DDS_RFI_25-70008_Medicare_Part_D_Claims_Addendum_01.docx

State of California Department of Developmental Services Administration Division 1215 O St, Sacramento, CA 95814 www.dds.ca.gov

CALIFORNIA DEPARTMENT OF DEVELOPMENTAL SERVICES DDS RFI 25-70008

ADMINISTRATION DIVISION

Date: October 28, 2025 To: INTERESTED RESPONDENTS

Subject: REQUEST FOR INFORMATION (RFI) NO. DDS RFI 25-70008 - ADDENDUM 01 DDS Medicare Part D Drug Claims Services Project

A. PURPOSE

The California Department of Developmental Services (DDS) and the Department of State Hospitals (DSH) issues this Request for Information (RFI) to identify solution alternatives to replace the existing drug claims billing solution. Our current vendor has provided these proprietary, custom software services to DDS and DSH since 2006. The purpose of this document is to explain the claim services and reimbursement processes that must be provided by the vendor to the DDS Cost Recovery System (CRS). Claim data for both DDS and DSH run through the CRS application. This billing system is a 30-yearold legacy application written predominately in the COBOL language with some NATURAL language programs as well. CRS has robust batch and online CICS components. Data structures used are VSAM files, flat files, and some ADABAS database structures. This system replacement initiative is titled the DDS Medicare Part D Drug Claims Services Project.

The DDS Information Technology Services Division provides the opportunity for those interested to participate in a Request for Information (RFI) to:

· Identify solutions that can replace the existing system and automate key business functions.

· Refine solution scope, schedule, and costs (one-time and continuing) to establish a project budget and timeline.

· Seek product demonstrations to understand the breadth of solutions available to achieve the project goals.

· Determine the feasibility of the project and viability of current solutions in the market to address DDS business needs.

B. KEY ACTION DATES AND TIMES

The following are the Key Action Dates and Times regarding this RFI. If DDS finds it necessary to change any of these dates, an Addendum to this RFI will be posted to the California State Contract Register (CSCR) https://caleprocure.ca.gov.

C. Disclaimer

1. This RFI is issued to obtain vendor and solution information to assist DDS in understanding the current market and for project planning activities.

2. This RFI does not constitute a solicitation. A response to this RFI is not an offer and cannot be accepted by the State to form a binding contract.

3. Respondents are solely responsible for all expenses associated with responding to this RFI.

4. Participants are advised that the responses to this RFI may become public information under the Public Records Act. Please do not include any proprietary information in response to this RFI.

5. Responding to this RFI creates no obligation on the part of any respondent to DDS. Conversely, issuing this RFI and considering the responses creates no obligation on the part of DDS to any respondent.

6. Submitting a response to this RFI will not enhance the review of that respondent’s proposal(s) to any future solicitations. Not submitting a response to this RFI will not prohibit a response to any future solicitations, nor disadvantage the evaluation of a response to any future solicitation. By submitting a response to this RFI a respondent is implicitly agreeing with these conditions.

7. DDS asks willing respondents to share non-binding budgetary pricing information. Pricing is only for planning purposes. Any pricing provided in a response to this RFI will not be considered a proposal/bid on the part of the respondent.

D. RFI FORMAT AND SUBMISSION

Responses to this RFI are due by the date and time stated in the Key Action Dates and Times section. Respondents must complete Attachment A – RFI Response Worksheet. Reponses must be submitted via email to the DDS contact listed in the Contact Information section.

The following should be included in the response submission email:

· On the subject line of the email, include: DDS RFI 25-70008

· Respondent name, contact person, telephone number, and email address, as part of the sender’s contact information

· Respondent’s Attachment A – RFI Response Worksheet

· Additional attachments or information related to Attachment A – RFI Response Worksheet The State reserves the right and has sole discretion to contact respondents directly to seek clarification of any response received.

E. RESPONDENT QUESTIONS

All questions related to this RFI must be submitted via email by the date specified in the Key Action Dates section and to the contact person listed in the Contact Information section.

The following should be included in the email inquiry:

· On the subject line of the email, include: DDS RFI 25-70008

· Respondent name, contact person, telephone number, and email address, as part of the sender’s contact information

· RFI section, page number, and/or other information useful in identifying the specific problem or issue in question

· The respondent’s question(s) The State reserves the right and has sole discretion to contact respondents directly to seek clarification of any inquiry received. The State may respond to questions directly to the respondent or if deemed necessary, release an additional addendum or updated RFI.

