HFS B48299 SSJF - 2025-36-003 - Solventum Corporation.pdf

Sole Source Justification Form

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Bulletin Reference Number 25-478HFS-MEDPR-B-48299

Requesting Agency/University Healthcare and Family Services

Sole Source Justification Form - Part I Section I - General Information

Department/Bureau/Section: Healthcare and Family Services, Bureau of Rate Development and Analysis

Need Identified Date: 12/1/2023 Supply/Service Need By Date: Jul 15, 2025

Project Title: Solventum Corporation Software License and Services

Vendor: Solventum Corporation

Provide a description of the supplies or services required:

Healthcare and Family Services (HFS or Department) seeks to enter into a 4-year sole source contract with Solventum Corporation (Solventum), formerly 3M Health Information System, to provide All Patient Refined Diagnostic Reporting Grouping (APR-DRG) and Enhanced Ambulatory Procedure Grouping (EAPG) Software License and Services Agreement for hospital inpatient and outpatient reimbursement.

Value: Estimated Value of Initial Term, this Change Order or Amendment: 5,354,806.49

Will this Sole Source amend a Professional or Artistic Services contract? Yes No

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Type: New Sole Economically Feasible Source

Section II - Proposed Term

One-Time Purchase Term Contract

Section III - Funding Source Select the type of funding to be used (Check all that apply): State Appropriate Funds Federal Funds Other (Explain):

No-cost contract

Section IV - Sole Source Justification

This purchase is economically only available from a single source primarily because it is: (If "Other" explain in one sentence)

Software License/Upgrade/Maintenance

Are there secondary justification(s) for this sole source? Yes No

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Bulletin Reference Number 25-478HFS-MEDPR-B-48299

Requesting Agency/University Healthcare and Family Services

Section V - Purchase History

Has the Agency or University Purchased these supplies or services in the past? Yes No

Term Term From Term To Value Description Contract Number Type

1 12/02/2002 12/01/2005 0 3M Diagnostic Reporting Group Software License and Services Agreement

Small Purchase

2 12/02/2005 07/14/2010 0 3M Diagnostic Reporting Group Software License and Services Agreement

Small Purchase

3 07/15/2010 12/12/2013 0 3M Diagnostic Reporting Group Software License and Services Agreement

Small Purchase

4 12/13/2013 03/11/2015 0 3M Diagnostic Reporting Group Software License and Services Agreement

Small Purchase

5 03/12/2015 06/08/2016 0 3M Diagnostic Reporting Group Software License and Services Agreement

Small Purchase

6 06/09/2016 07/04/2018 0 3M Diagnostic Reporting Group Software License and Services Agreement

Small Purchase

7 07/05/2018 07/04/2019 0 3M Diagnostic Reporting Group Software License and Services Agreement

2018-36-003 Small Purchase

8 07/05/2019 12/12/2023 0 3M Diagnostic Reporting Group Software License and Services Agreement

Small Purchase

9 12/12/2023 02/12/2024 0 3M Diagnostic Reporting Group Software License and Services Agreement

Small Purchase

If more than 10, or if other comments, explain:

Section VI - Business Rationale

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Bulletin Reference Number 25-478HFS-MEDPR-B-48299

Requesting Agency/University Healthcare and Family Services

1. Provide a detailed explanation of the need for the supplies or services:

Since 2014, pursuant to 305 ILCS 5/14-12, the Illinois Department of Healthcare and Family Services (HFS) has been required to utilize 3M’s All Patient Refined Diagnosis Related Grouping (APR-DRG) software and Enhanced Ambulatory Procedure Grouping (EAPG) software to classify and price inpatient and outpatient hospital services. These tools were statutorily mandated to promote standardization, transparency, and accuracy in hospital reimbursement.

In 2023, 3M Health Information Systems spun off its healthcare analytics and software division into a new standalone company, Solventum, which now owns and maintains the APR-DRG and EAPG software previously provided by 3M. HFS will continued to rely on this software platform to maintain consistency with the legislative mandate and operational requirements.

HFS processes hundreds of thousands of hospital claims annually, totaling over $5 billion in payments to hospitals. Of this amount, approximately $1 billion is paid directly by HFS under the fee-for-service program. The remaining $4 billion in claims are submitted by Managed Care Organizations (MCOs), but are still grouped and priced using the Department’s APR-DRG and EAPG software to ensure consistency and accuracy in payment methodologies. In addition, over $3 billion in hospital-directed payments are contingent upon claims being accepted and processed through Solventum’s grouping systems—further underscoring the critical role this software plays in hospital reimbursement and financial operations statewide.

