Part A West LFO.pdf

JUSTIFICATION FOR AN EXCEPTION TO FAIR OPPORTUNITY

Acquisition Title: Part A West Qualified Independent Contractor (QIC)-Requirement 26xxxx (tbd) Agency: Health and Human Services (HHS)/Centers for Medicare & Medicaid Services (CMS) Acquisition Year: 2026 Author: Mark Smolenski and Kathy McCracken

1. Description of Action:

A. Nature ☐ New Requirement ☒ Follow-On Order ☐ Modification of Existing Purchase Order / Contract Number

B. Order Against Qualified Independent Contractor IDIQ Contract, HHSM-500-2004-00007I, Maximus Federal Services, Inc. (Maximus)

C. Contract Type ☒ Firm-Fixed Price ☐ Time and Materials ☐ Cost Plus Fixed Fee (CPFF)

☐ Term ☐ Completion

☐ Cost Plus Award Fee (CPAF) ☐ Other:

D. Projected Cost / Price of contract (Base & All Options): $33,195,597.43 E. The total estimated value of the proposed sole source action (for modifications only): n/a F. Funding Source (s):

0511: Program Operations_ Direct: Disc, 001539: BIPA Section 521-QIC Operations, 8393:

Medicare Program Integrity_ Direct: Disc, 002960: QIC Participation in ALJ, and 0511:

Recovery Audit Contractors Part A/B_ Reimb: Mand, 006782: Recovery Audit Contractors Part A/B Admin.

CMS seeks consideration to award a three (3) year logical-follow on (LFO) task order from January 1, 2026 – December 31, 2028 (Base Period + 2 Renewal Periods) in the Part A West QIC jurisdiction. Award of a LFO task order is requested after consideration of the following:

FAR 16.505(b)(2)(i)(C) allows for a task order to be issued 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 current Part A West QIC task order (HHSM-500-2004-00007I / 75FCMC21F0002) was competed amongst all the QIC IDIQ contract holders.

Part A West QIC task order (HHSM-500-2004-00007I / 75FCMC21F0002):

The task order was awarded to Maximus in September 2021. To date, a total of approximately $24.92M has been obligated across three periods of performance with one period remaining (Renewal Year 3) as denoted below. The period of performance of HHSM-500-2004-00007I / 75FCMC21F0002 was/is:

Transition-In Period: September 30, 2021 – December 31, 2021 Base Operational Period: January 1, 2022 – December 31, 2022 Renewal Year 1: January 1, 2023 – December 31, 2023 Renewal Year 2: January 1, 2024 – December 31, 2024 Renewal Year 3: January 1, 2025 – December 31, 2025 Optional Transition Out: January 1, 2026 – April 30, 2026

G. Basis for Approval (Far 6.303-1(d))

☒ Individual Basis

☐ Class Basis

2. Description of Supplies or Services:

The estimated value of the proposed action is: $33,195,597.43

The purpose of the proposed logical follow-on Part A West QIC task order is to provide adjudication services in support of the of the Medicare, Medicaid, and 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. More specifically, the contractor shall act as a QIC responsible for conducting reconsiderations of initial Medicare claims determinations in the jurisdiction. The QIC shall be responsible for all reconsiderations requested as a result of Medicare Administrative Contractors (MACs) redeterminations of Medicare Part A and Part B of A claims. This workload includes processing reconsideration requests for, at a minimum, hospital inpatient, home health, skilled nursing home, hospice, and other Part A services and claims. It also includes institutional claims which are paid from the Part B Trust Fund (sometimes referred to as “Part B of A”). The QIC shall also be responsible for the expedited reconsideration workload comprised of, at a minimum, service termination and hospital discharge reviews performed by Quality Improvement Organizations (QIOs). It shall be noted that the QIC is also responsible for reconsiderations based on “initial determinations” regarding Medicare Secondary Payer (MSP) recovery claims against beneficiaries or providers/suppliers. Such recovery claims against beneficiaries routinely include both Part A & Part B claims.

The requirement number is 26xxxx (tbd).

