JOFOC 10_31_11 Redacted ver.pdf

Justification for Other than Full and Open Competition

(JOFOC)

1. Identification of the agency and contracting activity.

a. Federal agency and contracting activity.

Department of Health & Human Services/Centers for Medicare & Medicaid Services (DHHS/CMS)/ Office of Acquisitions & Grants Management (OAGM)

b. Sponsoring organization.

Office of Financial Management/Financial Services Group (OFM/FSG)

c. Project Officer information.

Nathan Crawford

CMS/OFM/FSG/DMDM

7500 Security Blvd. Baltimore, MD 21244 Mailstop C3-14-16

(410) 786-3391 nathan.crawford@cms.hhs.gov

2. Nature and/or description of the action being approved.

a. Acquisition purpose and objectives.

This justification is for the authority to issue a cost-plus-award letter contract (FAR 16.603) for a one year period of performance to Group Health Incorporated (GHI) to provide Medicare Secondary Payer (MSP) recovery services in accordance with 1862(b) of the Social Security Act (42 United States Code 1395y(b)). The anticipated definitization date is January 24, 2012. These provisions in part prohibit Medicare under specified conditions, from making payment where payment has been made or can reasonably expected to be made by a workers’ compensation (WC) law or plan, automobile and liability insurance (including self-insurance), or no-fault insurance. However, to provide continuity of care for the beneficiary, if payment has not been made or cannot reasonably be expected to be made promptly by workers’ compensation law or plan, automobile and liability insurance (including self-insurance), or no-fault insurance, Medicare may make conditional payments. Medicare’s conditional payments must be reimbursed to Medicare by the insurer if the associated workers’ compensation law or plan, or other insurance is primary to Medicare. The MSP statute further provides that an entity that receives primary payment shall reimburse Medicare for medical items and services that the primary plan has responsibility to pay for.

b. Project background.

In 2006, CMS awarded a contract to perform MSP recovery services to CNI Administrative Services, LLC (CNI). This contract consolidated all of the functions and workloads related to MSP post-payment recoveries associated with the recovery of Group Health Plan (GHP) (working aged, disabled, and end stage renal disease (ESRD)) debts and non-GHP (WC, no-fault, and liability) debts into one contract. The contractor is responsible for all activities required to identify or initiate GHP or non-GHP recovery actions to an employer, insurer/Third Party Administrator (TPA), WC carrier, no-fault insurer, liability insurer, or beneficiary.

In 2010 CMS decided to conduct a competition for the work the MSPRC performs.

On December 2, 2010 CMS posted a Sources Sought Notice (SSN) on FedBizOpps, utilizing the NAICS Code of 524291, requesting potential small business (e.g. 8(a), service-disabled veteran owned, HUBZone, woman-owned and small disadvantaged businesses) to submit capabilities for the MSPRC. The notice contained several attachments that detailed the scope of the work, including the SOW and the projected workload for FY 2012. As a result of that Sources Sought Notice, CMS received four (4) responses:

Of the responses received, none demonstrated adequate capabilities to perform the multiple tasks set forth in the Statement of Work (SOW) and the attachments.

Based on direction from the Small Business Administration (SBA), CMS performed additional market research during FY 2011 but no capable firms were identified.

Sources Sought Notice, SS- CMS- 2011-120057, was posted on August 18, 2011 to determine if small businesses have the capability to perform Medicare Secondary Payer recovery work. A review of their capability statements determined that none of the small businesses who responded were capable of performing this work.

Based on this market research CMS decided to use a full and open competition to award this work. To conduct a full and open competition for this work is expected to take a minimum of 9 months. The CNI contract expired on September 30, 2011.

