Attachment A - Statement of Work (Audit Services).docx

PERFORMANCE WORK STATEMENT:

We are requesting for proposal, auditing services for Denver Health and Hospital Authority (the Authority), OMC QALICB, Inc (OMC), the Denver Health and Hospitals Foundation (the Foundation), Denver Health Medical Plan, Inc. (the Plan). As primarily providers of healthcare and a political subdivision of the State of Colorado it is important those candidates bidding on the services have staff at all levels with a strong knowledge base in healthcare including hospital facility services, outpatient clinic services, ideally in a Federally Qualified Health Center (FQHC) setting, physician/professional services, and managed care – both from the provider and HMP perspective. Additionally, the firm should have staff assigned to the DHHA engagement who have expertise in the following areas:

· Governmental Accounting (including GASB 68 pension accounting)

· Medicaid Disproportionate share (DSH), Upper Payment Limit (UPL) financing, and provider fee calculations

· Medicaid and Medicare Cost reporting/third party reimbursement

· New Market Tax Credit (NMTC) transactions

· HMO statutory auditing experience in the State of Colorado. Including medical loss ratio calculations, risk score adjustments and premium deficiency reserves.

As the largest single provider of care to uninsured and Medicaid patients in the State, the Authority serves a diverse patient population with complex payer sources. A thorough understanding of billing and reimbursement for Medicare, Medicaid, capitated plans and Medicaid DSH is required. The Authority manages a separate restricted fund to account for grant awards (this includes federal, state and local grants), has a support agreement for the Foundation and is financially responsible for the Plan, a discretely presented component unit. The Authority is not a component unit of any other primary governmental entity.

Company Descriptions

The Authority The Authority was created in 1994 by the State of Colorado (the “State”) as a political subdivision of the State pursuant to Article 29 of Title 25, Colorado Revised Statutes, as amended (the “Act”). As contemplated in the Act, the City and County of Denver (the “City”), on January 1, 1997, transferred substantially all of the programs, services and facilities of the City’s Department of Health and Hospitals (the “Denver Health System”) to the Authority in consideration of certain agreements of the Authority concerning ongoing operation of the Denver Health System.

The Denver Health System, developed by the City and now owned and operated by the Authority, is a fully integrated health care delivery system that was developed over a period of 164 years. As part of the Denver Health System, the Authority operates the Denver Health Medical Center (the “Medical Center”), an acute care hospital with 555 licensed beds (458 staffed beds). The Medical Center is an academic Level I trauma center and it is the only hospital in the State certified for both adult and pediatric trauma patients. Medical, surgical, emergency and urgent care services are all provided on the Medical Center’s campus. The Authority also operates 41 federally qualified health centers, which include fourteen community health centers, nineteen school-based clinics and three mobile health centers. Two of the community health centers include urgent care sites and the Authority also operates a non-federally qualified health center urgent care site and two other specialty outpatient service sites. Also included in the Denver Health System’s operations are Rocky Mountain Poison and Drug Safety, the medical component of the City’s department of public health, Denver C.A.R.E.S. (a 100 bed non-medical detoxification center), the ACUTE Center for Eating Disorders, the Rocky Mountain Center for Medical Response to Terrorism, Mass Casualties and Epidemics, Rocky Mountain Drug Safety, Inc. (the sole member of Canadian Consumer Product and Pharmaceutical Safety, Inc., a company performing collection and analysis of drug and pharmaceutical data), medical response for the 911 system of the City and a 24 hour nurse advice line. The Authority is the sole member of Denver Health Medical Plan, Inc. (the “Medical Plan”), a nonprofit health maintenance organization that offers comprehensive medical insurance coverage to persons participating in its coverage plan.

The chart below depicts the composition of the Denver Health System (not depicted is Centennial, LTD).

In 2024, the Denver Health System served approximately 283,000 individual users (excluding the phone system services), which is approximately one-fourth of the City’s population, including approximately 87,000 behavioral health patients. The hospital operations of the Denver Health System have been in continuous operation since 1860 and the first community health center was established nearly 60 years ago. The System is served primarily by a physician group employed by the Authority and is also served by physicians employed by the University of Colorado School of Medicine. A large number of the Authority’s employed physicians have academic appointments at UCSOM pursuant to a formal affiliation agreement with the school.

