Attachment 4 CA2 - Revised Technical and Net Discount Proposal Guidance.pdf

Request for Revised Technical Proposals and Net Discount Proposals

Dear Offeror, The Department of Labor (DOL) is issuing this Amendment to Solicitation 1605DC-18-R- 00020, as part of its corrective action implementing the recommendations of the Government Accountability Office (GAO) in its January 29, 2020 decision on Bid Protests B-417237.2, .3 and .4. Please note the corrective action is narrowly tailored to address GAO’s recommendations.

DOL has revised only two sections of the Performance Work Statement (PWS). See Attachment 7 CA2 - PWS Changes, which accompanies this letter. You are being requested to submit a revised technical proposal to address just those two revised PWS sections, as well as a revised price proposal. No other revisions to your proposal are being requested and no other revisions to your proposal will be considered as part of the corrective action. DOL will issue a new award decision.

Below are instructions for submission of revised proposals and information regarding the re-evaluation process. Revised proposals are due no later than Wednesday, April 29, 2020, 5:00 PM EST. The Due Date for questions and comments concerning the solicitation is Monday, April 20, 2020, 5:00 PM EST.

• Instructions for submission of revised Technical Proposals:

o Technical Proposal Text:

Text (Clean): Offerors are instructed to use the Technical Proposal submitted on or about September 18, 2018 (original proposal) to create and submit one (1) “clean” complete copy. Pages that contain revisions from your initial proposal shall have change bars along the outside margin next to every line that includes a change. All new text shall also be indicated with change bars. The proposal must also conform to the text, font, and labeling instructions found at RFP Section L-7 (PLEASE NOTE THAT THERE IS NO PAGE LIMIT FOR VOLUME I – TECHNICAL APPROACH). Material submitted in excess of the page limits or noncompliance with printing parameters will be removed from both the “clean” and “line-in/line-out” copies and that material will not be considered in the evaluation and source selection decision.

Text (Line-in/line-out): The content of the “line-in/line-out” text submission shall be identical to the “clean” submittal, but will fully indicate all edits made to the original text proposal. In addition to the bar in the outside margin showing every line where a revision has been made, the “line-in/line-out” version shall be submitted with the following edit feature settings: inserted text--red, underlined text; deleted text--struck through in black; and changed formatting--none. Submit the number of copies indicated.

o Scope and content of revisions:

o Only two PWS requirements have been amended: the Prior Authorization Portal

(revised PWS 5.1.4) and the Drug Utilization Review (DUR) (revised PWS 5.1.4.4).

Accordingly, only those sections of your technical proposal which address those two PWS sections may be revised at this time. The evaluators will consider only those revisions which address those two PWS requirements (PWS 5.1.4 and 5.1.4.4);

o In addressing the Prior Authorization Portal (revised PWS 5.1.4), your submission should include the following information as it relates to the revised requirement only:

An outline of the core processes for your customer service center, including claimant and CE interface capabilities. (Reference: Customer Support – Item b.)

A clearly detailed description of how the proposed customer support tools will help the National Office and DFEC District Offices process prior authorizations, medication reviews, or claim assessments on a daily basis.

Include the timeframe from when the rejected prescription is requested by a pharmacy or a claimant to when your system displays a coverage recommendation.

A description of how your system will provide a coverage recommendation 100% of the time.

Include screen captures displaying the look and feel of the recommended portal.

Include a clearly detailed description and screen captures showing where the portal will provide the final coverage recommendations.

A description of the information and supporting evidence that is provided to the claims examiner with the final coverage recommendation.

Include 2 samples of each type of recommendation (e.g. recommend approval, recommend denial) that can be provided for a specific medication/circumstance.

o In addressing the Drug Utilization Review (DUR) (revised PWS 5.1.4.4), your submission should include:

A clear description of what your approach and system will be for Drug Utilization Review. (Reference: Utilization Management, Audits, and Reporting - Item c.)

A description of which automated prospective DUR edits you envision for

DFEC.

Including a table of edits with definitions for each edit.

Including a discussion of the level of customization you can offer with each prospective DUR edit. (e.g. can customization occur at the NDC and/or drug class level; can you restrict certain Result of Service Codes)

Including the average timeline to adjust an edit within your system. (e.g.

adjusting refill-too-soon edits from 75% to 90% on all opioids; adjusting a specific drug-drug interaction to a hard denial)

Including a description of any specific drug information compendia used in your system (e.g. First Databank, Medi-Span) and how the information is integrated. (e.g. how do adjustments to source material affect your edit processing; how will you notify OWCP of compendia-driven edit changes)

Including relevant examples of successful adjustments to automated prospective DUR edits that improved outcomes or lowered drug costs

A description of your automated retrospective DUR process.

