HFS SEFS B49697 - 2026-36-003 Milliman Sole Source final signed by SPO.pdf

Sole Source Justification Form

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Bulletin Reference Number 26-478HFS-CHSUP-B-49697

Requesting Agency/University Healthcare and Family Services

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

Department/Bureau/Section: Bureau of Rate Development & Analysis

Need Identified Date: Jul 31, 2024 Supply/Service Need By Date: Feb 23, 2026

Project Title: Actuarial Analysis and Consulting Services

Vendor: Milliman, Inc.

Provide a description of the supplies or services required:

The Department of Healthcare and Family Services (HFS) seeks to enter into a 18 month sole economically feasible source contract with Milliman Inc.

(Milliman) to assist the Department in the development of actuarially sound rates for risk-based Managed Care Organizations (MCOs). Milliman will provide annual capitated rate calculations and any applicable rate amendments for HealthChoice Illinois, YouthCare, Program of All-Inclusive care for the Elderly (PACE) and Medicaid-Medicare Alignment Initiative (MMAI), as well as the upcoming Dual Eligible Special Needs Plan (D-SNP) program. The State is required by federal regulation to provide actuarial certification of managed care capitation rates and the Department does not have the capacity to perform that certification itself. Therefore, this contract will enable the State to meet this federal requirement.

Value: Estimated Value of Initial Term, this Change Order or Amendment: 18,626,400

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

Estimated Contract Begin Date: Feb 25, 2026

Estimated Contract End Date: Aug 24, 2027

Number of Potential Renewals: 0

Length of Each Renewal in Months: 0

Total Value of All Renewals: 0

If a Term Contract, does the term, including renewals, exceed 12 months? Yes No

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

Given the timeline to post a new solicitation and Federal CMS approval is required prior to publication, and to ensure continuity of services and allow sufficient transition time without the need for overlapping contracts, the Agency is formally requesting an 18-month term for this sole economically feasible source contract, extending through August 2027. The 18-month term will allow HFS to continue utilizing the current vendor's lower hourly rate that remains more cost-effective than the competitor's, maintain uninterrupted services during the transition period, and continue receiving federal matching funds.

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Bulletin Reference Number 26-478HFS-CHSUP-B-49697

Requesting Agency/University Healthcare and Family Services

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

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)

Critical Changes to the Existing Contract are Necessary and Best Accomplished by the Contract Holder

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

Another justification that this purchase is only available from a sole source is because it is:

Potential loss of Federal Financial Participation (FFP) of 51.4%.

Another justification that this purchase is only available from a sole source is because it is:

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 Aug 30, 2017 June 30, 2019 6,700,000 Initial RFP 2017-36-003 RFP

2 Apr 9, 2019 Apr 8, 2022 14,713,734 Renewal 1 2017-36-003-02 Renewal

3 Feb 23, 2022 Feb 22, 2026 25,000,000 Renewal 2 2017-36-003-03 Renewal

4 Mar 11, 2025 Feb 22, 2026 9,900,000 Amendment 1 2017-36-003-04 Amendment

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

Section VI - Business Rationale

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Bulletin Reference Number 26-478HFS-CHSUP-B-49697

Requesting Agency/University Healthcare and Family Services

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

The services provided under the current Milliman contract (HFS Tracking #2017-36-003) are essential to support the Department in the development of actuarially sound capitation rates for risk-based Managed Care Organizations (MCOs). These services are necessary to ensure continued compliance with Federal Centers for Medicare & Medicaid Services (CMS) requirements, which mandate that MCO capitation rates be certified as actuarially sound.

HFS is in the process of preparing a Request for Proposal (RFP) for these services. However, the procurement process will not be completed prior to the expiration of the current contract renewal, which ends on February 24, 2026. HFS anticipates issuing the RFP in the second quarter of Fiscal Year 2026. The current contract expires February 2026.

This procurement is critical to the Department’s operations, as HFS does not have in-house staff actuaries capable of performing the complex rate development, calculations, and certifications required for compliance with federal regulations regarding MCO capitation rates. On-boarding a new vendor will likely take up to six months of orientation to the Illinois Medicaid ecosystem. This extended transition period will hinder the State's ability to meet approaching deadlines for critical requirements, all of which are highly time-sensitive. As a result, there is a significant risk of delays that could impact the federally mandated requirements.

