J1_-_SOW_-_Medical_Review_Contractor_(MRC)_-_6-2015_Redline.docx

STATEMENT OF WORK

For the Medical Claims Review of Medicare Managed Care Organizations

Division of Capitated Plan Audits As Funded By Medicare Integrity Program (MIP)

I. Scope

The Centers for Medicare & Medicaid Services (CMS), Office of Financial Management, Division of Capitated Plan Audits (DCPA), has responsibility for the financial oversight of cost-based Managed Care Organizations (MCOs). DCPA conducts the examination of MCOs, and as a function of these audits, the medical services processed by the MCO must be reviewed. The Contractor shall provide services in support of the CMS in determining whether Medicare service costs and statistics claimed on the MCO’s cost report are accurate and allowable to ensure fair apportionment and proper reimbursement from Medicare.

II. Background

From the beginning of the Medicare program in 1965, Medicare has recognized the unique nature of Health Maintenance Organizations (HMOs) and HMO-like entities and has provided for alternative payment methodologies appropriate for such organizations. The original Medicare amendments to the Social Security Act included the authority for prepaid plans to receive payments for physician services on a basis other than individual charges. Even before the enactment of the federal HMO Act in 1973, the 1972 amendments to the Social Security Act provided authority to contract with HMOs on a risk-sharing basis and on a cost basis.

The Tax Equity and Fiscal Responsibility Act (TEFRA) was passed in September 1982 in which Congress mandated the provision of managed care plan options to Medicare beneficiaries. The statute allowed Medicare beneficiaries to enroll in HMOs reimbursed on a cost basis (also known as MCOs) or “risk-contracting” HMOs. HMOs reimbursed on a cost basis are reimbursed for “reasonable cost” incurred for Medicare covered services rendered, related administration on those medical services, plan administration, and a defined special administration. The special administration is reimbursed 100%.

In 1996, Section 202 of the Health Insurance Portability and Accountability Act (HIPAA) added Section 1893, to the Social Security Act. Section 1893 established the Medicare Integrity Program (MIP). MIP was established to strengthen CMS’ ability to deter waste, fraud and abuse in the Medicare program. It provides for separate and stable long term funding for MIP activities. MIP expands CMS’ contracting authority so the agency can aggressively carry out program safeguard functions.

MCOs are paid the reasonable cost actually incurred in providing Medicare covered services to Medicare enrollees. These organizations are paid each month, in advance, an interim per capita rate for each Medicare enrollee. The total monthly payment is determined by multiplying the interim per capita rate by the number of the Medicare enrollees, plus or minus adjustments made by CMS. Total annual payment is calculated based on the information reported on the plan’s final cost report. Final settlement is authorized based on reconciliation of interim payments and Medicare reimbursable costs per the final cost report, normally at the conclusion of an audit.

Medicare's payment to cost-based plans is based on the reasonable cost of providing Medicare-covered services to Medicare enrollees. All necessary and proper expenses of the plan in providing Medicare-covered services are recognized. The share of the total cost borne by CMS is related to the Medicare-covered care furnished to Medicare beneficiaries so that no part of their cost would need to be borne by other enrollees or non-enrolled patients. Conversely, costs attributable to other enrollees and non-enrolled patients are not to be borne by Medicare. These payment principles take into account the special nature of cost plans by recognizing costs of marketing, enrollment, and certain other costs unique to the cost-based form of health delivery. Under these principles, there may be more than one method of handling a particular cost item (including apportionment and allocation methods).

DCPA is responsible for the examination of cost reports prepared by Health Maintenance Organizations (HMOs) and Competitive Medical Plans (CMPs) under Section 1876 of the Social Security Act and (Health Care Prepayment Plans (HCPPs) under Section 1833 of the Social Security Act, collectively referred to as cost-based MCOs. DCPA conducts the periodic examinations of cost-based MCOs in accordance with Generally Accepted Auditing Standards (GAAS) issued by the American Institute of Certified Public Accountants (AICPA) / Statements on Standards for Attestation Engagements; Generally Accepted Government Auditing Standards (GAGAS) - Yellow Book; Social Security Act (the Act) Titles XVIII and XIX and; the Code of Federal Regulation (CFR) governing the Managed Care programs.

III. Purpose

The objective of this SOW is to assist CMS in determining the accuracy of medical costs and statistics on the final annual cost report, and to identify overpayments related to improper medical coding, coverage and/or insufficient medical documentation. To achieve this objective, the contractor will perform statistical data analysis, develop a defensible statistically valid sampling and extrapolation procedure (in accordance with guidance and documents provided by CMS), and conduct medical coding and coverage review. The outcome CMS will achieve from obtaining a centralized support Medical Review Contractor (herein referenced as the Contractor or MRC) for sampling and medical claims review for all MCO examinations is a consistent approach, improved accuracy in reimbursement to MCOs, as well as increased efficiency in performing these reviews. The Contractor’s evaluation will determine whether Medicare claims were paid in accordance with CMS coverage, coding, payment and billing policies, and allow for the recoupment of any overpayment as a result of identified errors. In addition, the Contractor will provide consistent calculation and reporting of payment errors and overall error rates.