Including all systems and tools used and what information they monitor in an automated fashion Including how you identify outliers and problems Including relevant examples of successful automated retrospective DUR that achieved client goals.

A description of your process for clinical DUR.

Including your proposed process for identifying a target DFEC population in need of clinical DUR Including a summary description of what healthcare professionals will be proposed and for which tasks (e.g. how many of what types of professionals; what relevant qualifications or accreditations do they or your organization possess)

Including your proposed approach to achieving a high rate of change when making recommendations to physicians, whether verbally or in writing

Including how you propose to monitor and report to DOL on progress of DUR efforts, to determine if the expected outcome has been achieved

Including relevant examples of successful clinical DUR that improved outcomes or lowered drug costs

• Re-evaluation process for the technical proposals o DOL will evaluate the revised technical proposals and assign a new Element 1 rating, Understanding of the Requirement, taking into consideration the evaluators’ findings in the two revised PWS areas and findings from the earlier evaluation on other aspects of the technical proposals;

o The Government will then consider the ratings for all five (5) Technical Elements, including the new Element 1 rating and the ratings or the other elements which were previously assigned, to generate a new, overall technical rating, in accordance with the evaluation criteria in the Solicitation.

• Instructions for submission of revised Price/Discount Proposals:

o You are asked to submit the following:

o A document indicating that the guaranteed discount from Average Wholesale Price

(AWP), as defined in Part 2 of the Solicitation, will be at or below what is described in the following table:

Goods or Services Description Net discount proposed Brand Name Retail AWP minus 16% Generic Retail AWP minus 50% Brand Name (mail order or 90 day supply) AWP minus 20% Generic (mail order or 90 day supply) AWP minus 62% Compound Medications (3 or fewer ingredients) AWP minus 50% Compound Medications (more than 3 ingredients) AWP minus 70% o A revised net discount proposal (in the excel workbook) that includes discount rates and fees for all base and optional services as described in Attachment 6 CA2 - PBM Discount Calculation Workbook, Section B (Schedule of Supplies/Services), and Section L of the solicitation.

o In determining the discounts and fees to be proposed, you should consider all PWS requirements, including the requirement to provide clinical DUR services (per revised PWS 5.1.4.4) and a Prior Authorization Portal (per revised PWS 5.1.4). You may NOT propose pricing for any required service outside the discounts and fees set forth in Attachment 6 CA2 - PBM Discount Calculation Workbook, Section B (Schedule of Supplies/Services), and Section L of the Solicitation. The Government will NOT consider and will NOT accept any separate prices, pricing rates, fees or any charges for DUR services, the Prior Authorization Portal, or any other PWS requirement. If an Offeror proposes to charge a separate fee, or to charge for a service, in any way that is separate from the Section B Schedule of Supplies/Services, DOL will consider that proposal to exclude such services and the proposal may be deemed deficient for that reason.

o As further discussed below, DOL is providing Fiscal Year (FY) 2018 baseline data and projections for the anticipated contract period, including options, as well as the key underlying assumptions for those projections listed below. These estimates will be used solely for evaluation purposes, to calculate the overall evaluated price of each

Offeror’s price proposal. The actual volume of services under various CLINS will differ during performance.

Please use Attachment 5 CA2 - DOL Utilization Data - Drug - Compounds - DME - DST (Attachment 5 CA2) as the basis and template for your revised net discount proposed. Attachment 5 CA2 contains Excel files of prescription volumes, Durable Medical Equipment (DME) volumes, and diagnostic services and testing volumes.

These numbers are based on DOL’s available volumes as discussed below. DOL has provided identifiers to assist with compiling proposed prices into each CLIN.

From these files, DOL created baseline values under each CLIN based on 100% of Average Wholesale Price (AWP) for drugs and allowed values (maximum potential reimbursement amount) for DME and Diagnostic Services and Testing, which is reflected in Table 1. The Government estimated the monetary amount in each CLIN category over time and will utilize these values to calculate the aggregate savings from the price/discount proposals from all Offerors. The values in Table 1 reflect DOL’s best estimate under each CLIN given available data and reasonable assumptions about future conditions.

Given future market uncertainties and the nature of the FECA program, there are limitations in DOL’s ability to provide precise information regarding future years. In light of these considerations, DOL has provided the following assumptions, as explained under each separate heading, to further assist the Offerors’ understanding of Table 1. Finally, using Table 1, DOL has created an Excel workbook that allows Offerors to see the impact of their proposed net discounts on their overall evaluated price.