CMS requires final capitation rates to be certified and submitted no later than December 31, 2026, ahead of the State’s Medicaid managed care contract year beginning January 1, 2027. To meet this deadline, several critical technical components must be completed in advance, including base data validation, rate modeling, trend projections, program change impact assessments, and development of supporting federal rate certification documentation. These deliverables must be substantially finalized by September 2026 to allow for HFS review and revisions. Delays in executing a new contract or onboarding a new vendor would materially disrupt this timeline, as the complexity of Illinois’ Medicaid managed care program requires months of historical data review and subject matter expertise. Without timely submission of actuarially sound rates, CMS may deny rate certification or delay approval, potentially resulting in withheld federal matching funds (FFP) and interruption of payments to Managed Care Organizations (MCOs) jeopardizing the continuity of care for Medicaid members.

Other tasks required under this contract are ongoing and require no gap in actuarial support. These include risk adjustment, which is done semi-annually, encounter data monitoring, which is a quarterly process, financial monitoring of the MCOs, due in June of each year before the rate development process begins, assistance with the 1115 HRSN waiver implementation, HCBS waiver budget neutrality demonstrations, due to CMS each year (dates vary based on the waiver year for each waiver). A lapse in coverage of actuarial services will impact these processes, some of which impact federal funding, all of which impact HFS operations and our ability to operate the Medicaid program. All these processes require substantial onboarding time, approximately six months, for a new vendor to understand the existing structures, program design and requirements.

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Bulletin Reference Number 26-478HFS-CHSUP-B-49697

Requesting Agency/University Healthcare and Family Services

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

HFS requires a vendor to provide assistance in the review, advisement, and development of actuarially sound rates for MCOs participating in Illinois Medicaid or related Medical Programs, and assistance with Balancing Incentive Program (BIP) and Long Term Supports and Services (LTSS) rate assistance.

Services include:

-Developing actuarially sound capitation rates for MCOs.

-Provide reporting and analytical solutions that answer actuarial questions.

-Expert Comparative Assistance.

-Expert Testimony.

-Actuarial Analysis and Consulting Services to advance the State's Medicaid Section 1115 Healthcare Transformation Waiver implementation.

-Actuarial Analysis and Consulting Services to inform a Tailored Care Management Program (TCMP).

-Provide the Department with all reports, data sets, documents and analysis used in setting the capitation rates.

-Perform any analysis or rate models requested by the Department to quantify the effect of proposed changes to policies regarding payment rates, covered services, or other proposed program changes.

-Collect encounter data and review submitted encounter data to ensure completeness and accuracy in conjunction with HFS encounter data team.

-Conduct monthly evaluations of volumes and expenditures upon receipt of enrollment and encounter data and identify potential discrepancies.

-Submit evaluation of encounter data including completeness and trending utilization, no later than 20 business days following the end of the month in which the encounter data was due from the MCO.

-Quarterly reports comparing the health plan submitted encounter data with self-reported financial and utilization data.

-Assist the department in developing actuarially sound capitation rates for Fully Integrated Dual Eligible Special Needs Plan (FIDE_SNP), Program of All-Inclusive Care for the Elderly (PACE).

-Assist the Department in developing Annual renewal of Long Term Supports and Services (LTSS), HealthChoice Illinois (HCI), YouthCare and Health Benefits for Immigrant (HBI) rates.

-Transition of Contract Management.

-Review insurance filings and encounter data for purposes of confirming Medical Loss Ratios (MLRs) of managed care entities provide risk adjustment methodologies and assist with risk adjustment implementation.

-Assist the Department in developing strategies to report all-inclusive capitation payments to federal CMS on the CMS-64 on separate reporting lines.

-Provide assistance developing state directed payments (SDPs) to be included in MCO reimbursement methodologies.

-Provide assistance with The Ensuring Access to Medicaid Services Final Rule (Access Final Rule).

-Provide a transition plan that includes: the proposed approach to identify the tasks; a detailed schedule for transition, including but not limited to operational resources, business requirements, and procedures; and the transfer of data, documentation, and all other written materials and records developed in support of the Program.

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?