IV. Requirements

A. General

Independently, and not as an agent of the Government, the contractor shall furnish all the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the Government, as needed to perform the requirements of this SOW. All examination engagements shall be successfully completed no later than twelve (12) months from contract award, unless otherwise identified.

Additionally, please note that MRC shall not also function as a Cost Audit Contractor (CAC) within the same period in which they perform the tasks as outlined in this Statement of Work.

All deadlines are set in terms of calendar days, unless otherwise noted as “business” days.

The MRC shall coordinate all contract requirements through the Contracting Officer Representative (COR) and each MCO’s Servicing Auditor. The COR will oversee the high level of contractor’s work (i.e. overall priorities, guidance that will impact all reviews), while the Servicing Auditor will interact and oversee the detailed work of the contractor (i.e. reviewing draft reports). CMS will provide the list of Servicing Auditors, along with contact information. If the MRC is receiving conflicting information among the various Servicing Auditors, they should consult with the COR for final guidance and procedures for moving forward.

a. Expertise/Abilities

The contractor shall possess, at a minimum, the following expertise:

· Thorough understanding of the applicable sections of the Social Security Act, and Code of Federal Regulations (CFR) governing the MCO program

· Thorough understanding of the principles of managed care and the operation and management of MCOs

· Thorough understanding of the various provider and physician services arrangements

· Knowledge of standard industry bill payment practices, particularly Medicare

· Knowledge of the American Medical Association (AMA) Current Procedural terminology guidelines specific to billing and coding practices

· Thorough understanding of medical record auditing

· Expertise necessary to perform medical coding reviews

· Expertise necessary to perform medical coverage determinations

· Knowledge of medical provider healthcare fraud schemes

· Ability to analyze large amounts of data and perform statistical sampling designed to ensure recovery of overpayments.

· Expertise in statistical sampling and extrapolation

· Proficient use of the statistical analysis package RATSTAT

· Proficient use of Microsoft Excel and Access

b. Training

The Contractor’s key personnel and other staff, as appropriate, shall attend the MCO Examination Training for Auditors provided by CMS in Baltimore, if offered.

In addition, key personnel, or other personnel as determined by the contractor, shall conduct or arrange for a separate in-house training for staff unable to attend the CMS training. The review procedures and plan for accomplishing the SOW requirements shall be discussed in detail during the in-house training. Notify your Contracting Officer’s Representative (COR) of this training event and provide an option for CMS to listen in/ participate. This could be accomplished by providing a call-in number.

Please note that CMS anticipates the MCO Examination Training once yearly. CMS may waive this requirement for the Contractor, at the COR’s discretion.

The Contractor will prepare for the ICD-9-CM conversion to ICD-10-CM/PCS by utilizing industry standard training for staff in medical review and coding. Preparation will include the purchase of an Encoder that will have ICD-9-CM to ICD-10-CM/PCS crosswalk conventions for assistance in accuracy. Certain key personnel (Review Manager, Coding/Claim Review Analyst, and Senior Coding/ Claim Review Analyst) will obtain certifications in ICD-10-CM/PCS Train the Trainer Programs in order to train all medical review staff and coders per functional requirements of their duties in claim review.

c. Request for Information

The Contractor may require a variety of information from CMS throughout the period of performance. Any request for information must be made to either the servicing auditor or COR, as appropriate. Please note the servicing auditor may vary for each MCO.

d. Kick-off Meeting

The Contractor shall work with the COR to determine a mutually agreeable time to conduct the Kick-off meeting to review the SOW requirements and answer any of the Contractor’s questions. The kick-off meeting shall be held no later than 20 calendar days after the contract is awarded. An agenda shall be prepared by the Contractor and submitted to the COR at least 2 business days prior to the kick-off meeting. The kick-off meeting shall include, at a minimum, the following information:

· Discussion of all items from the Schedule of Deliverables and the Contractor’s plan to successfully complete them

· Discussion of expected risks and plan for risk mitigation

· Discussion of the submitted Project Management Plan (see section e below) and of how the plan fulfills all SOW requirements

· Discussion of the Security and Tracking Plan (see section F below)

· Discussion of Key Personnel

· Re-cap of all Planning Meetings held with the CACs (see section G.a. – Coordination with CAC).

The Contractor shall be responsible for providing meeting minutes. The meeting minutes shall be submitted electronically to the COR within 3 business days after the kick-off meeting.

As applicable, the Contractor shall attend the kick-off meetings for each CAC. This will be decided on a case-by-case basis by the COR.

e. Project Management Plan

The Contractor shall develop and submit one Project Management Plan (PMP) for all the MCOs to be reviewed each period of performance. This should include, at a minimum:

· How the Contractor proposes to carry out the methods and procedures the firm will employ to satisfy the requirements of the SOW

· Medical Review Procedures – a specific description of the medical review procedures the Contractor will follow to fulfill the purpose of the this SOW.