3. Authority and Rationale:

The Contracting Officer shall give every awardee a fair opportunity to be considered for a delivery/task order exceeding $3,500 unless one of the following statutory exceptions applies. FAR 16.505(b)(2). Mark the applicable exception:

☐ The agency need for the supplies or services is so urgent that providing a fair opportunity would result in unacceptable delays [FAR 16.505(b)(2)(i)(A)];

☐ Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services are unique or highly specialized [FAR 16.505(b)(2)(i)(B)];

☒ The order must be issued on a sole-source basis 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 [FAR 16.505(b)(2)(i)(C)]; or

Part A West QIC task order (HHSM-500-2004-00007I / 75FCMC21F0002):

The activities under the proposed LFO task order are essentially the same as the above listed Part A West QIC task order scope of work. As described in Section 2 above, the proposed logical follow-on Part A West QIC task order is to conduct reconsiderations of initial Medicare claims determinations in the jurisdiction. The QIC shall be responsible for all reconsiderations requested as a result of Medicare Administrative Contractors (MACs) redeterminations of Medicare Part A and Part B of A claims in the respective Part A West QIC jurisdiction and also to support a small number of expedited reconsiderations in accordance with 1869(c)(3)(c)(iii) of the Act and 42 Code of Federal Regulations

405.1200 through 405.1208. The Part A West QIC jurisdiction includes standard and expedited reconsiderations related to the following covered states: Washington, Idaho, Montana, North Dakota, South Dakota, Iowa, Missouri, Kansas, Nebraska, Wyoming, Utah, Arizona, Nevada, California, Alaska, Hawaii, Oregon, Kentucky, Ohio, Indiana, Illinois, Minnesota, Michigan, Wisconsin, Guam, Northern Mariana Islands, American Samoa.

It is noted that Maximus’s past performance on Task Order HHSM-500-2004-0007I/ 75FCMC21F0002 has been of high quality.

Additional Justification for LFO:

In March 2020 the Federal District Court for the District of Connecticut issued an order in Alexander v.

Azar. The Order directed the Secretary of the Department of Health and Human Services to create additional appeals processes for a defined class of people with Medicare who were initially admitted as hospital inpatients but were subsequently reclassified by the hospital as outpatients receiving observation services and meet other conditions specified in the order. As a result of the Order, on December 27, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule which includes provisions to establish a temporary retrospective appeal processes for certain people with Medicare who are initially admitted as hospital inpatients but are subsequently reclassified by the hospital as outpatients receiving observation services during their hospital stay and meet the eligibility criteria. See Appeal Rights for Certain Changes in Patient Status-CMS-4204-P. CMS issued the related final rule on October 11, 20241. Under this process, Medicare beneficiaries will have 365 calendar days from the implementation date of the final rule to gather any related documentation and submit a timely eligibility request. The implementation date is January 1, 2025.

This Court Order and the ensuing temporary retrospective review process created under the Rule

1 Federal Register :: Medicare Program: Appeal Rights for Certain Changes in Patient Status https://www.federalregister.gov/documents/2024/10/15/2024-23195/medicare-program-appeal-rights-for-certain-changes-in-patient-status directly impacts the Administrative Qualified Independent Contractor (AdQIC) contract and the two- Part A QIC (East & West) contracts. The AdQIC will be tasked to serve as the clearinghouse contractor for initially receiving and reviewing beneficiary requests to determine eligibility for this appeal process (i.e., the Eligibility Contractor), and the Part A QICs will be responsible for conducting any subsequent second level appeals adjudication submitted by beneficiaries as part of this court-ordered process.

During 2024, CMS modified the respective Part A QIC contracts to incorporate the new statement of work (SOW) requirements related to this temporary retrospective review process. Given the complexity of this new mandated appeals process, established in this Court Order, that involves beneficiary appellants and potentially significantly aged claims and related medical records/documentation (2009-present), CMS believes a Logical Follow On (LFO) is needed to ensure the continuity of operations and the most successful implementation and operations related to this temporary retrospective review process. Under this particular Justification and Approval document, CMS seeks approval for an LFO in the Part A West QIC jurisdiction to ensure the continuity of operations and preserve ease of this appeals process for beneficiaries potentially pursuing the temporary retrospective review process in this QIC jurisdiction. Absent approval of the requested LFO, the Agency risks having a transition of this workload (should the incumbent QIC not be awarded the new contract solicited) which would yield the need to clarify for beneficiaries’ the change (including updates to the filing address for submission of related appeals and/or supporting documentation etc.), during this limited retrospective appeal process period. This would create the potential for unnecessary beneficiary confusion in what is already a new and somewhat complex process with high stakeholder visibility, including the Court, and stakeholder interest. In addition, a transition during this period would also require new coordination points and relationships between the new QIC awardee for this jurisdiction and existing CMS contractors supporting this effort (i.e., the Eligibility Contractor, the Medicare Administrative Contractors (MACs), the Office of Medicare Hearings and Appeals, etc.).

