CMS in a standard (Excel) format (Exhibit 1). The specific line item descriptions and the order in which the items appear on the invoice template shall not be modified and no additional services shall be added to this template by the Financial Institutions unless approved by CMS; however, Financial Institutions responding to this solicitation shall bundle costs into the categories provided on the invoice template as appropriate.

The files for each account that include the specific banking services provided for that account as well as the associated costs shall be uploaded by CMS into the DFSDM banking database system. The CMS banking database system shall compare the total invoiced volumes to the volumes confirmed by the MAC or Demonstration contractor. The service fees shall be compared to the contractual costs for each line item. The total cost of each account shall be invoiced; the invoice shall then be included in a MAC or Demonstration project subtotal and combined into a total cost for the monthly banking services by the Financial Institutions. CMS shall be able to research the utilization of banking services through the CMS banking database by uploading these invoices and conducting an additional reconciliation. In addition, CMS shall reconcile invoices received to ensure correctness and accuracy.

V. OBJECTIVES and FUNCTIONAL OVERVIEW The CMS intends to contract with two commercial Financial Institutions to provide banking services to pay claims processed through the MACs and for CMS Demonstration project payments.

A. The basic functions required of the Financial Institutions under this SOW for MACs claims processing include but may not be limited to: communicating and coordinating with the MACs; establishing the communication architecture each day for daily file transfer; drawing funds from Medicare Trust Funds using an LOC authorized by CMS in coordination with the Treasury; daily processing and paying EFTs and paper checks authorized by the MACs; providing lockbox services; providing on-line access to daily information for the MACs; reconciling Medicare bank accounts; preparing reports and invoices; keeping records; providing customer services; and implementation and closing activities. The Financial Institutions shall test payment file transfers with the MACs and demonstration project payments and submit test reports to CMS for review and approval. The Financial Institutions shall coordinate testing with the Baltimore Data Center along with the MACs as required.

B. The basic functions required of the Financial Institutions under this SOW for Demonstration projects include but may not be limited to: communicating and coordinating with Demonstration contractors; establishing the communication architecture; testing; receiving deposits of funding from the Treasury for payments; processing and paying EFTs and paper checks authorized by the Demonstration contractors; reconciling Demonstration contractor bank account(s); preparing reports; keeping records; providing customer services; and implementation and closing activities.

VI. PERIOD of PERFORMANCE The period of performance for this contract is one base year with four option years.

VII. GOVERNMENT - FURNISHED PROPERTY

N/A

VIII. KEY PERSONNEL

The Project Director shall be identified as key personnel by the respondent to this SOW. This Project Director shall be responsible for ensuring completion of all SOW requirements. CMS Contract Officer’s Representative (COR) will provide technical direction. The Project Director will work with representatives of the serviced MACs, Demonstration contractors and other CMS contracted entities in the performance of this contract.

A minimum of 5 years of applicable experience is required for key personnel.

The Project Director shall be able to troubleshoot, diagnose, and convene the necessary personnel to address issues that may occur. Credentials for this Project Director shall include a minimum of 5 consecutive years of experience managing multiple Medicare Administrative Contractors(MACs) with management experience involving: large scale commercial banking transactions; substantial government and non-government funding /deposits; electronic funds transfer (EFT); and government reporting functions; as well as an extensive background working with programs at the level and complexity equal to or exceeding the scope described in this SOW.

The contractor shall retain identified Key Personnel on this task order while in the employment of this contract unless agreed to in writing by the Contracting Officer. The Key Personnel shall be full time on this contract.

IX. REQUIREMENTS/TASKS

The commercial banking services required shall be provided by Financial Institutions with a minimum of 5 consecutive years of experience managing multiple Medicare Administrative Contractors(MACs) and have experience in: large scale commercial banking transactions; management of substantial government and non-government funding/deposits; electronic funds transfer (EFT); and government reporting functions. Financial Institutions shall also be designated Financial Agents of the Treasury. Financial Institutions shall qualify to provide both MAC payment services and Demonstration payment services; only respondents meeting the criteria for BOTH workloads shall be considered. CMS shall split the payment workload volumes as evenly as practical between the two Financial Institutions selected through this procurement. All services provided to CMS under this SOW represent services that are commercially available.