To formally align the legal framework with this corporate change, the Illinois General Assembly passed House Bill 3273 (HB 3273) during the 104th General Assembly, which was signed into law in 2025. This legislation updated 305ILCS 5/14-12 to name Solventum (formerly 3M Health Information Systems) as the exclusive provider of the APR-DRG and EAPG software used in hospital rate-setting under Medicaid. It reaffirmed the Department’s authority to continue using Solventum’s tools as the official pricing engine for Medicaid hospital payments

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Bulletin Reference Number 25-478HFS-MEDPR-B-48299

Requesting Agency/University Healthcare and Family Services

2. Provide a list and describe in detail the specifications required to satisfy the need:

The Department requires access to proprietary classification and reimbursement software and services provided by Solventum Corporation (formerly 3M Health Information Systems) to support Medicaid payment methodologies, analysis, and policy evaluation.

The specifications necessary to satisfy this need include:

Proprietary Grouping Software Modules:Software modules such as APR-DRG, EAPG, CRG, PPR, PPC, PFP, IPCT, and OPCT are required.

- These modules must support the classification and grouping of inpatient and outpatient Medicaid claims in accordance with Illinois-specific reimbursement rules.

- The software must include Illinois Medicaid-configured versions (e.g., CGS-APRDRG IL, CGS-ENAPG IL).

Grouper Plus Content Services (GPCS):

- Secure, cloud-hosted access to the GPCS suite, which supports processing logic and output necessary for Medicaid claim grouping and payment calculation.

- Functionality must include the ability to issue and manage site-specific certificates for authorized users via 3M’s Access Management Tool.

Illinois Medicaid Compatibility:

- All software must support integration with the Department’s systems and align with Illinois Medicaid policy for payment and reporting.

- Vendor must maintain Illinois-specific configurations and updates.

Support, Implementation, and Maintenance Services:

- Vendor must provide implementation support, authorized user training, and ongoing maintenance and updates to software and classification logic.

- Access to 24/7 self-service support portal and technical support during business hours must be included.

Reporting and Distribution Capabilities:

- The software must allow the State to generate both aggregate and patient-level processed data reports for internal evaluation and reporting to state and federal agencies.

- Distribution of Patient-Level Processed Data (PLPD) reports must be conducted in accordance with the license and include data usage tracking and reporting.

Regulatory and Legal Compliance:

- All software and data handling must comply with HIPAA, HITECH, and the Illinois Personal Information Protection Act.

- A Business Associate Agreement (BAA) with Solventum must remain in place.

These specifications reflect technical and legal requirements unique to Solventum’s proprietary grouping and classification logic. The solution is essential for continuing to support Illinois Medicaid payment systems, and no alternative vendor can provide software with equivalent functionality or licensing rights due to proprietary restrictions.

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

This procurement is for the continued licensing, maintenance, and support of specialized software previously acquired and actively in use by the agency. The products are proprietary to Solventum Corporation and include core components used in the Department’s Medicaid payment and data analysis systems. These tools are governed by existing license agreements that prohibit support or maintenance by third parties, and require all updates, upgrades, and technical services to be provided directly by the vendor.This request is not for new functionality or expanded scope, but rather for the necessary services to ensure uninterrupted operation and compliance of existing systems that are integrated into the Department’s Medicaid processing environment. The agency is reliant on the vendor for timely delivery of clinical logic updates, security patches, and software fixes—all of which are critical to maintain claim accuracy and remain aligned with CMS guidance and State reimbursement rules.Because no other entity has the legal right or technical ability to maintain or service the licensed software, this request appropriately falls under the Software License/Upgrade/Maintenance justification and is not subject to competitive solicitation.

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Bulletin Reference Number 25-478HFS-MEDPR-B-48299

Requesting Agency/University Healthcare and Family Services

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

Legislative order 305 ILCS 5/14-12 specifically states "(a) Inpatient hospital services. Effective for discharges on and after July 1, 2014, reimbursement for inpatient general acute care services shall utilize the All Patient Refined Diagnosis Related Grouping (APR-DRG) software, version 30, distributed by Solventum Corporation. (b) Outpatient hospital services. Effective for dates of service on and after July 1, 2014, reimbursement for outpatient services shall utilize the Enhanced Ambulatory Procedure Grouping (EAPG) software, version 3.7 distributed by Solventum Corporation."