Again, potentially impacting a seamless operationalization of this mandated activity during the temporary appeal process. Further, significant resources within the Medicare Enrollment and Appeals Group are and will be utilized to support a successful implementation and operationalization of the Court mandated activities yielding a limited pool of staff to support conducting a new solicitation in this QIC jurisdiction and any potential transition activities that could follow. As such, CMS recommends this LFO be awarded to Maximus as it is in the best interest of both CMS and the continued success of the QIC program and its compliance with ongoing statutory and regulatory processes and the implementation and oversight of this new Court-ordered temporary retrospective appeal process specific to Part A claims.

☐ It is necessary to place the order to satisfy a minimum guarantee [FAR 16.505(b)(2)(i)(D)].

☐ A statute expressly authorizes or requires that the purchase be made from a specified source. [FAR 16.505(b)(2)(i)(E)].

4. Provide a statement of the actions, if any, the agency may take to remove or overcome any barriers that led to the exception to fair opportunity before any subsequent acquisition for the supplies or services is made:

The period of performance for this effort is limited to 36 months, including a base year and two (2) renewal periods. Any future needs to continue services related to the Part A West QIC jurisdiction, beyond this LFO, will be procured through competitive means.

5. State any other facts supporting the justification:

Maximus has been successfully performing in the Part A West QIC jurisdiction since September 2016 (competitively awarded contract HHSM-500-2004-00007I/HHSM-500-T0011 through August 31, 2020 and thereafter, a 1 year 4 month LFO, HHSM-500-2004-00007I/75FCMC21F0001 through December 31, 2021) and the last competitive award was, HHSM-500-2004-0007I / 75FCMC21F0002 (September 30, 2021 through December 31, 2025). It is expected that they will continue to provide CMS with a high-quality product in support of this important statutorily mandated program and further to successfully support CMS in the implementation of this Court mandated temporary retrospective review process.

Approvals:

1. Program Office Certification.

This is to certify that portions of this justification have been developed by the undersigned program office personnel, including supporting information and/or data verifying the Government’s minimum needs, schedule requirements and other rationale for Exceptions to Fair Opportunity, which form the basis for this justification.

Contracting Officer Representative (COR) / Date

Program/Project Manager (P/PM) / Date

2. Contracting Officer Certification and Best Value Determination:

This is to certify that the justification for the proposed acquisition has been reviewed and that to the best of my knowledge and belief, the information and/or data provided to support the rationale and recommendation for approval, is accurate and complete.

By my signature below, after review of the relevant documents, I have determined that the order subject to this Justification represents the best value for the Government as set forth in FAR 16.505(b)(2)(ii)(B)(5), and constitutes a fair and reasonable price. The basis for my determination is as follows:

The QIC IDIQ was awarded in 2004. CMS has generated a strong base knowledge in regard to fair and reasonable pricing under the IDIQ. The proposal submitted by Maximus will be evaluated against the pricing that was determined to be fair and reasonable under the existing Part A West QIC task order and the Independent 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 of the Part A West QIC logical follow-on task order will be fair and reasonable.

Contracting Officer / Date

3. CMS Competition Advocate Approval I have reviewed this Exception to Fair Opportunity and find that it adequately supports other than full and open competition.

Name / Date

4. Head of Contracting Activity (HCA) Approval I hereby confirm that the circumstances described above apply and approve this Justification for Exception to Fair Opportunity.

HCA Name / Date

5. Office of Small and Disadvantaged Business Utilization

__N/A_________________________________________________

6. OGC Legal Review

____ N/A _______________________________________________

7. HHS Competition Advocate Approval

__ N/A _________________________________________________

8. Senior Procurement Executive (SPE) Approval Based on the foregoing justification, I hereby confirm the circumstances described above apply and approve the Justification for Exceptions to Fair Opportunity.

___ N/A _____________________________________________ SPE Name / Date

___ N/A _____________________________________________