The basic functions required of the Financial Institutions under this SOW for Medicare claims payments include but may not be limited to: communicating and coordinating with the MACs; drawing Medicare funds from the Treasury through an LOC; processing payments through EFTs and paper checks disbursed by the Medicare contractors; reconciling relevant bank accounts; preparing reports; keeping up-to-date records; providing customer services, and implementation/closing activities. CMS strongly supports the use of EFT as the preferred method of payment; as of February 2018, approximately 90% of payments are made utilizing EFT.

CMS requires Financial Institutions to: meet the minimum financial stability criteria established by CMS and comply with the rules and regulations for commercial electronic banking established by the Treasury’s Office of the Controller of the Currency (OCC)and other governing entities; demonstrate the ability to process a combined monthly total of up to 2 million EFT and paper check Medicare payments; be a current Financial Agent of the Treasury; and transition the current payment processing within six months of the contract award.

The Financial Institutions shall be provided funds for payments to be used solely for payment of Medicare items and services covered under Title 18 of the Social Security Act or other Medicare programs as required. Such funds shall be deposited in a specific segregated FHIBA account separate from other accounts; the account shall be within a member bank of the Federal Reserve System or any “insured bank” within the meaning of the Act creating the Federal Deposit Insurance Corporation (FDIC) Act of August 23, 1935 49 Stat. 684 as amended, 12 U.S.C 264. CMS requires earnings on the funds remaining in the accounts. The earnings or losses resulting from any average daily available positive or negative balances in each Demonstration account shall be computed monthly at the Treasury’s Bureau of Fiscal Services Earnings Credit Rate and adjusted in the following month’s invoice for banking services. Reports of daily available balances shall be provided monthly to CMS.

Medicare Administrative Contractor (MAC) Authorized Payments

1. General Functionalities/Requirements The Financial Institutions shall furnish all the necessary services, qualified personnel, material, equipment, and facilities not otherwise provided by the Government as needed to perform the requirements of this SOW.

A. The Financial Institutions shall each process over 2 million claims payments monthly representing over $32 billion in Federal funds. As of February 2018, 89% of these Medicare payments are EFT transactions.

B. On a daily basis, the Financial Institutions shall draw funds from the Medicare Trust Fund using an LOC, deposit these funds into the appropriate FHIBA account, and process the Medicare payments (EFTs and paper checks) authorized by the MACs that are presented for payment.

C. Payment files shall be transmitted daily through the CMS system architecture from the MACs to the Financial Institutions for processing utilizing secure communication architecture.

D. The Financial Institutions shall verify that the electronic files received from the MACs comply with the required format/content prior to processing.

E. On a daily basis, the Financial Institutions shall return files to the MACs. These return files include but may not be limited to cleared/paid items or other clearance data as required. The Financial Institutions shall ensure that paid check files are “scrubbed” to correct any checks that were encoded incorrectly before the paid check files are forwarded to the respective MACs for reconciliation.

F. On a weekly basis, the Financial Institutions shall forward reports to the MACs for accounts reconciliation.

G. On a monthly basis, the Financial Institutions shall forward to the MACs a Monthly Schedule of Itemized Bank Services Provided Report without pricing data and a Recap of Daily Available Balances. This report shall be in the format specified by CMS. The MACs shall verify the volumes of services. Once concurrence is reached on service volumes, the Financial Institutions shall submit an invoice to CMS for banking services which includes pricing and volumes consistent with the verified volume report for the identified month presented in the prescribed format (Appendix B). CMS shall establish the scheduled dates for submission of the invoice to CMS; the specific schedule shall be determined with the awarded contract.

H. The Financial Institutions shall maintain 24/7 customer service data transmission support; each Financial Institution shall be capable of processing an estimated volume of over 100 incoming and 200 outgoing files per day. The Financial Institutions shall be required to provide an account for the clearance of paper check items that are written on the account and created by the MACs; all related check stock shall be tested for processing.

I. EFT transactions sent by the MACs to the Financial Institutions shall be formatted in accordance with commercial EFT standards.

