QIC_B_South_LFO_-_FBO.docx

Justification for an Exception to Fair Opportunity Pursuant to FAR 16.505(b)(2)(i)(c)

1. Identification of the Agency and the Contracting Activity

Department of Health and Human Services Centers for Medicare & Medicaid Services (CMS)

Contracting Officer’s Representative: Maria Ramirez (410) 786-1122 Center for Medicare (CM)

Contracting Officer: Mark Smolenski (410) 786-0175 Office of Acquisition and Grants Management (OAGM)

2. Nature and/or Description of Action Being Approved

This justification for an Exception to Fair Opportunity supports a logical follow-on task order award to Q 2 Administrators (Q2A) on a sole-source basis to provide adjudication services in support of the Medicare, Medicaid, and State Children’s Health Insurance Program Benefits Improvement and Protection Act of 2000 (BIPA), Public Law 106-554, Subtitle C - Changes in Medicare Coverage and Appeals Process, Section 521 Revisions to Medicare Appeals Process and the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 Public Law 108-173.

More specifically, Q2A will act as a “Qualified Independent Contractor” (QIC) responsible for conducting reconsiderations of initial Medicare claims determinations and redeterminations. The overarching goal of having QICs perform reconsiderations is to issue informative, accurate, and timely decisions.

The original task order (HHSM-500-2004-00010I/HHSM-500-T0001) was competed amongst CMS’ Qualified Independent Contractor (QIC) Indefinite Delivery Indefinite Quantity (IDIQ) contract holders and awarded to Q2A in December 2009.

The period of performance for the original task order is December 17, 2009 through August 31, 2013 (inclusive of option periods), with a total value of $40,437,870.

The period of performance for the proposed logical follow-on task order will be September 1, 2013 through August 31, 2014, with an estimated value of $15,785,396.

3. Description of the Supplies or Services Required to Meet the Agency's Needs (including the estimated value)

Under this logical follow-on task order, Q2A will process second level appeals, also known as standard reconsiderations, on Medicare Part B claims that had redeterminations issued by Medicare Administrative Contractors (MACs) and Carriers. The Part B QIC workload includes, at a minimum, processing reconsideration requests for doctors’ services, outpatient medical and surgical services, diagnostic tests, and ambulatory surgery. It also includes outpatient mental health care, and outpatient physical and occupational therapy. This task order is for the Part B South jurisdiction, which includes the following states/territories:

Note: Railroad Retirement Board reconsiderations are also included in this workload jurisdiction.

The claims estimates under this proposed logical follow-on task order will include all reconsideration activities under this task order, including Medicare Secondary Payer (MSP), Program Safety Contractor (PSC)/Zone Program Integrity Contractor (ZPIC), and Recovery Audit Contractor (RAC) appeals.

4. Identification of the Exception to Fair Opportunity and the Supporting Rationale

FAR 16.505(b)(2) (i)(C) allows for a task order to be issue on a sole-source basis under an IDIQ contract in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order. The existing Part B South QIC task order was competed amongst all the QIC IDIQ holders. Additionally, the scope of work for the proposed logical follow-on is identical to the existing Part B South QIC task order scope of work. The purpose of the existing Part B South QIC task order scope of work is to process second level appeals on Medicare Part B claims that had redeterminations issued by MACs in the defined “South” jurisdiction. The scope of work for the proposed logical follow-on is exactly the same.

The following paragraphs detail how issuing this logical follow-on task order is in the government’s best interest in terms of economy and efficiency.

Cost Savings to the Government Transitioning the Part B South QIC workload in the event the incumbent was not awarded the contract following a re-competition would involve a number of expensive and time consuming activities. CMS would have to exercise optional task 12, transition out activities, on the current Part B South task order at an estimated cost of $75,713. This funding would support close out of the current contract activities such as, forwarding reconsideration requests to the new QIC, responding to inquiries, and forwarding any remaining reconsideration case files to the Administrative QIC prior to the end of the contract period. In addition, the government would need to pay the incoming contractor transition-in costs estimated to be between $600,000 and $900,000.

Exercising a LFO for this jurisdiction benefits the government by saving both the time and money associated with transitioning this workload.

Program Stability and Continuity for Appellants During Fiscal Year (FY) 2012, the volume of QIC appeals increased significantly. The chart below depicts overall reconsideration receipts in recent fiscal years.

Overall Reconsideration Receipts by FY

*Based on MAS data on 01/16/13.

In FY 2012 non-RAC appeals increased by almost 50% and RAC appeals were up approximately 684%. This substantial increase in appeals activities has created workload challenges and jurisdictional backlogs. The Medicare Enrollment and Appeals Group (MEAG) and the Office of Acquisition and Grants Management (OAGM) have dedicated a significant amount of resources and time to working closely with the QICs to address these challenges and related performance issues. MEAG believes a potential transition in the Part B South QIC, currently a very stable/high performing contractor jurisdiction, creates additional risk to the Agency.

Q2A has successfully performed reconsideration activities in this jurisdiction since 2009 and also developed productive working relationships with MACs, the Office of Medicare Hearings and Appeals (OMHA), and the beneficiary & provider communities. MEAG notes having received minimal performance concerns from CMS stakeholders in the most recent POP despite Q2A also receiving a significant increase in appeals, as depicted in table 1.

If a competition were to occur in FY 2013, the Agency would face additional risk for potential performance issues of a new entity were to transition into the jurisdiction. This would create additional instability in the appeals environment while we are already working to address the significant workload increases and related challenges. If additional performance issues were to develop during a workload transition concurrent with the challenges we are already facing, the Agency will be at greater risk for further congressional and provider complaints/inquiries. Also, reconsiderations may not be processed timely and, in accordance with 42 CFR §405.970(c), appellants may escalate untimely appeals to the Administrative Law Judge (ALJ) level. Processing an ALJ hearing is significantly more costly to the Government than processing a reconsideration.

5. A Determination by the Ordering Activity Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable

The QIC IDIQ was awarded in 2004. CMS has generated a strong base of knowledge in regard to fair and reasonable pricing under the IDIQ based upon the experience with this type of work. The proposal submitted by Q2A will be evaluated against both the pricing that was determined to be fair and reasonable under the existing Part B South Task Order and the Government Cost Estimate the program staff will produce. The evaluation of the proposal against those items will enable CMS to make a fair and reasonable determination of the contractor’s price.

Taking into account the information provided in the paragraph above, the Contracting Officer has determined that the anticipated cost to the Government on the Part B South logical follow-on task order will be fair and reasonable.

6. Any Other Facts Supporting the Justification

N/A. Please see Sections 3 and 4 above.

7. Actions the Agency May Take to Remove or Overcome Any Barriers that led to the Exception to Fair Opportunity

In planning for the continuation of this work after this one year contract period, CMS intends to compete this requirement under the CMS QIC IDIQ. The planning for this competition will start early in FY 2014. CMS intends to release a request for proposal at some point of during the second quarter of FY 2014 with award to most likely occur during the third quarter of FY 2014.