· Milestones, resources and constraints of its projects including hours, task descriptions, and descriptions of assumption

· Breakdown of work load and anticipated key personnel devoted to each activity

· Anticipated timeline for work completion, time allocation by each key personnel

· Development of a plan to coordinate with the Cost Audit Contractors (CAC)

· Risks and plan for risk mitigation

· Quality Assurance Plan – Including procedures and processes used to perform quality control and assurance functions; specific personnel responsibilities to perform QA function; rate and frequency by which QA is performed; procedures and processes used to notify Contractor personnel of any change in direction regarding CMS policy as well as any issues identified during QA review.

The Contractor shall submit a draft PMP, electronically, within 20 calendar days after contract award for discussion during the kick-off meeting. The COR will provide feedback regarding any concerns on the PMP content. The PMP shall be revised to address any CMS concerns within 5 days of receipt. The final PMP shall be submitted no later than 5 calendar days after the draft is approved by the COR.

The PMP shall be modified and updated continuously to reflect any major changes in the project. The revised PMP shall be submitted to the COR for approval within 5 days of identifying the necessary changes. The Contractor must immediately make CMS aware of any situation that would cause the Contractor to miss a deadline.

f. Security and Tracking Plan

The Contractor shall ensure security of sensitive information as well as provide and implement a written security and tracking plan covering all aspects of this Statement of Work. The Contractor shall maintain oversight of the physical location of the protected information and other proprietary information. The Contractor shall store and dispose of the records/documents/files containing protected medical information and other proprietary information in accordance with CMS guidelines, and as instructed by the COR.

For medical records, CMS prefers a secure electronic data transfer of all medical records, but does not require that the medical records be transmitted electronically. The Security and Tracking Plan shall be submitted along with the PMP, no later than 20 calendar days after contract award.

g. Ad-hoc Conference Calls with CMS

As the need arises, CMS reserves the right to request ad-hoc conference calls with the Contractor. The COR or servicing auditor may request the conference call and will work with the Contractor to find an agreeable time and date. All conference call requests must be fulfilled within a maximum of 5 business days, though CMS can extend this deadline at their discretion. The Contractor must make all requested personnel available for participation on the conference call. If requested by the COR, the Contractor shall provide meeting minutes for these ad-hoc conference calls.

h. HPMS Updates

At the COR’s request, the Contractor shall make timely updates to the Health Plan Management System (HPMS) Cost Report Audit Module (CRAM) or provide required information to enable COR update HPMS. This includes, but is not limited to, the input of dates (Ex. Date sample sent to plan, etc.), and upload of various deliverables. Upon re-design of CRAM, the Contractor may be required to make these updates within a specified period of time.

B. Testing Guidelines

The Contractor shall perform sample selection for medical record review as described below upon receipt of the reconciled database. However, prior to sample selection, the Contractor must verify any systematic errors and analysis to remove non-covered services has been completed by the CAC. If necessary, a conference call shall be held with the CAC to confirm these procedures have been performed.

a. Sampling Guidelines

The Contractor shall conduct statistical sampling using RAT-STATS statistical software. The Contractor shall review a copy of the final annual cost report to gain an understanding of the plan’s medical service costs, statistics, and the impact of medical coding errors on reimbursable costs. In addition, the Contractor shall receive a copy of the reconciled claims database from the CAC. The Contractor will be required to sample at least 350[footnoteRef:1] medical claimsrecords to validate Medicare statistics and costs. Universe stratification, sample selection, and extrapolation of test results shall be conducted in accordance with the sampling guidance found in Appendix B - MCO Sampling & Extrapolation Guidance. In addition, the approach leading to extrapolation of findings should be reasonable, defensible, and thoroughly documented. At a minimum, the following sampling criteria shall be used (if applicable): [1: CMS reserves the right to modify the sample size during the option years to this contract. Please note that more than 350 records may be necessary to validate each claim. In addition, for certain statistical units, multiple procedures may need to be coded in order to validate the 350 unit sample.]

· Variable or attribute sampling shall be used as applicable based on the type of data (e.g. if testing “number of office visits” use attribute sampling; if testing “costs” or “charges,” use variable sampling)

· When using variable sampling, the contractor shall test 350 Medicare claimsrecords for statistics and costs.

· If statistics cannot be tested in conjunction with costs, a separate, additional, sample of 100 test items may be required for attribute sampling of statistics (e.g., visits, encounters), in addition to a sample of 350 claims to test Costs.

· Consideration whether a medical coding error will impact the medical service costs, statistics or both (see Section d below – ‘Other Items’).