J. EFT Notices of Change (NOC) shall be processed back to the respective MACs.

K. Financial Institutions shall, upon request, provide CMS with documentation to verify they are in compliance with all electronic banking requirements imposed by the Treasury.

L. Standard commercial banking tasks may be added to the final contracts as required by CMS.

M. The Financial Institutions shall provide lockbox services as required by CMS.

2. Funding A. The Financial Institutions shall post and total all EFTs and paper checks presented for payment during the day to the MAC’s respective FHIBA and draw funds using the LOC from the Medicare Trust Fund to cover that amount less any items presented for deposit during the day to each FHIBA. The MAC and CMS shall be provided with a copy of each Request for Funds on a daily basis.

B. The Financial Institutions shall immediately contact CMS for a Treasury contingency plan if the process for requesting the drawdown of funds from the Treasury through the Letters of Credit shall possibly be interrupted for any reason which includes government shutdown and debt ceiling.

C. The Financial Institutions shall establish multiple FHIBA accounts to address the workloads of each MAC; the requirements of this SOW apply to each FHIBA and any associated accounts established.

D. The LOC for each FHIBA account shall be used solely for processing payment of EFTs and paper checks disbursed by the MACs.

E. The MACs pursue collections for claims paid in error; these collections are referred to as “overpayment refunds” and are deposited by the MACs into the appropriate FHIBA. These funds shall be utilized to fund any other claim payments made from the FHIBA reducing the associated Treasury draw from the designated LOC.

F. The Financial Institutions shall coordinate with the MACs to ensure that a daily zero balance is maintained in each FHIBA notwithstanding paper check payment clearances.

G. The earnings or losses resulting from any average daily available positive or negative balances in each FHIBA shall be computed monthly at the Treasury’s Bureau of Fiscal Services Earnings Credit Rate and either added or subtracted from the following month’s invoice for banking services.

H. The Financial Institutions shall actively monitor the LOC and ensure that the affected MAC and CMS are notified when the draws on the LOC are approaching 80% of the monthly limitation.

3. Reconciliation A. The Financial Institutions shall be required to prepare a weekly reconciliation report for each FHIBA account. The MACs shall furnish the Financial Institutions with a file or other record of EFT and paper check items issued (numerically identified) on a weekly basis to be matched against those EFT and paper check items that have cleared through each FHIBA. The results of the weekly bank reconciliation shall be sent to the MACs for verification within 2 business days from the end of the reporting week.

B. The Financial Institutions shall, on a weekly basis, be required to submit to the MACs a bank statement/report reflecting the daily total EFT and paper check items debited, daily total deposits credited, and the daily balance in each FHIBA. LOC draws from the Treasury and other deposits shall be shown separately on the statement.

C. The Financial Institutions shall, on a monthly basis, forward to the MACs a volume report of Monthly Schedule of Itemized Bank Services Provided excluding per item costs, and a Recap of Daily Available Balances. The volume of services report shall be in the specified format (Appendix A). The MACs shall, on a monthly basis, forward to CMS their concurrence with the volume of itemized bank services provided report.

D. The Financial Institutions shall, on a monthly basis, provide a volume and cost invoice to CMS after negotiating concurrence with the MACs relative to the volume of services performed; this report shall be in the required format (Appendix A). CMS shall receive a monthly invoice from each of the Financial Institutions for banking services; the invoice shall include: pricing and volumes for the identified month presented in a prescribed format by individual account, rolled into program totals and comingled with the other invoiced costs for banking services provided to CMS.

4. Collateral and Securities The Financial Institutions shall collateralize available balances in each FHIBA in accordance with Treasury requirements. The amount of collateral to be pledged shall be based on the highest balances maintained in each FHIBA less the Federal Deposit Insurance Corporation (FDIC) coverage. In addition, the selected Financial Institutions shall provide ACH risk exposure in the amount of each daily EFT file transmission; this is estimated to be approximately $5 billion daily.

5. Imaging The Financial Institutions shall accept imaged checks for deposit from the MACs as required. The Financial Institutions shall provide the imaging equipment and communication connections to the MACs and shall invoice CMS accordingly.

6. Internet banking A. The Financial Institutions shall have the capability to provide secure Internet banking services for daily financial management at multiple end points including the MAC jurisdictions.