F. CONTACT INFORMATION

The RFI responses and all correspondence and/or questions related to this RFI shall be directed to the State contact person identified below:

Office: Department of Developmental Services

Name: Tanya LoForte Email Address: tanya.loforte@dds.ca.gov

G. PRODUCT/SOLUTION DEMONSTRATION

The respondents to this RFI may be invited to conduct demonstrations of their proposed product/solution. After the respondent’s response to this RFI is received by DDS, a demonstration of the product/solution may be scheduled, during which the respondent will be required to demonstrate the proposed requirements. The intent of the demonstration is to identify which products and solutions are best able to provide the required system functionality with minimal development. The demonstration must be performed on a production system or a configured production-level test system. In either case, the demonstrated system may employ live or simulated inputs. A brief description of the production/production-level environment, including any limitations imposed on the demonstration, should be part of the presentation.

The demonstration must be conducted by staff proficient in configuring and implementing the proposed solution.

The demonstration may be observed by DDS and stakeholders impacted by these projects via a webinar and the webinar will be recorded during the demonstration portion of the meeting. The webinar will not be recorded during the 30-minute question and answer portion of the meeting to allow for proprietary/confidential discussions. If a feature in the product/solution cannot be demonstrated on a production or production-level test system, the respondent may present the feature using PowerPoint slides.

H. BACKGROUND

DRUG BILLING CLAIM AND PAYMENT REIMBURSEMENT SERVICES

The HIPAA compliant vendor will provide claims submission and payment posting data for Medicare Part D Drug Claims services program. Payment posting reflects reimbursement monies to the State for health care services provided to consumers and patients at our Developmental Centers and State Hospitals.

Vendor will create the currently accepted HIPAA compliant D.0 pharmacy claims format for Medicare Part D, submit those claims to the consumer Prescription Drug Plan (PDP) and convert the 835 payment data transactions returned from the PDP to the format needed for posting by CRS.

Vendor will receive the drug claim data from our CRS billing system on a monthly basis, supplement the data for regulatory reasons, and submit the claims to one of several PDP’s, depending on the plan the consumer has. Then, in response to the billing, the vendor receives payment/denial responses from the Part D plans directly or DDS/DSH staff download payment data from the plan and places that data on an internal DDS server location where the vendor retrieves it. That payment/denial data is then converted by vendor into payment files that the CRS system can post to consumer accounts in the CRS billing system.

Vendor will provide various reports from their system used to work claims and monitor claiming activity. From those reports, denied claims and the reasons for denial are identified, worked and corrected claims are resubmitted.

Vendor will also build and support GUI’s for back-end claim processing performed by business staff at DDS and DSH.

Specific Services Vendor Must provide

· Separate DDS claims and payments from DSH claims and payments.

· Process Pharmacy Claim Transactions into HIPAA compliant electronic standard NCPDP D.0 claims files from CRS generated raw drug claim data.

· Provide Pharmacy Claims Editor.

· Interpret and convert 835 drug payment files from multiple PDP’s and create CRS posting transactions.

· Provide a suite of GUI functions (dashboard) for back-end customer work. Includes claims that encountered errors, manual claims posting, PDP insurance profile updates, etc.

Transaction Counts and Reimbursement dollars realized Approximate number of transactions in a recent 12-month period. Medicare and Medi-Cal reimbursements for July 2024 through June 2025:

Number of transactions processed through the CRS: 4,218,507

Billing and reimbursement revenue services provided

DDS, For Fiscal Year 24/25: July 2024 to June 2025

*Part D claims have not been processed due to the absence of an active Pharmacy Benefit Manager (PBM) contract. A new PBM contract has now been established; however, our existing clearinghouse does not currently have the capability to make the necessary updates to the Part D claim submission process. Once system modifications are in place with a new vendor and claim processing functionality is restored, Part D claims will resume.

DDS, Claim Counts:

DSH, last 3 fiscal years:

Medicare and Medi-Cal Billing regulations/requirements Medicare & Medicaid (Medi-Cal in California) Medicaid is a joint federal and state program that helps pay medical costs for certain people and families who have limited income and resources and meet other requirements. Medicaid never pays first for services covered by Medicare. It only pays after Medicare has paid. In rare cases where there’s other coverage, Medicaid pays after the other coverage has paid.

https://www.medicare.gov/Pubs/pdf/02179-medicare-coordination-benefits-payer.pdf

Reporting Other Health Coverage Federal and state laws require Medi-Cal members to report OHC to ensure Medi-Cal is the payer of last resort. When Medi-Cal learns that a member has OHC, the Medi-Cal record is than updated to reflect the OHC.