Solventum Corporation, formerly 3M Health Information System, is the only vendor that meets the legislative mandate.

5. Has the Agency or University considered alternative supplies or services to satisfy their need? Yes No

5a. If no, why weren't alternatives evaluated?

Solventum is the only vendor that fully meets the legislative mandate outlined in 305 ILCS 5/14-12, ensuring compliance with the required use of the APR-DRG and EAPG software for inpatient and outpatient hospital services.

6. Are there resellers or distributors?

Yes No N/A

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

This is a no-cost contract for HFS. Solventum has assigned an estimated value of $5,354,806.49 to the software packages being provided to HFS, which are offered at no charge to state Medicaid agencies, including HFS. Although HFS receives the software free of charge, Solventum offers the same software and technical support to hospital providers for nominal fees.The price is considered fair and reasonable because the software is provided to HFS at no cost, and Solventum is the only vendor that meets the legislative mandate

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

Yes No

8a. If yes, please provide details regarding future obligations and/or needs:

Solventum is the only vendor that meets the legislative mandate outlined in 305 ILCS 5/14-12.

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

The impact of this sole source not being approved is significant, as the contract is essential to maintain compliance with the 305 ILCS 5/14-12 Hospital Rate Reform Payment System. As noted in section 5a above, other other vendor can provide the necessary Solentum software required to meet the statutory requirements.

10. Is there any additional information you would like to add to justify this sole source?

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Bulletin Reference Number 25-478HFS-MEDPR-B-48299

Requesting Agency/University Healthcare and Family Services

Section VII

Requesting Department Representative

Requesting Department Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

Date Jul 8, 2025

Printed Name Dan Jenkins E-mail Address dan.jenkins@illinois.gov

Phone Number 217-524-7400

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed)

E-mail Address Monique.N.Wantland@illinois.gov

Phone Number 217-557-5777 Date

Printed Name Monique Wantland

Agency Bureau/Division Head or University Purchasing Director and Not a Designee

SPO Approval and Signature Required

I have reviewed and understand the contents of this Sole Source Justification and agree with the State Agency or University determination.

I have reviewed and understand the contents of this Sole Source Justification and do not agree with the State Agency or University determination. As a result, the State Agency or University must explore other sourcing methods to satisfy their need.

State Purchasing Officer Signature Phone Number 217-993-1719 Date 7/8/2025

Printed Name Jennifer Klein E-mail Address jennifer.klein@illinois.gov

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Bulletin Reference Number 25-478HFS-MEDPR-B-48299

Requesting Agency/University Healthcare and Family Services

Sole Source Justification Form - Part II Section I - General Information

Project Title Solventum Corporation Software License and Services

Vendor Solventum Corporation

Initial Date of Procurement Bulletin Posting 7/9/2025

Was a Sole Source hearing held per 30 ILCS 500/20-25?

Yes - Complete Section II and III below (Section II will only be visible when this option is selected)

No - Section II not required, go to Section III below Section III - CPO Approval and Signature Required

Based on my review, I authorize the Agency/University to proceed in accordance with the published Notice referenced above.

Based upon my review, I authorize the Agency/University to proceed with the following Changes.

Based on my review, the Agency/University is not authorized to proceed with this sole source as presented and my recommendation is that it be cancelled.

Other

CPO Signature CPO Phone 217-622-1857

Printed Name Ellen H. Daley Date

CPO E-mail ellen.h.daley@illinois.gov

Version 7.01 Page of Sole Source Justification Form - Part I Section I - General Information Will this Sole Source amend a Professional or Artistic Services contract?

If yes, what was the original contract value?

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Section II - Proposed Term If a Term Contract, does the term, including renewals, exceed 12 months?

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

Section III - Funding Source Select the type of funding to be used (Check all that apply):

Section IV - Sole Source Justification Are there secondary justification(s) for this sole source?

Section V - Purchase History Has the Agency or University Purchased these supplies or services in the past?

Term Term From Term To Value Description Contract Number Type Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

2. Provide a list and describe in detail the specifications required to satisfy the need:

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

5. Has the Agency or University considered alternative supplies or services to satisfy their need?

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

5a. If no, why weren't alternatives evaluated?