Milliman is the current vendor providing actuarial analysis and consulting services to HFS. Milliman possesses in-depth knowledge of HFS’s managed care environment, including the rate structure and historical context relevant to the services requested under this sole economically feasible source procurement. This continuity and expertise are critical to ensuring compliance with Federal CMS regulations and for the development of actuarially sound capitation rates that support over $25 billion in annual expenditures, covering nearly 80% of HFS’ Medicaid enrollees. The existing contract with Milliman was awarded through a competitive RFP process. Following the evaluation of three vendors, Milliman was selected as the most responsive and responsible bidder, offering services at a reasonable cost.

Due to the complexity and time sensitivity of the federally mandated deliverables, including submission of annual capitation rates with any risk mitigation prior to the start of the rating period, there is insufficient time to complete a new procurement and on-board a new vendor without jeopardizing compliance. Milliman is the only vendor capable of maintaining continuity of service without delay. A transition at this stage would require significant time to complete on-boarding, data transfers, and model validation, which would push critical work past required federal deadlines. As stated in Section IV, failure to meet these deadlines could result in federal non-compliance and the potential loss of funding of approximately $15 billion annually. Therefore, continuation with the incumbent vendor is the only viable option to meet the agency’s requirements within the mandated time frame.

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Bulletin Reference Number 26-478HFS-CHSUP-B-49697

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:

The services required under this sole economically feasible sole source request have significant implications for the Illinois Medicaid ecosystem, particularly in the areas of rate development, payment methodologies for new services, and the implementation of new value-based payment models. Accordingly, this work must be deeply informed by the state's Medicaid environment, including the managed care service delivery system, existing rate structures, payment methodologies, and the state's various Medicaid data repositories.

The current vendor, Milliman, possesses a deep and specialized knowledge of these domains, which would not be readily available from another vendor without a significant ramp-up period, estimated at approximately six months. This subject matter expertise is critical to ensuring continuity, accuracy, and efficiency in the delivery of these services.

Milliman was originally selected through a competitive Request for Proposals (RFP) process, during which three (3) vendors were evaluated. Following a thorough review, Milliman was determined to be the most responsive and responsible vendor, offering services at a reasonable cost. Under this sole economically feasible source, the scope of deliverables and the previously established hourly rates will remain unchanged.

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?

The vendor’s specialized knowledge of Medicaid services, data repositories, and rate-setting methodologies is critical to the success of this work. The services are governed by complex federal regulations and departmental priorities, requiring a vendor capable of interpreting and applying these requirements in alignment with the department’s strategic direction. This expertise is necessary to ensure continuity and quality of managed care and Medicaid services without disruption to the population served.

HFS is currently in the process of developing a new competitive RFP. However, that process will not be completed prior to the expiration of the current contract. Given the complexity of the rate development process, transitioning the requirements of the contract to an alternative vendor within the current contract term that expires February 24 ,2026 is not feasible. Attempting such a transition at this stage would risk a disruption in actuarial services and could result in noncompliance with federal regulations.

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?

The existing contract was awarded through the RFP process, after evaluation of three (3) Vendors, Milliman, Inc. was determined to be the most responsive, responsible Vendor at a reasonable cost. The vendor has agreed to maintain the existing hourly rates with an increase of CPI-U of 2.4% for the blended rate of $258.70, which continues to provide substantial value to HFS. HFS estimates $18,626,400.00 for the 18-month term of the contract, with an estimated 72,000 hours required to meet the needs of the Department.

HFS reviewed several recently awarded RFPs within our own Agency and Sister Agencies to assist in the determination of receipt of fair pricing. Following are a just a few of the contracts which consist of the similar services: Health Management Associates, Inc. $325.00/ hour rate for Health Care Transformation Consulting and Guidehouse, Inc. $255.00/hour rate for Health Care Transformation Consulting, and Oliver Wyman $306.25/hour blended rate.

From an economic feasibility standpoint, this pricing stability ensures cost predictability, preserves continuity of care, and allows HFS to redirect resources toward finalizing the new competitive procurement without risking additional costs or service interruptions.

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

Yes No

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Bulletin Reference Number 26-478HFS-CHSUP-B-49697

Requesting Agency/University Healthcare and Family Services

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 State risks losing approximately $15 billion annually in federal matching funds for capitation payments if the HFS experiences a gap in actuarial services. Without actuarial certification confirming that Managed Care Organization (MCO) rates are actuarially sound, the federal CMS will not approve the rates. As a result, HFS would be unable to claim federal matching funds.