B. The Financial Institutions shall coordinate with the MACs to ensure the success of all communications required to provide Internet banking for daily financial management. There are currently 12 Medicare Part A and B MAC jurisdictions and 4 DME regions (Appendix E).

C. The Financial Institutions shall provide a positive pay service for the MACs. This service shall audit incoming checks to identify discrepancies between the original check payment defined by the MACs and the item presented for clearance; the Financial Institutions shall not pay checks where discrepancies are identified through positive pay. It is anticipated that there may be several levels of positive pay services available to the MACs each with their own individual pricing.

7. Technical assistance/customer service A. The Financial Institutions shall maintain 24/7 customer service data transmission support and each shall process a volume of over 100 incoming and 200 outgoing files per day.

B. The Financial Institutions shall provide technical assistance to the MACs during business hours from 9:00am-5:00pm EST and shall provide responses/updates to technical problems no later than 24 hours after contacted.

C. The Financial Institutions shall monitor the receipt of files on a daily basis and shall follow up with CMS and/or the MACs to determine the status of missing file transmissions and resolve outstanding issues.

D. The Financial Institutions shall provide dedicated customer service representatives for each MAC.

E. The Financial Institutions shall provide dedicated testing coordinators to ensure a single point of contact for each MAC.

F. The Financial Institutions shall ensure that testing of bank issue and void files, EFT files, clear files, and any other required system testing is conducted promptly with minimal interruption or interference with services provided.

G. The Financial Institutions shall adhere to the standard file format for the Account Reconciliation Process (ARP) inbound and outbound files (Appendix D) H. The Financial Institutions shall assist the MACs with transferring any funds that are incorrectly deposited.

I. The Financial Institutions shall notify the MACs and request approval from CMS prior to making any service changes.

J. The Financial Institutions shall maintain any required CMS passwords for system transactions making changes as required on a timely basis avoiding any and all access cancellations.

8. Transmissions Architecture Securities and Efficiencies A. The CMS Enterprise File Transfer system is the primary mechanism for coordinating the workflow of file transfer and subsequent application execution from a variety of CMS business partners, government agencies, and other stakeholders; this system provides a secure data transfer in accordance with the current CMS Acceptable Risk Safeguards (ARS). The Financial Institutions shall need internet connectivity to push and receive files using the Managed File Transfer (MFT) Internet server from CMS and access through VPN or T-1 line. The Financial Institution shall require a Secure Shell (SSH) server for CMS to push the files. The Master Key File (MKF) Internet server client shall be supplied by CMS; CMS can also accommodate Connect:Direct but it requires additional documentation and security agreements.

B. The Financial Institutions shall be required to establish/maintain security (FIPS 140-2) configurations to provide network connectivity with CMS.

C. International Business Machine (IBM) Sterling Connect:Direct and TIBCO MFT Platform server for point to point file transfer software shall be utilized at CMS for optimized high-volume, secure (FIPS 140-2) delivery of files within and among enterprises either across hardware lines or Virtual Private Network (VPN) connections.

D. CMS currently utilizes TIBCO MFT which covers Platform Server and Internet Server within the Enterprise File Transfer infrastructure. The MFT Internet server requires a Secure File Transfer Protocol (SFTP) server at the business partners’ site as CMS shall push files to their site.

E. The IBM Sterling Business Integration Suite (ISIS) formerly called Gentran Integration Suite provides mechanisms such as mailboxes and Secured FTP (S/FTP and FTP/S) support. CMS is using this product to accept incoming files into a mailbox and then process them using a variety of mechanisms including scripts, Connect:Direct to a hub, FTP to a mid-tier system, etc.

F. The Financial Institutions shall comply with all CMS password security requirements.

9. Service Requirements and Considerations In the circumstance where CMS network connection is required, the Financial Institutions shall be required to provide Information Technology (IT) support for the following Data Communications services:

A. Facility escorts as required for Service Provider installation and maintenance of CMS installed data circuits.

B. IT support as necessary to facilitate Local Area Network (LAN) configuration during installation of CMS provided data circuits (i.e. routing, firewall rules, hardware, dabbling.)