Due to the Unusual and compelling Urgency (FAR 6.302-2) to maintain continuity of MSP recovery services, to provide timely information to Medicare beneficiaries/representatives, to facilitate settlements, to issue accurate and timely demand letters, and to recover money for the Medicare Trust Funds, it is critical to issue a contract limited to a single contractor with the capability and understanding of the MSP requirements and workload activities so the contractor can perform the MSP recovery activities without interruption. Without this contract, serious injury to the government would occur because the Medicare Trust Fund would not be reimbursed for its conditional payments (in FY 2010 over $400M was recovered for the Medicare Trust Funds). In addition, without this contract Medicare may make payment from the Medicare Trust Funds when another party should pay.

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The contractor must also be compliant with the Federal Information Security Management Act (FISMA) and Section 508 compliant, and meet all security, compliance, and financial management requirements that are identified in the statement of work (SOW) at the time of award. This contract will be for a base period of 9 months with an option not to exceed 3 months. During the 9 month base period, the MSP recovery work will be competed and awarded under competitive procedures. A 3 month option period is needed to transition the work to the contractor that wins the competitive award. The MSP recovery work is a complex requirements contract, which normally would take 12 to 15 months to compete and award. CMS has established an aggressive schedule to have the competitive award made within 9 months.

The 9 month procurement process is the absolute minimum duration necessary to complete the award of a new contract and allow for a transition to the new contractor.

GHI uses the systems needed for processing the MSP recovery workload, is FISMA and Section 508 compliant, and meets the security, compliance, and financial requirements identified in the Medicare Administrative Contractor (MAC) contracts. As a result, GHI possesses the equipment and skills which can be leveraged to conduct MSP recoveries timely. In addition, we believe GHI has the skills to manage the MSP recovery work so there will be minimal disruption to the services provided to Medicare beneficiaries, attorneys, insurers/TPAs, WC carriers, and no-fault insurers, while CMS conducts a full and open competition for the MSP recovery work.

3. Description of the supplies or services required to meet the agency’s needs (including the estimated value).

a. Project title. Medicare Secondary Payer Recovery Contractor (MSPRC)

b. Project description.

The MSPRC will be responsible for the development and pursuit of recovery claims. MSP recovery activities include:

identifying mistaken or conditional MSP payments for recovery from employers, insurers/TPAs, WC carriers, no-fault insurers, liability insurers, or from beneficiary settlements, judgments, or awards;

determining conditional payment amounts potentially subject to recovery;

providing conditional payment amounts when Medicare conditionally pays a beneficiary’s claim involving WC, no-fault insurance, or liability insurance (including self-insurance);

answering telephone inquiries and written correspondence;

issuing recovery demand letters, where appropriate;

making beneficiary waiver determinations pursuant to Section 1870 of the Act when such requests are filed;

resolving alleged defenses to MSP debts;

processing first level appeal requests from beneficiaries on beneficiary MSP debt;

providing MSP litigation/negotiation support to CMS;

performing activities related to the Debt Collection Improvement Act of 1996 (DCIA;

Pub. L. 104-134), including referral of delinquent MSP debt to Treasury for cross-servicing activities, where appropriate;

ensuring that financial statements and reports are accurate and conform with CMS financial reporting instructions; and ensuring efficient procedures and internal controls are in place for all functions.

Requirement type.

Research & development (R&D) R & D support services

X Support services (non-R&D)

Supplies/equipment

Information technology (IT)

Construction

Architect-engineer (A & E) services

Design-build

Other (specify): ____________________

Type of action.

New requirement X Follow-on work to a new contractor.

Other (specify): ______________________

Proposed contract/order type.

Firm-fixed-price Other fixed-price (specify, e.g., fixed-price award-fee, fixed-price incentive-fee): __________ Cost-plus-fixed-fee X Other cost reimbursement: cost-plus-award-fee Time and materials Indefinite delivery (specify whether indefinite quantity, definite quantity, or requirements): ___________

Other (specify): ___________

Completion Form Term form

c. Total estimated dollar value and performance/delivery period.

4. Identification of the statutory authority permitting other than full and open competition.

This acquisition is conducted under the authority of 41 USC §253(c)(2) as implemented by Federal Acquisition Regulation (FAR) 6.302-2, Unusual and Compelling Urgency.