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

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Bulletin Reference Number 26-478HFS-CHSUP-B-49697

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

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 10/8/2025

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

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Bulletin Reference Number 26-478HFS-CHSUP-B-49697

Requesting Agency/University Healthcare and Family Services

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

Project Title Actuarial Analysis and Consulting Services

Vendor Milliman, Inc.

Initial Date of Procurement Bulletin Posting 10/9/2025

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

HFS is in the process of preparing a Request for Proposal (RFP) for these services. However, the procurement process will not be completed prior to the expiration of the current contract renewal, which ends on February 24, 2026. HFS anticipates issuing the RFP in the second quarter of Fiscal Year 2026. The current contract expires February 2026.

This procurement is critical to the Department’s operations, as HFS does not have in-house staff actuaries capable of performing the complex rate development, calculations, and certifications required for compliance with federal regulations regarding MCO capitation rates. On-boarding a new vendor will likely take up to six months of orientation to the Illinois Medicaid ecosystem. This extended transition period will hinder the State's ability to meet approaching deadlines for critical requirements, all of which are highly time-sensitive. As a result, there is a significant risk of delays that could impact the federally mandated requirements.

CMS requires final capitation rates to be certified and submitted no later than December 31, 2026, ahead of the State’s Medicaid managed care contract year beginning January 1, 2027. To meet this deadline, several critical technical components must be completed in advance, including base data validation, rate modeling, trend projections, program change impact assessments, and development of supporting federal rate certification documentation. These deliverables must be substantially finalized by September 2026 to allow for HFS review and revisions. Delays in executing a new contract or onboarding a new vendor would materially disrupt this timeline, as the complexity of Illinois’ Medicaid managed care program requires months of historical data review and subject matter expertise. Without timely submission of actuarially sound rates, CMS may deny rate certification or delay approval, potentially resulting in withheld federal matching funds (FFP) and interruption of payments to Managed Care Organizations (MCOs) jeopardizing the continuity of care for Medicaid members.

Other tasks required under this contract are ongoing and require no gap in actuarial support. These include risk adjustment, which is done semi-annually, encounter data monitoring, which is a quarterly process, financial monitoring of the MCOs, due in June of each year before the rate development process begins, assistance with the 1115 HRSN waiver implementation, HCBS waiver budget neutrality demonstrations, due to CMS each year (dates vary based on the waiver year for each waiver). A lapse in coverage of actuarial services will impact these processes, some of which impact federal funding, all of which impact HFS operations and our ability to operate the Medicaid program. All these processes require substantial onboarding time, approximately six months, for a new vendor to understand the existing structures, program design and requirements.

Q2Answer: HFS requires a vendor to provide assistance in the review, advisement, and development of actuarially sound rates for MCOs participating in Illinois Medicaid or related Medical Programs, and assistance with Balancing Incentive Program (BIP) and Long Term Supports and Services (LTSS) rate assistance.

Services include:

-Developing actuarially sound capitation rates for MCOs.

-Provide reporting and analytical solutions that answer actuarial questions.

-Expert Comparative Assistance.

-Expert Testimony.

-Actuarial Analysis and Consulting Services to advance the State's Medicaid Section 1115 Healthcare Transformation Waiver implementation.

-Actuarial Analysis and Consulting Services to inform a Tailored Care Management Program (TCMP).

-Provide the Department with all reports, data sets, documents and analysis used in setting the capitation rates.

-Perform any analysis or rate models requested by the Department to quantify the effect of proposed changes to policies regarding payment rates, covered services, or other proposed program changes.

-Collect encounter data and review submitted encounter data to ensure completeness and accuracy in conjunction with HFS encounter data team.

-Conduct monthly evaluations of volumes and expenditures upon receipt of enrollment and encounter data and identify potential discrepancies.

-Submit evaluation of encounter data including completeness and trending utilization, no later than 20 business days following the end of the month in which the encounter data was due from the MCO.

-Quarterly reports comparing the health plan submitted encounter data with self-reported financial and utilization data.