C. IT support as necessary to facilitate network configuration and changes related to contractor LAN hand-off to CMS Wide Area Network (WAN) (i.e., routing, firewall rules, hardware, cabling).

D. The necessary rack space, power, and a standard dial tone/telephone line for installation of CMS provided data circuits and network devices.

10. Account Ownership and Maintenance Accounts shall be established under a separate tripartite agreement between each Financial Institution, the MACs, and CMS. The tripartite agreements are standard and shall function as the authorizing documentation for establishing accounts (Appendix C).

11. Transfer of Information A. From the MACs to the Financial Institutions

1. Daily

a) The MACs shall prepare miscellaneous deposits of checks.

b) The MACs shall transmit EFT files via Network Data Mover (NDM) or other designated file transfer system to the Financial Institutions for Automated Clearing House (ACH) transactions; the formats of this file shall be in accordance with National Automated Clearing House Association (NACHA) standards. Control totals of ACH file transmissions shall be communicated and verified with the Financial Institution each day prior to being processed by the Financial Institutions.

c) The MACs shall transmit via NDM or other designated file transfer system, Check issues file, ACH origination files and positive pay files to the Financial Institutions containing Medicare claims processing contractor issued, voided, and/or stale check files to match against checks presented for payment. The fields in the file shall at a minimum include: check date, payee name, check number, and check amount.

2. Weekly

a) The MACs, in order to facilitate weekly reconciliations, shall furnish the Financial Institutions with a file or other record of EFT and paper check items issued (numerically identified) on a weekly basis to be matched against those EFT and paper check items that have cleared through each FHIBA. The results of the weekly bank reconciliations shall be sent by the Financial Institutions to the MACs for verification.

b) The MACs shall request corrective action on errors identified during the weekly bank account verification/reconciliation.

B. From the Financial Institutions to MACs

1. Daily

a) The Financial Institutions shall transmit to the MACs files of successful and unsuccessful EFTs and paper checks that posted to each respective FHIBA.

b) The Financial Institutions shall credit the appropriate FHIBAs for overpayment collections, etc., deposited by the MACs.

c) The Financial Institutions shall provide the capability for the MACs to perform inquiries regarding daily beginning balance, transactions, and ending balance for each FHIBA.

d) The Financial Institutions shall provide online details of specific transactions and provide confirmation acknowledgements via U.S. Mail next business day if necessary; online confirmation shall be available to the MACs on the same business day.

e) The Financial Institutions shall post and total all EFT and paper checks presented for payment during the day to the MACs’ respective FHIBA and, using the LOC draws funds from the Medicare Trust Fund to cover that amount less any items presented for deposit during the day to each FHIBA. The MACs shall be provided with a copy of each LOC Request for Funds on a daily basis.

f) The Financial Institutions shall provide clears files of all items paid from the previous business day in which the item was not reversed.

g) The Financial Institutions shall provide Pay/No-Pay requests on positive pay mismatched items from the previous business day.

2. Weekly The Financial Institutions shall provide bank statements, bank reconciliations, supporting documentation, and deposit slips weekly as well as a CD ROM of imaged checks paid.

3. Monthly The Financial Institutions shall provide final reconciliations to the MACs no later than the 5th business day after the end of the reporting month. These reconciliations shall include the volumes of services performed and the daily available balance information. Any discrepancies in these reports shall be resolved prior to providing final invoices to CMS for payment.

C. Ongoing The Financial Institutions shall coordinate routine testing of EFT systems with the MACs to ensure compliance with FISMA and OCC security policy. The Financial Institutions shall provide testing support as defined by CMS based on unanticipated changes in system architecture required by CMS.

12. Non Base Jobs/Transmission Efficiency CMS has been transitioning the functional architecture between the MACs and the CMS Medicare systems. A variety of individual systems applications have previously been created in order to apply files developed by the MACs to the standard CMS file application format. CMS is working to standardize files received from the MACs and shall be testing these programs during the course of this contract. CMS requires the selected Financial Institutions to be an integral part of the end to end testing for these transitions. Cost for the transmission and receipt of testing files shall be included in the cost/business proposal with this solicitation.