To assist in future appeals, the Contractor must retain the work papers and the universe used for sample selection for at least 5 years, or until all appeals have been exhausted. The Contractor may contact the servicing auditor to determine if all appeal rights have been exhausted.

b. Sampling Plan

Following the receipt of the reconciled claims database from the CAC, the Contractor shall submit to each Servicing Auditor, the COR, and the CAC a Sampling Plan, specific for each MCO to be reviewed, within 2 weeks. The Sampling Plan must be prepared in accordance with the sampling plan guidance found in Appendix C – MCO Standard Sampling Plan. Along with the Sampling Plan, the contractor shall also submit summary details regarding stratification. The contractor shall use the first tab (“Universe Statistics”) from the Extrapolation Template (Appendix D) to demonstrate these details. Any revisions to the Sampling Plan must be made within 5 calendar days of receiving CMS guidance. Each Servicing Auditor will be responsible for approving the Sampling Plan for their MCO.

c. Sample Selection

The Contractor shall complete sample selection and submit the selected sample items to the MCO all within 10 calendar days of receiving CMS’ approval of the sampling plan.

For the samples selected, the MRC shall also identify each unique beneficiary and the sampled date of service, and send this listing to the CAC for confirmation of cost plan enrollment at the time of service. The listing shall be sent to the CAC at the same time the samples are sent to the MCO.

d. Other Items

At the time of sample selection, the Contractor must be mindful of the relationship between the medical service costs within the claims database and the statistical unit used by the MCO to apportion medical service costs. These items do not always correlate on a one-to-one basis. The Contractor must gain a thorough understanding of the statistic type for each MCO. This understanding will be necessary when applying errors properly to the entire population of claims costs and statistics. The Contractor shall work with the CAC and the servicing auditor at the start of the period of performance to ensure there are no gaps in understanding. The Contractor should note that application of adjustments to statistics and/or costs will vary based on the provider payment mechanism and the statistic used.

C. Coordination with the MCO

As a result of the sample selection, the Contractor will be responsible for data exchange with the MCO. The Contractor will need to obtain all documentation to support their medical claims review directly from the MCO. To facilitate this process, the Contractor may hold separate conference calls with each MCO for planning purposes, data receipt, as well as to resolve outstanding items.

a. Memorandum of Understanding (MOU)

At the start of the planning period shortly following the contract award, the Contractor shall issue a Memorandum of Understanding (MOU) to each MCO. The MOU shall document the Contractor’s overall medical review procedures and include a detailed timeline of the medical claims review process. This shall follow the timing guidelines required by this SOW. The purpose of the MOU is to document that the MCO was notified of both CMS’s and the Contractor’s expectations and deadlines for providing the medical records and method of resolving exceptions. In addition, the Contractor may include details regarding sampling procedures and extrapolation calculations.

Prior to the MOU being sent to the MCO, the Contractor shall submit a draft to their COR for approval. The Contractor may develop a template MOU and use this overall non-specific language for every MCO under review during the period of performance. The draft MOU must be submitted to the COR within 30 calendar days of contract award. Any modifications made by the COR to the MOU must be incorporated within 5 calendar days of their receipt. Upon CMS approval, the MOU must be submitted to each MCO within 5 calendar days.

The Contractor shall include documentation of the MCO receiving the MOU in their final work package submitted to CMS.

b. Sample Request

Once the Contractor has received the reconciled medical claims database from the CAC, the Contractor is responsible for selecting a sample and submitting it to the MCO, per the parameters listed in this SOW, Section IV.B above. This information exchange will be coordinated between the Contractor and the MCO. The CAC will not be responsible for requesting medical claims documentation from the MCO.

The Contractor shall afford the MCO an initial 60 day period to retrieve medical records.

c. List of Exceptions

Preliminary List of Exceptions

The first phase of medical records review shall be completed 60 days after the samples are submitted to the MCO. Upon completing the first phase of claims review, the Contractor will need to submit a list of exceptions to the MCO to notify them of the results. This should include a listing of each sample along with the Contractor’s evaluation of the coding and service costs. The Contractor must fully and clearly articulate the outcome of their review and write in a way that both CMS and the MCO can understand the results. The preliminary list of exceptions should not include the results of the extrapolation calculation; however, a preliminary error rate could be provided at this time. The Contractor shall submit the List of Exceptions to the MCO, copying their COR and the appropriate servicing auditor. This will coincide with the Preliminary Exit Conference.

If the MCO has any disagreements, the Contractor shall allow for a conference call to discuss these exceptions. The MCO’s Servicing Auditor should be in attendance on this call. The MCO shall also be allowed an additional 30 days to clear any exceptions and provide additional medical records.

Final List of Exceptions

Following the additional 30 day period (total of 90 days), the Contractor shall have 30 calendar days to finalize their list of exceptions. At a maximum, after 60 days following the Preliminary Exit Conference, the Contractor shall provide a Final List of Exceptions to the MCO, copying the servicing auditor and COR. The final list of exceptions should include a listing of all medical record review results, justification, and any references. In addition, at this time, the Contractor may include tentative error rates, and results of extrapolation, as applicable. The Contractor must ensure the MCO is aware that their results are still subject to CMS review. The Final List of Exceptions shall coincide with the Contractor’s submission of the Draft Report Package to the servicing auditor and CAC.

d. Late Documentation

When the Contractor receives late documentation prior to a final report being issued to the CAC, but after the 90 day cut-off date, the documentation should be reviewed. The Contractor shall confer with CMS on how to move forward in these situations. In some cases, CMS may allow for late documentation to be incorporated into the Contractor’s Final Report.