6. Are there resellers or distributors?

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

8a. If yes, please provide details regarding future obligations and/or needs:

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

10. Is there any additional information you would like to add to justify this sole source?

Section VII Requesting Department Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed) SPO Approval and Signature Required Sole Source Justification Form - Part II Section I - General Information Was a Sole Source hearing held per 30 ILCS 500/20-25?

Section II - Sole Source Hearing Details The State posted to the Illinois Procurement Bulletin a description of the State's need, the justification for the sole source decision, and information regarding the opportunity to submit comments and testify at a public hearing. Notice of the hearing was also posted outside of the hearing room 48 hours prior to the hearing.

The public hearing was conducted for the purpose of receiving testimony regarding the sole source determination. The Hearing Officer recommends the following:

The following relevant documents are attached:

Section III - CPO Approval and Signature Required 9.0.0.2.20101008.1.734229 ellen.h.daley@illinois.gov

In 2023, 3M Health Information Systems spun off its healthcare analytics and software division into a new standalone company, Solventum, which now owns and maintains the APR-DRG and EAPG software previously provided by 3M. HFS will continued to rely on this software platform to maintain consistency with the legislative mandate and operational requirements.

HFS processes hundreds of thousands of hospital claims annually, totaling over $5 billion in payments to hospitals. Of this amount, approximately $1 billion is paid directly by HFS under the fee-for-service program. The remaining $4 billion in claims are submitted by Managed Care Organizations (MCOs), but are still grouped and priced using the Department’s APR-DRG and EAPG software to ensure consistency and accuracy in payment methodologies. In addition, over $3 billion in hospital-directed payments are contingent upon claims being accepted and processed through Solventum’s grouping systems—further underscoring the critical role this software plays in hospital reimbursement and financial operations statewide.

To formally align the legal framework with this corporate change, the Illinois General Assembly passed House Bill 3273 (HB 3273) during the 104th General Assembly, which was signed into law in 2025. This legislation updated 305ILCS 5/14‑12 to name Solventum (formerly 3M Health Information Systems) as the exclusive provider of the APR‑DRG and EAPG software used in hospital rate-setting under Medicaid. It reaffirmed the Department’s authority to continue using Solventum’s tools as the official pricing engine for Medicaid hospital payments Q2Answer: The Department requires access to proprietary classification and reimbursement software and services provided by Solventum Corporation (formerly 3M Health Information Systems) to support Medicaid payment methodologies, analysis, and policy evaluation. The specifications necessary to satisfy this need include:

Proprietary Grouping Software Modules:Software modules such as APR-DRG, EAPG, CRG, PPR, PPC, PFP, IPCT, and OPCT are required.

- These modules must support the classification and grouping of inpatient and outpatient Medicaid claims in accordance with Illinois-specific reimbursement rules.

- The software must include Illinois Medicaid-configured versions (e.g., CGS-APRDRG IL, CGS-ENAPG IL).

Grouper Plus Content Services (GPCS):

- Secure, cloud-hosted access to the GPCS suite, which supports processing logic and output necessary for Medicaid claim grouping and payment calculation.

- Functionality must include the ability to issue and manage site-specific certificates for authorized users via 3M’s Access Management Tool.

Illinois Medicaid Compatibility:

- All software must support integration with the Department’s systems and align with Illinois Medicaid policy for payment and reporting.

- Vendor must maintain Illinois-specific configurations and updates.

Support, Implementation, and Maintenance Services:

- Vendor must provide implementation support, authorized user training, and ongoing maintenance and updates to software and classification logic.

- Access to 24/7 self-service support portal and technical support during business hours must be included.

Reporting and Distribution Capabilities:

- The software must allow the State to generate both aggregate and patient-level processed data reports for internal evaluation and reporting to state and federal agencies.

- Distribution of Patient-Level Processed Data (PLPD) reports must be conducted in accordance with the license and include data usage tracking and reporting.

Regulatory and Legal Compliance:

- All software and data handling must comply with HIPAA, HITECH, and the Illinois Personal Information Protection Act.

- A Business Associate Agreement (BAA) with Solventum must remain in place.

These specifications reflect technical and legal requirements unique to Solventum’s proprietary grouping and classification logic. The solution is essential for continuing to support Illinois Medicaid payment systems, and no alternative vendor can provide software with equivalent functionality or licensing rights due to proprietary restrictions.

Solventum Corporation, formerly 3M Health Information System, is the only vendor that meets the legislative mandate.