X This acquisition is conducted under the authority of 41 United States Code (U.S.C.) 253(c)(2) as set forth in Federal Acquisition Regulation (FAR) 6.302- 2.

FAR 6.302-2, Unusual and Compelling Urgency

This acquisition is conducted under the authority of section 4202 of the Clinger-

Cohen Act of 1996.

N/A

This acquisition is conducted under the authority of the Services Acquisition

Reform Act of 2003 (41 U.S.C. 428a).

N/A

5. Demonstration that the proposed contractor(s) unique qualifications or the nature of the acquisition requires use of the authority cited.

a. Name and address of the proposed contractor(s).

Group Health Incorporated (GHI) 25 Broadway, 12th Floor New York, NY 10004

(212) 615-0000

b. Nature of the acquisition and proposed unique qualifications of the contractor(s).

Due to the Unusual and compelling Urgency to recover GHP and non-GHP debts in a timely manner, and to provide timely service to insurers and Medicare beneficiaries/representatives, it is critical to obtain the services of a contractor familiar with the current MSP operations and systems.

In addition GHI has a contract with CMS to perform Medicare COB activities. As a result, GHI has the existing capability to identify and recover both GHP and non-GHP debt, provide good customer service, and refer uncollected debt to the Department of the Treasury using established, tested, and approved software and technology that complies with CMS security and architecture requirements. GHI is also FISMA and 508 compliant, and meets all security, compliance and financial management requirements of the SOW.

There are no other contractors that currently perform MSP recovery work, including managing current MSP recovery activities and having access to the systems used by CNI as the MSPRC. Other contractors experienced in MSP recovery work could not ensure a seamless transition as they do not have an understanding of the current work processes and do not have access to the systems CNI currently uses. These systems contain all the correspondence related to the NGHP cases, including case notes, beneficiary authorizations, and claims data.

GHI will manage all the MSPRC functions, including the subcontracted functions, prioritize the work and ensure compliance with the SOW requirements. GHI is uniquely qualified to manage the MSPRC functions as it performed and managed a portion of this work

In addition GHI has additional management staff trained in MSP as they have a contract with CMS to perform the MSP coordination of benefits activities. No other contractor meets these unique qualifications.

6. Description of the efforts made to ensure that offers are solicited from as many potential sources as practicable. Indicate whether a FedBizOpps notice was or will be publicized as required by FAR Subpart 5.2 and, if not, which exception under FAR 5.202 applies.

MSP recovery work is very technical and specialized. Currently it requires access to multiple systems containing information for open cases. Only one company has access to the necessary systems and the expertise to perform the MSP recovery requirements without an interruption of service. These requirements are as follows:

A complete understanding of MSP policy and current MSPRC operational procedures.

Access to the systems currently used by the MSPRC including ReMAS, Imagio, SMART/MARTI, and RSC.

Experience handling correspondence and processing cases including calculating conditional payment amounts and issuing demand letters.

Any interruption in MSP recovery operations would cause serious injury to the government because the Medicare Trust Funds would not be reimbursed for amounts Medicare paid related to underlying incident in liability, workers compensation and no-fault settlements (in FY 2010 MSP recoveries returned over $400M to the Medicare Trust Funds). In addition, the Medicare Trust Fund could make payments for medical care when another party should pay. Therefore a FedBizOpps notice has not been published as the exception at FAR 5.202(a)(2) applies.

7. Determination by the Contracting Officer that the anticipated cost/price to the Government will be fair and reasonable.

The Contracting Officer has made a determination that the definitization of this letter contract will be fair and reasonable. The amount of money obligated by the letter contract is less than 40% of the estimated total value of the contract and is fair and reasonable. There is a sufficient information available, actual contract cost for the last five years, to enable the Government to accurately develop an Independent Government Cost Estimate with a high degree of accuracy.

The Contracting Officer will obtain cost and pricing information and will also require that such cost and pricing information be certified in accordance with FAR 15.406-2 upon receipt of the contractor’s proposal, which is required to definitize the letter contract.