D. Medical Coding/Service Cost Review

MCO Medical Coding Review is necessary to evaluate direct medical expenses as well as apportionment statistics used to allocate the MCO’s medical service costs and indirect expenses. In order to determine if services provided to beneficiaries are properly coded, the contractor must compare medical records to the coding in the sampled medical claims. For this review, both the dollar value of the direct medical claim must be tested as well as the apportionment statistic by which the MCO attributes its medical service costs and indirect operating expenses to Medicare. In some cases, these are one in the same. In other cases, they are unrelated. The Contractor shall reference Appendix I – Medical Coding Review Steps for CMS’ minimum expectations for medical coding review.

a. Statistical Evaluation

The type of statistic must be evaluated when selecting the sample to determine whether an attribute sample or variable sample should be used. In the case of a variable sample, where the statistical value correlates to the direct medical cost, the MCO must obtain the medical records to support the validity of the coding and coverage of services in all 350 samples.

b. Medical Record rReview

The Contractor shall perform medical record review as a team, consisting of the key personnel listed in this SOW. Each medical record shall be evaluated to determine any coding or coverage errors. In addition, the Contractor shall perform their medical review in accordance with the Medicare Program Integrity Manual. The medical review shall be documented, including all analyses, references, and final decisions. In the case where staff at the Contractor has conflicting opinions that cannot be resolved internally, these views shall be brought to CMS, along with support. When disputes can be resolved internally, this should also be documented in the Contractor’s work papers. Work papers should reflect all levels of review.

At a minimum, the medical review should be conducted as follows:

· The documentation for each claim should be reviewed and documented. Documentation and justification should be recorded in all cases, i.e. even when the coder agrees with the originally submitted code.

· Medical record review shall be performed on a rolling basis. Meaning, as the Contractor receives documentation, they should perform their review immediately.

· Each sample shall also be evaluated based on Medicare coverage and necessity rules.

· In the case of exceptions, a second-level of review by another credentialed coder reviewer shall take place. This validation should confirm both the disagreement with the MCO’s original code or coverage determination, as well as the first-level coder’s reviewer’s re-pricing/re-coding/proposed resolution to the error.

· On a test basis, the second-level coder reviewer shall confirm the first level coder’s reviewer’s determination, regardless of whether or not there was an error observed. This should be done for at least 10% of the samples, in addition to all samples where an error was observed.

· Quality Control review should also be done by both the Review Manager and Project Director to confirm the determination made by the first and second level codersreviewers.

· All results and review levels shall be documented in the work papers submitted to CMS.

c. Unsupported Services

In instances where the Contractor’s team identifies unsupported medical services, an adjustment to the medical expense and the apportionment statistic must be determined. There are various types of errors that may be observed, and these should not all be treated equally. For example:

· Part or all items on the medical claims are not supported by adequate documentation. In the case of an error in coding when the correct code can be identified based on the documentation provided, the Contractor shall re-price/re-code these claims as appropriate. The adjustment shall be the dollar value of the difference between the original code and the revised code’s reimbursement. When supporting documentation is not provided, the claim shall be considered a complete payment error and removed.

· For up-coding (Billing a higher level service or a service with a higher payment than is supported by the medical record documentation), the difference between the original code and the corrected code will be the adjustment.

· For down-coding (Billing a lower level service or a service with a lower payment than is supported by the medical record documentation), no additional costs shall be added that were not incurred; however, statistics may be adjusted. The Contractor shall consult with the COR and servicing auditor in these instances.

· The medical record documents that a non-covered service was covered.

· Claim was processed with Medicare as primary when it should have been as a secondary payer, or vice versa.

· Beneficiary was not enrolled in the MCO at the time of service. Note, the MRC may need to confer with the CAC to make this determination.

· Additional error types shall be discussed with the COR and considered on a case by case basis. The Contractor shall use their professional judgment to advise CMS on how each exception should be settled.

E. Extrapolation

a. RATSTATS

RATSTATS is a free statistical software package, developed by the OIG, to be used by the Contractor to perform sample selection, as well as to calculate the extrapolated dollar value adjustment of errors identified through their review. CMS is requiring the use of RATSTATS for extrapolating errors. This software can be downloaded from the OIG’s website at https://oig.hhs.gov/compliance/rat-stats/index.asp. In addition, the Contractor shall use the template at Appendix D for uploading the medical claims database into RATSTATS.

b. Extrapolation Guidelines

CMS has developed guidelines for extrapolating unsupported costs. The Contractor shall reference Appendix B – Sampling and Extrapolation Guidance for specific direction. In general:

· The Contractor will need to calculate the overall financial error rate.