Table 1

Drug, DME, and Diagnostic Services and Testing Estimates

Categories

Baseline Data Base Period

Option Period 1

Option Period 2

Option Period 3

Option Period 4

Overall Total

Brand Name Retail $104,808,940.70 $65,765,561.04 $54,044,527.51 $48,005,307.29 $40,926,747.00 $35,121,280.94 $348,672,364.48

Generic Name Retail $216,191,506.01 $180,909,009.68 $220,982,153.36 $211,363,042.25 $200,670,439.67

$190,078,896.10

$1,220,195,047.07

Brand Name (mail order or 90 day supply) $10,037,331.39 $6,397,259.49 $5,308,574.36 $4,601,525.70 $3,738,793.12 $3,038,681.05 $33,122,165.11 Generic Name (mail order or 90 day supply) $21,551,464.08 $17,914,507.56 $22,206,060.20 $21,199,774.19 $20,038,675.59 $18,881,985.66 $121,792,467.28 Durable Medical Equipment (DME) $926,681.39 $463,340.69 $931,314.80 $935,971.37 $940,651.23 $945,354.48 $5,143,313.96 Diagnostic Services and Testing $1,690,434.66 $845,217.33 $1,698,886.83 $1,707,381.27 $1,715,918.17 $1,724,497.77 $9,382,336.03 Compound Medications Spend (3 or fewer ingredients) $1,442.65 $1,202.16 $1,442.65 $1,442.65 $1,442.65 $1,442.65 $8,415.41 Compound Medications Spend (more than 3 ingredients) $131,730.98 $109,771.42 $131,730.98 $131,730.98 $131,730.98 $131,730.98 $768,426.32 OPTIONAL: Specialty Brand Name Retail $7,374,875.04 $6,145,483.37 $7,374,875.04 $7,374,875.04 $7,374,875.04 $7,374,875.04 $43,019,858.57 OPTIONAL: Specialty Generic Name Retail $715,884.73 $596,546.75 $715,884.73 $715,884.73 $715,884.73 $715,884.73 $4,175,970.40 OPTIONAL: Specialty Brand Name (mail order or 90 day supply) $794,883.21 $662,376.18 $794,883.21 $794,883.21 $794,883.21 $794,883.21 $4,636,792.23 OPTIONAL: Specialty Generic Name (mail order or 90 day supply) $32,074.20 $26,727.43 $32,074.20 $32,074.20 $32,074.20 $32,074.20 $187,098.43 Total = $364,257,249.04 $279,837,003.10 $314,222,407.87 $296,863,892.88 $277,082,115.59 $258,841,586.81 $1,791,104,255.29

Assumptions

Non-specialty Brand and Generic Drugs (including: Brand Name Retail, Generic Name Retail, Brand Name (mail order or 90 day supply), and Generic Name (mail order or 90 day supply)):

Estimates contain year-over-year reductions based on previously planned controls (please note brand to generic conversions below). Further, a 4% year-over-year reduction in total spend for non-specialty brand and generic drugs due to prescription drug management improvements under a PBM.1

Brand to Generic Conversions:

After reviewing the brand name drug distribution of products, OWCP found that a substantial amount of brand name drugs could be switched to a therapeutically equivalent generic alternative. This would result in a lower brand name drug spend over time, and an increase in generic spend as the brand to generic conversions occur.

The Government had already planned to implement this policy in the future once the PBM was awarded and the new vendor completed Phase 3 of the awarded contract (which includes the development of patient/provider portal and implementation of a formulary). Consequently, the general approach of the new generic policy was factored into its calculations.

DME and Diagnostic Services and Testing (DS&T):

In the spring of 2018, the USPS implemented a contract with a DME vendor to provide voluntary (the claimant can choose to use the service or not) DME for their injured workers. The DME’s vendor penetration rate has been approximately 3% of the total DME allowed amounts for that program. Both the DME and Diagnostic and Testing Services (DS&T) under DOL’s PBM contract are similarly structured. Thus, it is estimated that DOL’s PBM would achieve similar penetration results. Since the company to which the PBM contract is awarded can only offer DME services to non- USPS injured workers, 3% was multiplied by the baseline non-USPS DME allowed amount to provide the baseline value for DME. USPS does not, however, have a DS&T contract so the estimated penetration rate of 3% was multiplied by all of the FECA DS&T allowed amount to provide the baseline value for DS&T. The Government determined that the best proxy to estimate true penetration rate for its DS&T voluntary program was 3%, since the best data at the Government’s disposal is USPS’s DME voluntary participation rate and FECA DS&T will also be optional in

1 Paduda, J. Prescription Drug Management in Workers’ Compensation. The fifteenth Annual Survey Report (2017 Data). Available at: https://comppharma.com/wp-content/uploads/2018/07/2018-CompPharma-Rx-Drug-Mng-Survey-Public.pdf. “More significantly, over the last eight years, workers’ compensation drug spend has dropped by 31.5%, or approximately $1.1 billion.”

https://comppharma.com/wp-content/uploads/2018/07/2018-CompPharma-Rx-Drug-Mng-Survey-Public.pdf https://comppharma.com/wp-content/uploads/2018/07/2018-CompPharma-Rx-Drug-Mng-Survey-Public.pdf nature. Additionally, a 0.5% year-over-year increase in penetration was assumed from Option Period 1 and forward for both DME and DS&T.

