part I and part II HFS B-45785.pdf

Sole Source Justification Form

Version 7.01 Page 1 of 7

Bulletin Reference Number 25-478HFS-MEDPR-B-45785

Requesting Agency/University Healthcare and Family Services

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

Department/Bureau/Section: Healthcare and Family Services, Bureau of Program Reimbursement Analysis

Need Identified Date: Jul 1, 2024 Supply/Service Need By Date: Apr 1, 2025

Project Title: Advanced Communication Engine (ACE)

Vendor: Optum Government Solutions, Inc.

Provide a description of the supplies or services required:

The Department seeks 1-year sole source contract with Optum Government Solutions to continue to meet the legislative mandate 305 ICS 5/5-30.12 which is a technical solution to assist both the Managed Care Organizations (MCOs) and the providers in reducing claim billing errors and reduce the number of MCO denials. Optum Government Solutions will provide an annual ACE Solution Maintenance and Support Services, annual iEDI Software Support Services, Informatica B2B Software Subscription, Informatica Power Center Software Subscription, SOC Reporting, and professional services for the Enterprise Data Warehouse (EDW) interfaces and the Advanced Communication Engine (ACE) EDW Analytics.

Value: Estimated Value of Initial Term, this Change Order or Amendment: 7,244,329

Will this Sole Source amend a Professional or Artistic Services contract? Yes No

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Type: New Sole Source

Section II - Proposed Term

One-Time Purchase Term Contract

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

Section IV - Sole Source Justification

This purchase is economically only available from a single source primarily because it is: (If "Other" explain in one sentence)

Software License/Upgrade/Maintenance

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

Version 7.01 Page 2 of 7

Bulletin Reference Number 25-478HFS-MEDPR-B-45785

Requesting Agency/University Healthcare and Family Services

Section V - Purchase History

Has the Agency or University Purchased these supplies or services in the past? Yes No

Term Term From Term To Value Description Contract Number Type

1 Sept 30, 2019 Mar 31, 2023 45,837,916 Advanced Communication Engine ("ACE") 2020-21-001 Sole Source

2 April 1, 2023 Mar 31, 2024 6,832,800 Advanced Communication Engine ("ACE") 2023-36-003 Sole Source

3 April 1, 2024 Mar 31, 2025 7,029,154 Advanced Communication Engine ("ACE") 2024-26-001 Sole Source

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

Section VI - Business Rationale

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

The Department seeks 1-year sole source contract with Optum Government Solutions to continue to meet the legislative mandate 305 ILCS 5/5-30.12 which is a technical solution to assist both the MCOs and the providers in reducing claim billing errors and reduce the number of MCO denials. Claim billings from the providers billed on either an X12 837i or an 837p are sent to Optum’s iEDI and a copy sent to the Department’s Enterprise Data Warehouse (EDW) at the same time the claims are sent to the MCO’s clearinghouse. The MCO responses to the claim billings both the X12 277CA (claim is rejected or accepted) and the X12 835 (claim is denied or paid) are also sent to the EDW at the same time the files are sent to the provider. The EDW ACE team runs analysis from the EDW on the claims to determine the claim rejection denial reasons, frequency and other information as needed. The Department also licensed Optum’s ACE software to provide more robust edit descriptions to give the providers more information to correct billing errors. This combined technical solution is a brand-new initiative not available in other Medicaid systems or available in any other state.

Using the data sent from the IEDI, the Department has developed a series of interactive analytic dashboards using Tableau that provide both a summary and detail level view of both the MCO rejects/denials and reasons. The series of dashboards slice the data in various ways by provider, provider type and MCO. Based on Agency approval and request, Optum will assist the Department with publishing the dashboards for stakeholder access and supporting user inquires. The goal is to assist both the provider and the MCOs to identify and reduce the number of payment billing errors and streamline the billing process. The Department is also using more robust edit responses from ACE to compare to the MCO edit responses. This will assist the provider in correcting payment billings errors quickly without multiple submissions of the claim delaying provider payment for services.

Version 7.01 Page 3 of 7

Bulletin Reference Number 25-478HFS-MEDPR-B-45785

Requesting Agency/University Healthcare and Family Services

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

Annual ACE Solution Maintenance and Support Services: Optum will provide the Application Management Services and Software Support Services for the ACE Software, and Other Vendor Supplied COTS Software (Informatica). Optum shall supply the staffing to manage the iEDI/ACE Enterprise Data Warehouse (EDW) project, Extract, Transfer and Load (“ETL”) interfaces tasks, and Business Intelligence (BI) reporting/analytics tasks related maintenance and operations services. As part of the Maintenance and Support Services, Optum will also provide updated National and Illinois State Medicaid data files, CPT/ICD10 content and system software updates to capabilities and technology at the frequency they are published and/or update.