· When the overall financial error rate exceeds 1%, the results should be extrapolated.

· Using RATSTATS and the template provided by CMS at Appendix D, the Contractor shall calculate the lower bound for each stratum, at the cost-center level, at 90% confidence.

· In most cases, the Contractor will perform a stratified variable appraisal.

· Work papers must reflect all results and calculations.

In some cases, unsupported medical service costs do not directly correlate to the statistic used on the MCO’s cost report. For example, the claims database will show claims paid, but the statistic used could be Fee-For-Service equivalent. It is crucial that the Contractor gain a thorough understanding of the relationship between the claims database and the statistic. In these cases, the Contractor shall still extrapolate both cost and statistics based on the overall financial error rate exceeding 1%. However, extrapolation must be separately calculated for each, costs and/ or statistics. The Contractor must provide separate adjustments to the statistics and for the medical service costs. The Contractor must confer with CMS and the CAC when unusual relationships exist between the costs making up the medical claims database and the associated statistic.

Additionally, CMS expects that both the numerator and denominator to the statistic will be reduced. However, there are certain exceptions where only the numerator will be adjusted. The MRC shall confer with CMS when these distinctions are not obvious or when some ambiguity exists.

c. Pattern Errors

When the Contractor identifies systematic or pattern errors, whenever possible, the exact value of those errors within the entire universe should be identified. These claims should then be removed from the universe when calculating the financial impact of other errors.

If the exact value cannot be determined, the Contractor shall defer to CMS guidance as to whether the sample should be included in the calculated extrapolation. Alternatively, the Contractor may consult directly with the MCO in helping to determine the exact value. The Contractor shall notify CMS immediately upon identifying this type of exception.

d. Sample Expansion Infrequently, the Contractor may identify circumstances that require additional samples to be selected. When these occur, the Contractor shall notify CMS immediately. The Contractor shall provide exact details of the circumstance, the number of additional samples, and a summary of the desired outcome. CMS will make a determination on a case-by-case basis of whether an expanded sample should be selected.

If CMS decides to move forward with an expanded sample, a modified review timeline must be submitted to and approved by the Servicing Auditor.

Compensation for the additional samples will be in accordance with the established price per claim determined at time of award.

F. Overall Timing Requirements

In order to better coordinate with both the CAC and the MCO, the Contractor must adhere to the review timeline as follows, and as described in Appendix H – Overall Review Timeline.

· Upon receiving the reconciled claims database from the CAC, the Contractor must prepare sampling plans and submit to CMS within 2 weeks.

· Upon approval of the sampling plan, the Contractor must select samples and send these to the MCO within 10 calendar days. This should generally occur at the same time as the Entrance Conference.

· The Contractor shall provide the MCO with 60 calendar days to submit documentation/ medical records for the samples.

· After 60 days, the Contractor shall meet with the MCO and discuss any outstanding items as well as provide the Preliminary List of Exceptions. Whenever possible, the Contractor shall coordinate this discussion to be combined with the Preliminary Exit Conference. The MCO shall be provided an additional 30 days from the date of the meeting/discussion to clear any outstanding items. The MCO shall be notified at this time that no additional extension will be allowed and that any items still outstanding after 30 days will be considered an exception. This will allow the MCO a total of 90 days to obtain support for the samples.

· Upon receipt of documentation from the MCO, the Contractor must complete the medical record review functions within 30 calendar days, or at most, 120 from when the samples were sent to the MCO. The Contractor must also complete and submit the Draft Report and Work Paper Package at this time to CMS, as well as send the Final List of Exceptions to the MCO.

· The Final Exit Conference will occur no later than 120 days following the Preliminary Exit Conference.

· Upon CMS approval of the Draft Report Package, the Contractor shall submit the Final Report to both CMS and the CAC within 5 business days. The Final Report can be submitted electronically to the CAC. The Final Report submission to CMS should be done electronically, as well as one hard copy.

· Upon receiving any formal disagreements from the MCO, the Contractor will have 1 week to prepare their formal rebuttal and submit this to the CAC, copying the COR.

G. Coordination with the Cost Audit Contractor (CAC)

Throughout the completion of the SOW requirements, the Contractor shall complete their work in conjunction with the CAC. This will require significant coordination and communication between the two contractors. As the Contractor will need to work with several CACs, at the beginning of the period of performance the Contractor shall establish a relationship with the CACs. Per the requirements of this SOW, the Contractor shall provide updates and copies of deliverables to the CAC. This shall include details behind any calculations, etc. The Contractor shall also be available to participate in conference calls with the CAC, as necessary. The Contractor shall notify their COR of any challenges that might develop.

Additionally, in order for the CAC to incorporate the Contractor’s findings into their opinion on the Audit Report, the CAC may request certain information from the Contractor. This information may include credential information, personnel resumes, etc. CMS requires that the Contractor comply with the CAC’s requests.