X. DEMONSTRATION PROJECT PAYMENTS –REQUIREMENTS/TASKS

The basic functions required of the Financial Institutions under this SOW for Demonstration projects include but may not be limited to: communicating and coordinating with Demonstration contractors; receiving deposits of funding from the Treasury for Demonstration payments; processing a combined monthly total of up to 100,000 EFT and paper check Demonstration payments; reconciling Demonstration project bank accounts; preparing reports; keeping up-to-date records; providing customer services, implementation/closing activities; and transitioning the current Demonstration project payment processing within six months of the contract award.

Demonstration Project Payments

1. General Functionalities A. The Financial Institutions shall process Demonstration project payments that are disbursed monthly, quarterly, or semi-annually; these Demonstration payments represent approximately $10 billion annually in Medicare funds. CMS requires earnings on the unexpended funds available in each Demonstration project account. The earnings or losses resulting from any average daily available positive or negative balances in each Demonstration account shall be computed monthly at the Treasury’s Bureau Of Fiscal Services Earnings Credit Rate and adjusted in the following month’s invoice for banking services. Reports of daily available balances shall be provided monthly to both the program offices responsible for the payment funding CMS/DFSDM.

B. The Financial Institutions shall provide ACH risk exposure that equals the total daily draw from the Government LOC for the MACs plus the total funding of Demonstration projects.

C. The Financial Institutions shall receive Treasury deposits into Demonstration bank account(s) and process the Demonstration payments (EFTs and paper checks) authorized by the Demonstration contractor/CMS representatives that are presented for payment.

D. The Financial Institutions shall have all Demonstration Projects under one bank account and report and invoice at the individual Demonstration Project level.

E. The Financial Institutions shall ensure that the EFT payment files conform to commercial standards prior to processing; if the files presented by the Demonstration contractor fail to conform to these standards, the files shall be rejected with timely notification to the contractor. The Financial Institutions shall ensure that paid check files are “scrubbed” to correct any checks that were encoded incorrectly before the paid check files are forwarded.

F. On a monthly basis, the Financial Institutions shall forward transactional reports to the Demonstration contractor for accounts reconciliation.

G. Demonstration payment files are to be submitted by the Demonstration contractor to the Financial Institutions on a predetermined payment date schedule.

H. On a monthly basis, the Financial Institutions shall forward to the Demonstration contractor and CMS representative volumes for the Monthly Schedule of Itemized Bank Services Provided Report without pricing data as well as a separate Recap of Daily Available Balances for each Demonstration project. The Demonstration contractor and the Financial Institution shall concur on service volumes.

I. The Financial Institutions shall submit an invoice for Demonstration project banking services on a predetermined schedule (Exhibit 1).

J. The Financial Institutions shall have the capability to maintain 24/7 customer service data transmission support and handle incoming and outgoing files daily. Demonstration payment files are submitted to the Financial Institutions on predetermined payment dates.

K. The Financial Institutions shall, upon request, provide CMS with documentation to verify they are in compliance with all electronic banking requirements imposed by the Treasury.

L. Standard commercial banking tasks may be added as required by CMS in order to maintain the integrity and performance of Demonstration payments.

M. The Financial Institutions shall provide lockbox services to Demonstration contractors for the purpose of collecting overpayments returned by the payee.

2. Funding A. The Financial Institutions shall post and total all payments presented during the day to each Demonstration project account.

B. The Financial Institutions shall immediately contact CMS for a Treasury contingency plan if the process for providing funding for demonstration projects shall possibly be interrupted for any reason which includes government shutdown and debt ceiling.

C. The Financial Institutions shall ensure that all funds deposited or paid on behalf of the Demonstration project shall be kept separate from all other funds.

D. The Financial Institutions shall return surplus funds in the Demonstration project accounts to the Treasury upon request by CMS.

E. The earnings resulting from any average daily available positive balances in each Demonstration account shall be computed monthly at the Treasury Bureau of Fiscal Services Earnings Credit Rate and subtracted from the following month’s invoice for banking services.

F. The Financial Institutions shall be responsible for establishing ACH risk exposure coverage for daily ACH transactions; the total ACH risk exposure is estimated to be $5 billion daily.