-Assist the department in developing actuarially sound capitation rates for Fully Integrated Dual Eligible Special Needs Plan (FIDE_SNP), Program of All-Inclusive Care for the Elderly (PACE).

-Assist the Department in developing Annual renewal of Long Term Supports and Services (LTSS), HealthChoice Illinois (HCI), YouthCare and Health Benefits for Immigrant (HBI) rates.

-Transition of Contract Management.

-Review insurance filings and encounter data for purposes of confirming Medical Loss Ratios (MLRs) of managed care entities provide risk adjustment methodologies and assist with risk adjustment implementation.

-Assist the Department in developing strategies to report all-inclusive capitation payments to federal CMS on the CMS-64 on separate reporting lines.

-Provide assistance developing state directed payments (SDPs) to be included in MCO reimbursement methodologies.

-Provide assistance with The Ensuring Access to Medicaid Services Final Rule (Access Final Rule).

-Provide a transition plan that includes: the proposed approach to identify the tasks; a detailed schedule for transition, including but not limited to operational resources, business requirements, and procedures; and the transfer of data, documentation, and all other written materials and records developed in support of the Program.

Q3Answer: Milliman is the current vendor providing actuarial analysis and consulting services to HFS. Milliman possesses in-depth knowledge of HFS’s managed care environment, including the rate structure and historical context relevant to the services requested under this sole economically feasible source procurement. This continuity and expertise are critical to ensuring compliance with Federal CMS regulations and for the development of actuarially sound capitation rates that support over $25 billion in annual expenditures, covering nearly 80% of HFS’ Medicaid enrollees. The existing contract with Milliman was awarded through a competitive RFP process. Following the evaluation of three vendors, Milliman was selected as the most responsive and responsible bidder, offering services at a reasonable cost.

Due to the complexity and time sensitivity of the federally mandated deliverables, including submission of annual capitation rates with any risk mitigation prior to the start of the rating period, there is insufficient time to complete a new procurement and on-board a new vendor without jeopardizing compliance. Milliman is the only vendor capable of maintaining continuity of service without delay. A transition at this stage would require significant time to complete on-boarding, data transfers, and model validation, which would push critical work past required federal deadlines. As stated in Section IV, failure to meet these deadlines could result in federal non-compliance and the potential loss of funding of approximately $15 billion annually. Therefore, continuation with the incumbent vendor is the only viable option to meet the agency’s requirements within the mandated time frame.

Q4Answer: The services required under this sole economically feasible sole source request have significant implications for the Illinois Medicaid ecosystem, particularly in the areas of rate development, payment methodologies for new services, and the implementation of new value-based payment models. Accordingly, this work must be deeply informed by the state's Medicaid environment, including the managed care service delivery system, existing rate structures, payment methodologies, and the state's various Medicaid data repositories.

The current vendor, Milliman, possesses a deep and specialized knowledge of these domains, which would not be readily available from another vendor without a significant ramp-up period, estimated at approximately six months. This subject matter expertise is critical to ensuring continuity, accuracy, and efficiency in the delivery of these services.

Milliman was originally selected through a competitive Request for Proposals (RFP) process, during which three (3) vendors were evaluated. Following a thorough review, Milliman was determined to be the most responsive and responsible vendor, offering services at a reasonable cost. Under this sole economically feasible source, the scope of deliverables and the previously established hourly rates will remain unchanged.

HFS is currently in the process of developing a new competitive RFP. However, that process will not be completed prior to the expiration of the current contract. Given the complexity of the rate development process, transitioning the requirements of the contract to an alternative vendor within the current contract term that expires February 24 ,2026 is not feasible. Attempting such a transition at this stage would risk a disruption in actuarial services and could result in noncompliance with federal regulations.

HFS reviewed several recently awarded RFPs within our own Agency and Sister Agencies to assist in the determination of receipt of fair pricing. Following are a just a few of the contracts which consist of the similar services: Health Management Associates, Inc. $325.00/hour rate for Health Care Transformation Consulting and Guidehouse, Inc. $255.00/hour rate for Health Care Transformation Consulting, and Oliver Wyman $306.25/hour blended rate.

From an economic feasibility standpoint, this pricing stability ensures cost predictability, preserves continuity of care, and allows HFS to redirect resources toward finalizing the new competitive procurement without risking additional costs or service interruptions.