Annual iEDI Software Support Services: Optum will provide and maintain general support for the iEDI Gateway solution and will use reasonable efforts to resolve any questions and issues reported to the Vendor Support via the Agency portal on a 24 hours a day, 7 days a week basis, excluding scheduled maintenance periods.

Annual Informatica B2B Software Subscription and an annual Informatica Power Center Software Subscription to enhance the intake process allowing for more volume of data files and process request 24 hours a day, 7 days a week, if needed, excluding scheduled maintenance periods. This will increase the file volume intake.

Provide SOC 2 Type 1 within 120 days of contract execution with a certification ensuring that the controls will remain the same for the duration of the contract.

Professional Services to provide support for EDW interfaces maintenance and operations, ACE EDW Analytics, a Business Intelligence resource dedicated to developing and delivering the reporting and analytics as part of the ACE Solution Maintenance and Support services, and an EDW Specialist Support to provide the necessary subject matter expertise on varying aspects of the ACE project.

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

Optum is one of only three major clearing houses, and the only clearing house that has built such a solution. It is our understanding if any other clearinghouse can offer this solution it is because they have a license for this product from Optum and their license is restricted against use with Medicaid programs.

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

The legislative order 305 ICS 5/5-30.12 specifically states "(3) The technology shall cause all HIPAA-compliant responses to submitted claims, including rejections, denials, and payments, returned to the submitting provider to pass through the established single pipeline. (4) The technology shall give the Department the ability to create edits to be placed at the front end of the pipeline that will reject claims back to the submitting provider with an explanation of why the claim cannot be properly adjudicated by the payer. (5) The technology shall allow the Department to customize the language used to explain why a claim is being rejected and how the claim can be corrected for adjudication. (6) The technology shall send copies of all claims and claim responses that pass through the pipeline, regardless of the payer to whom they are directed, to the Department's Enterprise Data Warehouse."

Optum ACE is one of the three major clearinghouses and the only one that has built this type of solution. The three clearinghouses are Optum, Change Health Care (CHC) Payor Connectivity and Availity. Optum is the only solution that meets the legislative mandate to create edits pre-adjudication and is flexible enough to handle the payor’s line of business. Since the initial contract was signed Optum acquired CHC so they own this solution as well. CHC Payor Connectivity and Availity do not have the ability to pass claim edits or responses to the Medicaid EDW or provide the analytic requirement defined by the legislation.

5. Has the Agency or University considered alternative supplies or services to satisfy their need? Yes No

Version 7.01 Page 4 of 7

Bulletin Reference Number 25-478HFS-MEDPR-B-45785

Requesting Agency/University Healthcare and Family Services

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

Change Health Care (CHC) Availity

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

CHC Payor Connectivity has been acquired by Optum. CHC Payor Connectivity does not have all the edit messages as ACE and does not have the option to transmit X12 messages to the EDW or perform the analytics. CHC Payor Connectivity is no longer available due to the security breach.

Availity does not have all the edit messages as ACE and does not have the option to transmit X12 messages to the EDW or perform the analytics.

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

The Department researched both CHC Connectivity’s and Availity’s website which are two of Optum ACE’s primary iEDI competitors and neither vendor has more robust edit messaging available through ACE. Based on the Department’s research Availity’s edit capability is limited and cannot be relaxed to conform to the payor’s line of business. This is critical in assisting providers in resolving unnecessary billing errors.

Neither CHC Connectivity or Availity has the ability to redirect the X12 messages to the Department’s EDW or perform the analytics as mandated in the legislation.

6. Are there resellers or distributors?

Yes No N/A

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

The Department already owns the ACE license. Since the Department contracts with Optum to manage and maintain the EDW, the agency negotiated the price which significantly reduced the cost of the continued ACE maintenance and operations and analytic solution.

The cost for a one-year sole source contract with Optum Government Solutions is broken down into the the following services and prices:

Annual Advanced Communication Engine (ACE) Solution Maintenance and Support Services: $4,648,245 Annual iEDI Software Support Services: $175,578 Informatica B2B Software Subscription: $177,553 Informatica Power Center Software Subscription: $221,269 SOC Reporting: $103,000 Professional services for the EDW interfaces and the ACE EDW Analytics: $1,918,684 Total: $7,244,329.00

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

Yes No

Version 7.01 Page 5 of 7

Bulletin Reference Number 25-478HFS-MEDPR-B-45785

Requesting Agency/University Healthcare and Family Services

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

The non-financial impact of this sole source not being approved is that the contract is necessary to continue HFS’ compliance with 305 ILCS 5/5-30.12 “Managed care claim rejection and denial management”. As noted in 5a above no other Vendor has the software necessary to fulfill the requirements of the statute. The Providers, MCOs and the Department have spent a significant amount of time, money and effort in routing these claims through Optum’s iEDI and back to the Department’s EDW. To undo this routing of claims would create a significant burden and cost on both the providers and the MCOs.