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8. Description of the market research conducted (see FAR Part 10) and the results, or a statement of the reasons market research was not conducted.

On December 2, 2010, CMS posted a SSN in FedBizOpps, utilizing the NAICS Code of 524291, requesting potential small business (e.g. 8(a), service-disabled veteran owned, HUBZone, woman-owned and small disadvantaged businesses) to submit capabilities for the MSPRC. The notice contained several attachments that detailed the scope of the work, including the SOW and the projected workload for FY 2012.

As a result of that Sources Sought Notice, CMS received four (4) responses:

Of the responses received, none demonstrated adequate capabilities to perform the multiple tasks set forth in the Statement of Work (SOW) and the attachments.

Per SBA’s direction, CMS performed additional market research utilizing the Central Contractor Registration (CCR), Dynamic Small Business Search to identify small and/or small disadvantaged businesses with experience in performing Recovery Audits. CMS identified 34 potentially capable small businesses utilizing NAICS Code 524291, Recovery Audits.

On April 4, 2011, a SSN was issued via e-mail to the 34 small and small disadvantaged businesses (e.g. 8(a), service-disabled veteran owned, HUBZone, woman-owned and small disadvantaged businesses) .The SSN requested the submission of capability statements to demonstrate capability and experience in the above categories. The capability statements were evaluated and it was determined that none of the small businesses demonstrated capability to perform the requirements.

On May 23, 2011, CMS performed additional market research to identify 8(a) firms using the SBA Quick Market Search. As a result of that search, no capable certified 8(a) firms were found.

Sources Sought Notice # SS-CMS-2011-120057 was issued on August 18, 2011 to identify all small businesses, regardless of type, that would have to capabilities to perform the Medicare Secondary Payer recovery work. Four firms responded providing their capability statements.

None of these businesses were deemed capable.

The MSP recovery work is very technical and specialized. Currently, it requires access to multiple systems containing information for open cases. Only one company has the expertise to perform the requirements without an interruption of service. These requirements are as follows:

A complete understanding of MSP policy and current MSPRC operational procedures.

Access to the systems currently used by the MSPRC including ReMAS, Imagio, SMART/MARTI, and RSC.

Experience handling correspondence and processing cases including calculating conditional payment amounts and issuing demand letters.

9. Any other facts supporting the use of other than full and open competition.

R e d a c t e d

MSP recovery work must be conducted timely to ensure conditional payments are repaid to the Medicare Trust Funds.

It is important for CMS to ensure that conditional payment amounts are issued timely so the liability insurer and the beneficiary/representative have sufficient information to settle the case.

If the case does not settle, Medicare loses its right to collect. When this happens, the Medicare Trust Funds are not repaid. In addition, CMS must ensure demand letters are issued timely.

When demand letters are delayed, collection of Medicare's conditional payment amount becomes more difficult as the beneficiary may no longer have the settlement funds. This also reduces debt collections for the Medicare Trust Funds.

Due to the urgent and compelling nature of this situation, it was necessary that CMS issue a contract without conducting a full and open competition. This contract is only for the period of time it takes to complete a full and open competition for this work.

10. Listing of sources, if any, that expressed, in writing, an interest in the acquisition.

Four firms responded, providing their capability statements, to Sources Sought Notice # SS-CMS- 2011-120057 was issued on August 18, 2011. A review of their capability statements determined that none of the small businesses who responded were capable of performing this work.

The four respondents were:

11. Statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the required supplies or services.

This JOFOC covers a 9 month base period with an option for an additional 3 months to transition the work to the contractor that receives the award under the full an open competition. The Medicare Secondary Payer Integration work which is currently included in the Medicare Secondary Payer Recovery Contract (MSPRC) and Coordination of Benefits Contract (COBC) will be a removed from the MSPRC/COBC full and open competition and issued as a separate procurement that will be set-aside for small businesses.