https://www.dhcs.ca.gov/services/Pages/TPLRD_OCU_cont.aspx

Coordination of Benefits Medicaid never pays first for services covered by Medicare. It only pays after Medicare, employer group health plans, and/or Medicare Supplement (Medigap) Insurance have paid.

https://www.medicare.gov/supplements-other-insurance/how-medicare-works-with-other-insurance/which-insurance-pays-first

DDS Cross Over Claims Billed to Medi-Cal (‘Cross Over’ means the consumer has both Medicare and Medi-Cal insurance coverage) Through the Coordination of Benefits hierarchy, and as the payor of last resort, Medi-Cal will not reimburse for services or drugs if the consumer has Medicare insurance that covers those services or drugs. Below is a table illustrating drugs eligible for Medi-Cal reimbursements following Medicare billing facilitated by the vendor.

JULY 2024 – JUNE 2025 DRUGS

Other coordination of benefits regulations, citations, excerpts Summary of Regulatory Requirements States must take reasonable measures to determine the legal liability of third parties to pay for services furnished under the State (Medicaid) plan. At a minimum, States must:

o Collect health insurance information during the initial eligibility interview process and the redetermination process. … States are to use the cost avoidance method where the probable existence of TPL is established at the time a claim is filed unless they have an approved waiver, or specific conditions exist … States are to seek recovery from the third party whenever claims have been paid for which a third party is liable. States may utilize cost effective thresholds for determining when to seek recovery.

https://www.medicaid.gov/medicaid/eligibility/downloads/summaryoffederalregulatoryrequirements.pdf The Deficit Reduction Act of 2005 (DRA) made several changes intended to strengthen States’ ability to identify and collect mistaken Medicaid payments from liable third-party payers. The Centers for Medicare & Medicaid Services (CMS) has issued guidance to States on these changes.

Background:

By law, the Medicaid program is the payer of last resort. If another insurer or program has the responsibility to pay for medical costs incurred by a Medicaid-eligible individual, that entity is generally required to pay all or part of the cost of the claim prior to Medicaid making any payment. This is known as “third party liability” or TPL. Third parties that may be liable to pay for services include private health insurance, Medicare, employer-sponsored health insurance, settlements from a liability insurer, workers' compensation, long-term care insurance, and other State and Federal programs (unless specifically excluded by Federal statute). Third party payers are not responsible for reimbursing Medicaid for any services that are not covered under the Medicaid State plan. In general, if a State has determined that a potentially liable third party exists, it must attempt to ensure that the provider bills the third party first before sending the claim to Medicaid. This is known as “cost avoidance.” Whenever a State has paid claims and subsequently discovers the existence of a liable third party it must attempt to recover the money from the liable third party. This is known as “pay and chase.” States are required to cost-avoid claims, with a few specific exceptions which are identified in regulation.

https://www.cms.gov/regulations-and-guidance/legislation/deficitreductionact/downloads/tpl.pdf Addendums:

Welfare and institution codes 14023. (a) Any applicant for coverage under this chapter who at the time of application has any other contractual or legal entitlement to any health care service defined in Section 14053, and who willfully fails at that time to disclose the fact of such other entitlement, or falsely represents that he or she does not have such other entitlement, is guilty of a misdemeanor.

(b) Any person eligible under this chapter who, subsequent to the date of application for such assistance or coverage under this chapter, acquires any other contractual or legal entitlement to any health care service defined in Section 14053, and willfully fails or refuses to give notice thereof to his county welfare department within 10 days of such acquisition, is guilty of a misdemeanor.

(c) Any person eligible under this chapter who has any other contractual or legal entitlement to any health care service defined in Section 14053, and who knowing that he or she must use such entitlement first, obtains any such service under Medi-Cal without first having utilized and exhausted his or her other contractual or legal entitlement thereto or therefor, is guilty of a misdemeanor.

(d) Any applicant shall by virtue of becoming eligible under this chapter have irrevocably assigned the benefits of any contractual or legal entitlement for health care to the State Director of Health Services to the extent that the services were paid for under this chapter.

14023.7. Any provider of service seeking payment for health care services for a person eligible for these services under this chapter shall first seek to obtain payment from any private or public health insurance coverage to which the person is entitled, where the provider is aware of this coverage and to the extent the coverage extends to these services, prior to submitting a claim to the department for the payment of any unpaid balance for these services.

In the event that a claim submitted to a private or public health insurer has not been paid within 90 days of billing by the provider, a claim may be submitted to the department.