The Authority has the following blended component units: 550 Acoma Inc., and Canadian Consumer Product and Pharmaceutical Safety Inc. New formed captive entity, Centennial Ltd, is expected to also be a blended component unit with a tentative formation in July of 2025.

OMC QALICB, Inc.

DHHA OMC QALICB, Inc. (“OMC Inc.”) was formed in January 2020 to purchase equipment primarily used in the OMC. The members of OMC Inc. are the Authority and Denver Community Health Services, Inc. (“CHS”). The Board of Directors of OMC Inc. consists of one member who is an Authority employee and two members who are directors on the CHS Board of Directors. Two Authority employees and one director from the CHS Board of Directors act as nonvoting officers of OMC Inc.

In January 2020, the Authority closed a new markets tax credit (“NMTC”) financing transaction to acquire a portion of the medical equipment to be used in the OMC under construction at that time. In connection with the NMTC, the Authority made a loan of $14.9 million to an entity created by the NMTC equity investor that simultaneously invested $6.9 million of equity. The combined proceeds of these amounts were invested in three separate single purpose entities created by the equity investor and three Community Development Entities (“CDEs”) who contributed NMTC allocation authority. These three entities, in turn, made six loans equal to $19.2 million to OMC Inc. which used the proceeds to acquire medical equipment it leases to the Authority. As part of the January 2020 NMTC closing, a put-call option agreement was executed with the NMTC investor allowing the Authority to receive through a put of ownership or a call to purchase the single purpose entities associated with the NMTC structure and therefore the ability to cancel the NMTC associated debt carried by OMC Inc. OMC Inc. is presented in the Basic Financial Statements of the Authority as a discretely presented component unit.

Denver Health Medical Plan, Inc.

The Medical Plan is a nonprofit corporation formed by the Authority in 1997 as a health maintenance organization to provide comprehensive medical insurance coverage on a prepaid basis to its members. The Medical Plan’s members include current and former employees of the Authority and their dependents and employees of the City. In 1998, the Medical Plan began participating in the Child Health Plan Plus. In 2006, the Medical Plan implemented a Medicare Advantage Special Needs plan under which members are dually eligible for Medicaid and Medicare; in 2007, a Medicare Select plan was implemented for low-income Medicare beneficiaries. In 2014, the Medical Plan began offering individual commercial coverage through Connect for Health Colorado, the Colorado insurance marketplace developed as a result of the Affordable Care Act. Effective September 1, 2018, Denver Health’s Medicaid managed care program, Denver Health Medicaid Choice (“DH Medicaid Choice”), was transferred from the Authority to the Medical Plan. This shift was the result of the Colorado Department of Health Care Policy and Finance (“HCPF”) change to a new Regional Accountable entity (“RAE”) arrangement and to incorporate the DH Medicaid Choice contract directly into the RAE. In July 2022, DH Medicaid Choice transitioned to a fee for service model from the capitated (per member per month) model. In 2023, the Authority plans became self-funded and the health plan was contracted to perform administrative services including processing and payments of claims. Comment by Muschanow, Rhonda: On 1/1/2023 the Authority plans became self funded and the health plan was contracted to perform administrative services including the processing and payments of claims.

At December 31, 2024 and 2023, there were 101,326 and 104,931 members enrolled in the Medical Plan, respectively. Approximately 11% of Medical Plan enrollment originated through Authority employee enrollment in 2024.

The Authority is the sole member of the Medical Plan. The Medical Plan is governed by a nine-member Board of Directors appointed by the Authority, and has its own Finance, Audit and Compliance Committee. The Medical Plan is presented in the Basic Financial Statements of the Authority as a discretely presented component unit.

Denver Health Foundation The Denver Health Foundation (the “Foundation”), founded in 1988, is a nonprofit corporation that supports the work of the Authority. The Foundation helps donors with diverse interests make a comprehensive impact on the health, social and economic wellbeing of the greater Denver area by supporting the care provided by the Authority.