3. Reconciliation A. The Demonstration contractors shall furnish the Financial Institutions with a file or other record of EFT and paper check items issued (numerically identified) for each payment cycle to be matched against those EFT and paper check items that have cleared through each Demonstration project account.

B. The Financial Institutions shall be required to prepare monthly bank statement reports for each Demonstration contractor. The bank statement report shall reflect the daily total EFT and paper check items debited, daily total deposits credited, and the daily balance in each account.

C. The Financial Institutions shall return a file to the Demonstration contractors which shall be matched by the Demonstration contractors to those EFT and paper check items that have cleared through each Demonstration project account.

D. The Financial Institutions shall provide the Demonstration contractors with the clears file for paper checks and electronic payments processed on a daily basis.

4. Collateral and Securities The Financial Institutions shall collateralize available balances in each Demonstration project account in accordance with the Treasury requirements. The amount of collateral to be pledged shall be based on the highest balances maintained in each Demonstration project account less the FDIC coverage.

5. Imaging The Financial Institutions shall provide the imaging equipment to the Demonstration contractors and accept imaged checks for deposit.

6. Internet Banking A. The Financial Institutions shall provide secure Internet banking for daily financial management at multiple end points including the Demonstration contractors.

B. The Financial Institutions shall coordinate with the Demonstration contractors to ensure the success of all communication required to provide Internet banking for daily financial management at the designated locations.

C. The Financial Institutions shall provide a positive pay service to each Demonstration contractor. This service shall allow for an audit of incoming checks for payment to identify discrepancies between the original check payment defined by the Demonstration contractors and the item presented for clearance; the Financial Institutions shall not pay checks where discrepancies are identified through positive pay. It is anticipated that there may be several levels of positive pay services available to the Demonstration contractors each with their own individual pricing.

7. Technical Assistance/Customer Service A. The Financial Institutions shall maintain 24x7 customer service data transmission support.

B. The Financial Institutions shall provide technical solutions to problems no later than 24 hours after contacted.

C. The Financial Institutions shall monitor the file transmissions and follow up with CMS and the Demonstration contractors if there are missing or rejected files.

D. The Financial Institutions shall comply with all CMS password policies.

E. The Financial Institutions shall provide dedicated customer service representatives for each Demonstration contractor.

F. The Financial Institutions shall provide dedicated testing coordinators to ensure a single point of contact for each Demonstration contractor.

G. The Financial Institutions shall ensure that testing of bank issue and void files, EFT files, clear files, as well as any other required system testing is conducted promptly with minimal interruption or interference with services provided.

H. The Financial Institutions shall assist the Demonstration contractors with ACH reversals by contacting the receiving bank to recoup improper payments.

I. The Financial Institutions shall notify the Demonstration contractors and request approval from CMS prior to making any service changes.

8. Transfer of Information A. Demonstration Contractors to Financial Institutions

1) The Demonstration contractors shall send the EFT payment, positive pay check and remittance advice file (as applicable) to the Financial Institutions on a per payment cycle basis; Demonstration contractors on projects with small payment volumes use an Excel spreadsheet with payment information loaded online into the Financial Institution’s web portal.

2) The Demonstration contractors on projects with larger payment volumes shall send payment files to the Financial Institutions using a mutually determined file transfer system; the format of this file shall be in accordance with NACHA standards or Electronic Data Interchange (EDI). Control totals of ACH file transmissions shall be communicated and verified with the Financial Institutions each day prior to being processed by the Financial Institutions.

3) The Demonstration contractors shall transmit through a mutually determined file transfer system positive pay files to the Financial Institutions containing Demonstration check payments issued, voided, and/or stale date check files to match against checks presented for payment. The fields in the file shall at a minimum include: check date, payee name, check number, and check amount.

B. Financial Institutions to Demonstration Contractors

1) Daily

a. The Financial Institutions shall provide online financial statements updated daily to reflect successful EFTs and checks that posted to the account.

b. The Financial Institutions shall credit the appropriate Demonstration contractor’s account for overpayment collections deposited into the lockbox.

c. The Financial Institutions shall provide same day details of transactions online and provide confirmation acknowledgement via U.S. mail next business day service.

d. The Financial Institutions shall provide a clears file of all items paid from the previous business day in which the payment was successful.

e. The Financial Institutions shall provide a Pay/No-Pay request on positive pay mismatched items from the previous business day.