If the CAC requests that the Contractor sign a confirmation letter to verify the nature and scope of their relationship with CMS, the Contractor must sign and return this letter to the CAC.

a. Planning Meeting

Within 15 days after the contract award, the Contractor shall work with the COR and each CAC to hold a planning meeting. The Contractor will need to hold a separate planning meeting with each CAC, the COR, and the applicable servicing auditors. These planning meetings will be important to discuss specifics about each MCO, establish a timeline of anticipated entrance and exit conference dates, field work dates, coordinate data exchange, and to develop a working relationship between the contractors. The Contractor must submit minutes from each Planning meeting to the COR within 3 calendar days.

Additionally, the Contractor is required to provide the CAC with any and all claims database fields that are necessary for sample selection. The contractors should also discuss logistical arrangements that will need to be made to transfer the reconciled database. These shall be discussed during the Planning Meeting, and formally submitted to the CAC, copying the COR, within 15 days after the contract is awarded.

b. Data Requests and Finding Preparation

The CAC will be responsible for requesting databases of all claims and encounters as well as reconciliations that tie the data files to the totals submitted on the Final Annual cost report. It is the Contractor’s responsibility to ensure the database they receive from the CAC is clean, and ties to the cost report. The Contractor should request support of reconciliation from the CAC. This should be verified prior to sample selection. The Contractor and the CAC shall hold a conference call within 5 days of receiving the reconciled database to verify the Contractor’s understanding of the items to be tested, and to discuss completeness of the reconciliation procedures.

At the completion of the Contractor’s review, the draft report will be submitted to CMS for review and approval. Once approval is received, the Contractor must submit the Final Report to both CMS and the CAC. Reference Section V for detailed requirements for the Final Report.

The CAC will need to rely upon the Contractor’s work to prepare the finding; therefore, the Contractor must be available to discuss their results and the associated adjustments, upon the CAC’s request. Additionally, the Contractor must provide electronic copies of any supporting work papers and deliverables that the CAC requests. The CAC will be required to compile any questions they have on the Contractor’s work. The Contractor must reply to any inquiries within 5 business days of receipt. Upon finalizing outstanding questions regarding the Contractor’s work, an “Agree/Disagree Letter” will be submitted the MCO, and the Final Exit Conference will be held. When the MCO disagrees with any medical claims review finding, the Contractor will be required to review any justification provided. Based on their review, the Contractor may need to adjust the Final Report, including determination of errors, error rate and extrapolation calculation. If review of the MCO’s justification does not change the Contractor’s determination, a written rebuttal must still be prepared. The Contractor must coordinate with the CAC on the timing of this review. However, in general, information from the MCO must be reviewed and a response must be prepared within 1 week of receipt. The Contractor will most likely be aware of any items and issues the MCO plans to disagree with prior to receiving the formal agree/disagree letter. The COR must be notified of an exceptions to this deadline.

c. Entrance/ exit conferences

The Contractor is responsible for coordinating with the CAC and participating in the entrance and exit conference for each MCO under review. The Contractor must be mindful that the CAC must also adhere to contractual deadlines and must be flexible in planning entrance and exit conference dates.

The Contractor should also consider the overall timing requirements in Section IV.F when agreeing on the exit conference date. The Contractor should provide as much information as available regarding the results of the medical record review during the preliminary exit conference.

Entrance Conference -

Generally, the official entrance conference shall be held no later than 120 days following contract award. There is only one entrance conference for both the CAC and the MRC.

Preliminary Exit Conference

The preliminary exit conference will be held no later than 60 days following the entrance conference, or 60 days following the submission of the sample to the MCO. The Preliminary List of Exceptions will be provided to the MCO at this time, and they will be afforded an additional 30 days to clear these exceptions.

Final Exit Conference

The final exit conference shall be held no later than 120 days following the preliminary exit conference. Prior to the final exit conference, the Contractor’s Final Report will be finalized and approved by CMS. The final exit conference will serve was official notification of all findings and observations identified by both the MRC and CAC. From this point, the MCO will be afforded time to complete the Agree/Disagree letter and prepare any formal disagreements. The Contractor shall be required to formally reply to any disagreements to their exceptions.

d. Field work

The Contractor is not required to spend time in the field; however, any field work dates must be coordinated with the CAC in order to reduce the burden on the MCO.

e. Conference Calls

Upon the CAC’s request, the Contractor shall conduct status calls (at least monthly, or at an agreeable frequency) to discuss the status of the medical coding review for each MCO. The Contractor can elect to have all CAC’s join their bi-weekly status call with CMS, or can arrange separate calls.

The Contractor shall also be available for ad hoc conference calls with the CAC, as necessary.

H. Appeal Support

The Contractor shall be responsible for providing support if any of their determinations are appealed. The Contractor shall cooperate with CMS and provide continuous support throughout the appeal process, at CMS’s request. Note that the issues in dispute may relate to sampling, extrapolation, and results of the medical coding review. The Contractor will be required to ensure that appropriate personnel are available to testify and perform other functions listed below. This support can include, but is not limited to:

· Testifying at the Hearing, which could require traveling to CMS.