14024. When health care services are provided to a person under this chapter who at the time the service is provided has any other contractual or legal entitlement to such services, the director shall have the right to recover from the person, corporation, or partnership who owes such entitlement, the amount which would have been paid to the person entitled thereto, or to a third party in his behalf, or the value of the service provided, if the person entitled thereto was entitled to services. The Attorney General may, to recover under this section, institute and prosecute legal proceedings against the person, corporation, or partnership owing such entitlement in the appropriate court in the name of the director.

To the extent permitted by federal law and subject to the director's prior right to recover upon any contractual or legal entitlement or other third-party liability for the cost incurred in rendering care, the provider of services shall remain entitled to recover remaining unpaid charges to the extent that any third party is obligated to pay the charges by reason of the beneficiary's other contractual entitlement. Any claim shall not be permitted to the extent that the claim would reduce the director's right to recover pursuant to Section 14124.78.

The provider of services shall be required to notify the department of any potential contractual or legal entitlement or other third-party liability within 60 days of discovery. A provider who has obtained proof of Medi-Cal eligibility and who makes a claim for payment by any third party shall disclose in the claim that the patient is a Medi-Cal beneficiary.

I. ATTACHMENT

Attachment A - RFI Response Worksheet

· Response to be completed by interested respondents.

ATTACHMENT A - RFI RESPONSE WORKSHEET

SECTION 1 – RESPONDENT INFORMATION

1. Legal business name of the respondent and business address (Street, City, State, Zip)

2. Name, title/position, and contact information (phone, email) of the individual submitting the response for number 1 above.

3. In bullet format, list and briefly describe the projects and/or activities the company engaged in that are similar to the project scope and size defined in this Request for Information (RFI).

SECTION 2 – SOLUTION DESCRIPTION

Your responses are needed to help DDS fully understand the breadth of alternatives available. Please answer as many questions as possible based on your company’s experience. Please be specific and attach supporting documentation, if needed.

1. Product/Solution Overview Describe the system solution/product Respondent offers that would satisfy the business needs and requirements described in this RFI. Check all that apply and complete the description and government clients:

1. Solution type:

|_| Customized Off-The-Shelf |_| Modified Off-The-Shelf |_| Custom

2. Hosting Options:

|_| Software As-A-Service |_| Vendor hosted solution |_| State-hosted solution

3. Solution Description: Including technical environment and requirements needed to host the solution (e.g., servers/cloud, hardware, software, etc.).

a.

b. Length of time the proposed product has been on the market.

c. The number of current customers using your product.

d. Describe the customization required for standard implementation.

1. Software Needs:

List software licenses (if applicable) needed to implement the described solution.

(Yes or No) Est. Lic. #

(including technical platform)

1. Software Experience:

Describe if your firm is experienced with the above software

1. Does your firm implement all of the above software?

2. Does your firm have experience implementing this software? If so, which products?

3. Does your firm use subcontractors to implement any of the above software? If so, which products?

SECTION 3 – IMPLEMENTATION APPROACH

A. Estimated Schedule Provide an estimated schedule to implement the solution described. Do you see an opportunity for a pilot implementation?

B. Development and Implementation Approach Describe a typical lifecycle to develop and implement a system of similar size/complexity, including any recommended phasing or waves of implementation to ease adoption or facilitate user productivity. Discuss the company’s standard implementation methodology (i.e., Waterfall, Agile). DDS is interested in how companies may manage the implementation approach for a COTS or MOTS solution.

C. Design and Configuration Describe your approach to validating requirements, design, customization, and configuration of the solution for DDS.

D. Testing Describe your approach to system and user acceptance testing (UAT). DDS Subject Matter Experts (SMEs), DSH SMEs, and IT staff are anticipated to perform UAT.

E. Deployment Describe training approach assuming your company would provide materials for and deliver instructor Train-the-Trainer (TTT) training. DDS TTT staff would deliver end user training to DDS staff DSH staff, and select end users. Describe deployment activities for DDS Headquarters.

F. Team Management Discuss how your company develops and cultivates a project team to support a project of similar size and scope for a successful implementation

G. Additional Information Provide any additional information about your company, products, estimated costs, and/or services that you believe will help DDS better understand your capabilities (e.g., additional current services, future plans to improve products and services, etc.).

SECTION 4 – Comments and Recommendations A. Estimated Implementation Schedule and Approach The RFI is the key opportunity to review the specifications under development and provide feedback as to the feasibility of attaining these standards. Please use the space below to summarize any comments you have regarding the specifications provided in this RFI.

B. Additional Comments DDS thanks you for your participation in the RFI by providing us information. DDS will also consider suggestions and recommendations for improving our procurement process. If you have recommendations regarding this project that are not already included in responses to the questions in this attachment, please provide them below.

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