2) Weekly The Financial Institutions shall provide bank statements, bank reconciliations, supporting documentation, and deposit slips weekly as well as a CD-ROM of imaged checks paid.

3) Monthly The Financial Institutions shall provide a final reconciliation to the Demonstration contractors no later than the 5th business day after the end of the reporting month.

4) Ongoing The Financial Institutions shall coordinate routine testing of EFT systems with the Demonstration contractors to ensure compliance with FISMA and OCC security policy. The Financial Institutions shall provide testing support based on changes in system architecture as required by CMS.

XI. TRANSITION TO NEW CONTRACTOR

The incumbent Financial Institutions shall participate in the workload transition following the award of a new Banking contract as required by CMS. The incumbent Financial Institutions shall work proactively with CMS and any other CMS designated organization to ensure a smooth, orderly, cooperative transition of services. The incumbent Financial Institutions shall submit a phase-in plan that coordinates with the master transition plan approved by CMS. Activities related to transition shall be conducted over a period not expected to exceed 5 months. Within two weeks of notification by CMS that the transition to a new Financial Institution shall take place, the incumbent Financial Institution shall draft a Joint Operating Agreement (JOA) between the incumbent, the new banking contractor, and CMS.

The purpose of the JOA is to establish a formal process for managing the workloads and maintaining continuity of Medicare banking services while both contracts are in place and to also establish a process to fully transition the workloads from the incumbents to the new Financial Institutions. The JOA shall detail the methods that shall be used to communicate and coordinate activities between CMS, the incumbents, and the new Financial Institutions.

The JOA shall define the responsibilities for the incumbent Financial Institutions and the new Financial Institutions and shall be submitted to CMS for approval before final signatures are obtained. In addition, as part of the JOA, the incumbent Financial Institutions and the new Financial Institutions shall form a joint management team that shall ensure that communication, coordination, cooperation, and consultation between the two entities and CMS is maintained in support of the transition and ongoing work.

Incumbent Responsibilities:

The incumbent Financial Institutions shall coordinate with the New Financial Institutions to present a Transition Plan within four weeks of the date of contract award to the CMS Project Officer for CMS approval. The Plan shall address the specific steps and dates the incumbents shall take to change the workload to the new Financial Institutions. The Plan shall include but not be limited to the following:

· Transition plans and procedures coordinated with the new Financial Institutions;

· Transition milestones and timeframes, including a detailed timeline for activities in-progress;

· A comprehensive listing of the responsibilities of all personnel participating in the transition;

· A detailed schedule and description of the methodology to be employed by the incumbents to maintain continuity of Medicare banking services during the transition period;

· A risk management plan that includes a list of the potential risks during the transition period and the plan to mitigate the risk.

The transition plan shall be mutually acceptable between the incumbent Financial Institutions and the new Financial Institutions. The plan shall be approved by CMS prior to initiation.

Accounts with outstanding items shall remain open until all items have cleared, or the 365 day expiration has been reached, or other arrangements have been made by the government.

New Financial Institution Responsibilities:

The new Financial Institutions shall use the first four weeks (30 calendar days) after the contract award start date as the “ramping up” period (Appendix F). During the “ramping up” period the Financial Institutions shall participate with the incumbent Financial Institutions to prepare a Transition Plan /Project Plan that includes tasks and milestones with start and completion dates for the entire transition from the incumbent banks. The new Financial Institutions shall provide CMS with weekly status updates to the plan. The new Financial Institutions shall be responsible for providing the final transition plan to CMS for approval.

During the first four weeks the new Financial Institutions shall contact the incumbent banks, CMS and other CMS designated contractors that are needed for completing the transition. The new Financial Institutions shall take the leadership role to schedule and facilitate weekly meetings for completing the transition and provide CMS with minutes from each meeting.

Beginning the month after the ‘”ramp up” period, the Financial Institution shall work with CMS and the incumbent Banks to transition one A/B MAC jurisdiction every 30 days; this is a deliberately slow pace that allows adequate time to address problems. This transition process shall occur for three months transitioning three of the MAC locations.