· Reviewing appeal documents that contest the Contractor’s findings and providing formal written comments/ support.

· Providing written clarification to the originally submitted work.

· Revising review documentation based on the provided appeal documentation.

· Assisting the Office of General Counsel (OGC) and DCPA by participating in conference calls and providing audit documentation, emails, etc.

Any written support requested by CMS must be provided within 15 business days. Extensions will be granted on a case-by-case basis. The Contractor should also be aware the appeal support will normally occur after the period of performance.

V. Deliverables

A. Project Management Plan

See Section IV above

B. Security and Tracking Plan

See Section IV above

C. Sampling Plan

See Section IV above

D. Draft Report Package

Upon completing the medical record review, the Contractor must summarize their results for electronic submission to CMS. The draft report package should be submitted to CMS and the CAC within 30 calendar days of receiving additional support, or at most, 60 days following the Preliminary Exit Conference and must include the following, at a minimum:

· A formal written report detailing the Medical Review Procedures, Final List of Exceptions along with citations and justification for each exception.

· Details of the adjustment, including documentation of the calculation.

· Details of extrapolation, including error rates. This should be included even if the error rate did not warrant extrapolation.

· All applicable work papers. Work papers should undergo an initial quality review before submitting the file to CMS. CMS reserves the right to request a hard copy of the work papers at any time.

The Contractor shall coordinate with the COR on format and level of detail of this report. This should be finalized prior to submitting the first report.

The Contractor will receive feedback on the draft report from CMS and at times, the CAC. As indicated by CMS, any issues must be corrected and revisions implemented within 5 business days and a revised draft shall be submitted.

E. Final Report Package

Once the Contractor receives approval for the Draft Report, they must submit the Final Report Package to CAC and the appropriate servicing auditor within 5 business days. The Final Report shall include all information included in the Draft Report updated for any revisions received from CMS. The Contractor shall include all work papers, documents and other related support on a CD. The Contractor shall also include documentation and copies of all SOW requirements. The work papers should remain in their original format. For example, if the work paper was prepared in excel, the file must remain in excel and unlocked so CMS can verify formulas and calculations. All universes used for sample selection and preparation shall be included as well as all notes or write-ups. The Final Report shall be included in both Word and PDF format. Each file on the CD shall be titled in such a way to reflect the content of the file or document. If errors are identified within the work papers, the Contractor shall make CMS requested revisions. Each document shall make reference to other documents in an easily traceable format.

The Final Report shall be submitted as a hard copy as well as electronically. CMS reserves the right to request a hard copy of documentation, including work papers at any time.

Any revisions to the Final Report and/or work papers are due within 5 business days of being notified that corrections are necessary.

F. Bi-weekly Status Report

A bi-weekly call shall be established at an agreeable time between the COR and Contractor to discuss the status of each MCO’s review. The COR reserves the right to cancel the bi-weekly call at their convenience, or as requested by the Contractor.

In addition, the Contractor shall submit a Bi-weekly Status Report to the COR at least 1 calendar day prior the bi-weekly call. The bi-weekly status report should summarize the work done to date for each MCO under review. This includes pertinent dates for each MCO (ex. Sample sent to plan), issues to date, outstanding items, and any other relevant items. The format of this report shall be determined between the COR and the Contractor. Please note that as needed, the CAC will be in attendance on the bi-weekly status call to obtain an update on the review of their MCOs and the biweekly report may be shared with them.

G. Monthly Report

The Contractor shall submit Monthly Status Reports to the COR by the 20th of each month for the previous month’s effort. Monthly status reports shall by submitted electronically via email. The format of the report shall be agreed upon between the COR and the Contractor. At a minimum, the Monthly status report should include:

· Administrative action – QA, etc.

· Prior month’s activities for each MCO

· Summaries of meeting with CMS, MCOs and each CAC

· Areas of concentration for the upcoming month

· Issues of concern that require CMS attention

· Summary of error rates and adjustments for MCOs that review has been completed

· Brief write-up of identified coding error types found to date

· Updated dates for each MCO – entrance conference date, date samples sent to Plan, exit conference date, draft report sent to CMS date, final report sent to CMS/CAC date

· Status of documentation review for each MCO

H. Mid-Contract Presentation

The Contractor shall make an in-person walkthrough presentation upon substantial completion of the majority of work for one MCO, or approximately within 7 months of the contract being awarded. CMS will coordinate with the Contractor which MCO will be presented. The Contractor shall provide a visual presentation of all work papers and procedures performed to date as well as a summary of exceptions. This shall also include a walk-through of sampling procedures and extrapolation calculations.

The goal of this presentation is for the Contractor to demonstrate understanding of the SOW tasks and treatment of exceptions. The Contractor shall also share ideas for improvement in the review process (coordinating with other contractors), and receive feedback from CMS. The Contractor shall also provide a summary of risk areas and/or recommend additional procedures or revision to the current process.

Personnel presenting the walk-through should include the statistician, lead claims…