The Foundation is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. The Foundation has had success raising funds through major gifts, grants and several annual special events. Significant areas of support include, but are not limited to, maternal and child health, community health, volunteer functions and trauma prevention and care.

The Foundation is governed by a board of directors; vacancies are filled by action of a majority of the Foundation board. The Foundation’s bylaws require that the Foundation board include the Authority’s Chief Executive Officer and up to three additional Authority representatives, not to exceed four total Authority-related members. The Foundation’s bylaws also state that members of the Authority’s Board and medical or administrative staff are not to constitute a majority of the Foundation board. The Authority provides administrative, accounting and clerical support to the Foundation. The Foundation is presented in the Basic Financial Statements of the Authority as a discretely presented component unit.

SCOPE OF WORK REQUIRED:

The Denver Health and Hospital Authority, a body corporate and political subdivision of the State of Colorado, hereinafter referred to as DHHA or “the Authority”, solicits a proposal relating to firm fixed price quote for independent financial auditing services. Contained within the remainder of this document is information to assist the Vendor in accurately submitting all information required to be considered for award for the above services. This activity shall commence on October 1, 2025, or date of award, whichever is later. Term of this contract shall be from the Authority’s fiscal period 2025 to 2029. The Authority’s fiscal period is calendar year. The contract period encompasses the financial statement preparation time related to the fiscal year ends.

The accounting firm will be selected based on a thorough analysis of each firm’s ability to provide DHHA with quality auditing services. DHHA will only contract with firms that do not discriminate against employees or applicants for employment because of race, creed, color, national origin, gender/sex, age, disability, marital status, sexual orientation or citizenship status with respect to all employment decisions.

The following are the entities and services within the business scope of DHHA:

Financial Audits:

· Denver Health and Hospital Authority (government accounting standards)

· DHHA includes the 2 CFR 200 (Single) Audit

· Centennial Ltd, “the Captive” (captive insurance)

· OMC QALICB, Inc. “OMC” (not-for-profit with New Market Tax Credits)

· Denver Health Medical Plan, Inc., “the Plan” (statutory audit)

· Denver Health Foundation, “the Foundation” (not-for-profit fund accounting)

Agreed-Upon Procedures:

· ACUTE Financial Report

· Primary Care Fund Application Report

Employee Benefit Plan Audits:

· 401(a) annual audit

· 457(b) three-year rotation audit

Form 990 Tax Services:

· Denver Health Medical Plan, Inc.

· OMC QALICB, Inc.

· Denver Health Foundation

· 550 Acoma, Inc.

· Rocky Mountain Poison & Drug Center

· Centennial Ltd

· Denver Community Health Services, Inc. (under $50k)

Specification Requirements:

The proposer must meet the following minimum qualifications in order to participate in this RFP. Failure to meet these qualifications may result in disqualification.

· Must have a minimum of 5 years’ experience auditing healthcare clients with revenues $500M and greater.

· Must be a registered CPA firm in Colorado.

· Must have 2 CFR 200 (Single Audit) accounting and auditing experience.

· Must have Health Maintenance Organization Insurance experience, and related Statutory-basis accounting and auditing experience.

· Must have foundation experience, and related fund accounting and auditing experience.

· Must have captive insurance accounting and auditing experience.

DHHA considers communication to be crucial in order to resolve any issues that may arise during the audit period. Accordingly, the auditor and management must meet periodically to discuss audit progress and related issues. Meetings may be held on an “as needed” basis depending upon the urgency of the issues. The auditors must immediately apprise senior management regarding any accounting or auditing concern that has come to their attention that might have an impact on their ability to issue an unqualified opinion on the financial statements.

Five key factors that will be considered in selection of the audit firm include:

· Cost

· Technical competence

· Experience with similar organizations/references

· Demonstrated ability to focus on the needs and specialized accounting issues specific to the Authority, rather than a “one size fits all” approach; and

· Track record and demonstrated focus on timeliness of meeting / exceeding deadlines, responding, and assisting with new issues that arise each year.

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