The allowed amounts for DME and DS&T are based on the OWCP Fee Schedule and may be subject to adjustments based on locality, and pricing modifiers. OWCP uses the CMS Geographic Practice Cost Indices (GPCI) to calculate the values for locality adjustments. A listing of geographic practice cost indices by ZIP code is contained in the file: Effective_October_15_2018_gpci-by-zip.xls located on the OWCP fee schedule website.

OWCP acceptable modifiers will adjust allowable amounts by a modifier percentage using appropriate modifier levels. A listing of the Modifier Level Tables with the OWCP-designated fee schedule adjustment for each modifier are contained in the file: Effective_October_15_2018_mod_table.xls on the OWCP fee schedule website.

For more information on the OWCP Fee Schedule, please see the OWCP Fee Schedule “Read Me First” document on the OWCP website.

Compound Medications:

Compound Medications have dropped substantially since the publication of the FECA Bulletin No. 17-01. This Bulletin created a prior authorization requirement for compounded drugs. DFEC experienced a drop of approximately 90% in its compounding spend following the first year, and continues to see further reductions.

Thus, only the fourth quarter of compound claims were provided to Offerors. OWCP used this fourth quarter spend to predict the baseline value. No increase or decrease was assumed for future years as the compound utilization is anticipated to continue to be minimal.

OPTIONAL: Specialty Drugs:

For this optional CLIN, brand and generic drugs that cost over $670 for a 30 day supply and those that cost over $2,010 for a 90 day supply were identified.2 These values reflect common thresholds that define specialty drugs in Medicare’s program.

Next, a pharmacist determined which of these medications were strictly specialty products. Product spend for injectable, antiretroviral, chemotherapy, and/or monoclonal antibodies were included as specialty products and the totals were summed to provide a full year baseline value. No increase or decrease was assumed for future years as any increase in specialty drug utilization would be offset by

2 Centers for Medicare and Medicaid. Announcement of Calendar Year (CY) 2019 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter. Specialty Tiers. Page 233. Available at: https://www.cms.gov/Medicare/Health- Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf. “This analysis showed that just around 1% of 30 day-equivalent fills exceeded $670 and as a result, CMS will maintain the $670 threshold for CY 2019.”

https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf improvements in formulary management, and retrospective drug utilization review procedures.

Inflation/Deflation:

Future economic inflation/deflation in the values of average wholesale prices (AWPs) was not assessed separately. The 4% year-over-year reduction estimate in total spend is considered to be inclusive of any economic fluctuation, as workers’ compensation PBMs have seen their spend decrease despite fluctuations in AWP for both brand and generic drugs over the past 8 years.

Base Period versus Optional Periods:

The Government factored in contract-specific requirements and timelines into the base period spend. Due to Phase 1, 2, and 3 requirements, some requirements may not be fully functional upon contract award. The Government considered this aspect, and that is why the base period spend under the PBM is less than the first option year.

The Government will be utilizing the following for Section M – Evaluation Factors for Award, Factor III – Price/Discount to read in its entirety as follows:

The Government will evaluate quotes to determine if prices/discounts meet the minimum go/no go requirements. (Section L – Instructions, Conditions and Notices to Bidders, 2. Mandatory Criteria, A. Pricing/Discount). Next, the CLIN prices/discounts will be evaluated, including all option periods and optional service CLINs, to ensure that the Price/Discounts proposed are reasonable, using the techniques in FAR 15.404-1(b)(2). The Government will also calculate the aggregate savings under each Offerors’ proposal considering every CLIN and every period, by applying the proposed net discounts to the estimated monetary amounts (as set forth in Table 1 above). The Government will thus generate a total estimated cost for each Offeror over the life of the contract. In selecting the awardee, the results of the Price/Discount evaluation will become significantly more important as technical ratings approach equality.

• With regard to the Past Performance:

o The corrective action will not include a reevaluation of Past Performance. In making a new selection decision, DOL will consider the findings from the earlier evaluation of your firm’s Past Performance.

• DOL does not plan or expect to engage in any further rounds of discussions with any

Offeror.