The ACE solution has provided transparency into the provider billing MCO adjudication highway. The Department now has the data it needs not only meet the legislative objective to report this information, but also to assist the providers and MCOs in reducing the number of unnecessary rejections and denials.

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

Version 7.01 Page 6 of 7

Bulletin Reference Number 25-478HFS-MEDPR-B-45785

Requesting Agency/University Healthcare and Family Services

Section VII

Requesting Department Representative

Requesting Department Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

Date

Printed Name Dan Jenkins E-mail Address dan.jenkins@illinois.gov

Phone Number 217-524-7400

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed)

E-mail Address Monique.N.Wantland@illinois.gov

Phone Number 217-557-5777 Date

Printed Name Monique Wantland

Agency Bureau/Division Head or University Purchasing Director and Not a Designee

SPO Approval and Signature Required

I have reviewed and understand the contents of this Sole Source Justification and agree with the State Agency or University determination.

I have reviewed and understand the contents of this Sole Source Justification and do not agree with the State Agency or University determination. As a result, the State Agency or University must explore other sourcing methods to satisfy their need.

State Purchasing Officer Signature Phone Number 217-993-1719 Date Dec 11, 2024

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

Version 7.01 Page 7 of 7

Bulletin Reference Number 25-478HFS-MEDPR-B-45785

Requesting Agency/University Healthcare and Family Services

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

Project Title Advanced Communication Engine (ACE)

Vendor Optum Government Solutions, Inc.

Initial Date of Procurement Bulletin Posting 12/12/2024

Was a Sole Source hearing held per 30 ILCS 500/20-25?

Yes - Complete Section II and III below (Section II will only be visible when this option is selected)

No - Section II not required, go to Section III below Section III - CPO Approval and Signature Required

Based on my review, I authorize the Agency/University to proceed in accordance with the published Notice referenced above.

Based upon my review, I authorize the Agency/University to proceed with the following Changes.

Based on my review, the Agency/University is not authorized to proceed with this sole source as presented and my recommendation is that it be cancelled.

Other

CPO Signature CPO Phone 217-558-6897

Printed Name Ellen H. Daley Date Dec 26, 2024

CPO E-mail ellen.h.daley@illinois.gov

Version 7.01 Page of Sole Source Justification Form - Part I Section I - General Information Will this Sole Source amend a Professional or Artistic Services contract?

If yes, what was the original contract value?

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Section II - Proposed Term If a Term Contract, does the term, including renewals, exceed 12 months?

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

Section III - Funding Source Select the type of funding to be used (Check all that apply):

Section IV - Sole Source Justification Are there secondary justification(s) for this sole source?

Section V - Purchase History Has the Agency or University Purchased these supplies or services in the past?

Term Term From Term To Value Description Contract Number Type Section VI - Business Rationale

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

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

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

5. Has the Agency or University considered alternative supplies or services to satisfy their need?

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

5a. If no, why weren't alternatives evaluated?

6. Are there resellers or distributors?

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

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

8a. If yes, please provide details regarding future obligations and/or needs:

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

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

Section VII Requesting Department Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed) SPO Approval and Signature Required Sole Source Justification Form - Part II Section I - General Information Was a Sole Source hearing held per 30 ILCS 500/20-25?

Section II - Sole Source Hearing Details The State posted to the Illinois Procurement Bulletin a description of the State's need, the justification for the sole source decision, and information regarding the opportunity to submit comments and testify at a public hearing. Notice of the hearing was also posted outside of the hearing room 48 hours prior to the hearing.

The public hearing was conducted for the purpose of receiving testimony regarding the sole source determination. The Hearing Officer recommends the following:

The following relevant documents are attached:

Section III - CPO Approval and Signature Required 9.0.0.2.20101008.1.734229 ellen.h.daley@illinois.gov

("ACE")

("ACE")

("ACE")

Using the data sent from the IEDI, the Department has developed a series of interactive analytic dashboards using Tableau that provide both a summary and detail level view of both the MCO rejects/denials and reasons. The series of dashboards slice the data in various ways by provider, provider type and MCO. Based on Agency approval and request, Optum will assist the Department with publishing the dashboards for stakeholder access and supporting user inquires. The goal is to assist both the provider and the MCOs to identify and reduce the number of payment billing errors and streamline the billing process. The Department is also using more robust edit responses from ACE to compare to the MCO edit responses. This will assist the provider in correcting payment billings errors quickly without multiple submissions of the claim delaying provider payment for services.

Q2Answer: Annual ACE Solution Maintenance and Support Services: Optum will provide the Application Management Services and Software Support Services for the ACE Software, and Other Vendor Supplied COTS Software (Informatica). Optum shall supply the staffing to manage the iEDI/ACE Enterprise Data Warehouse (EDW) project, Extract, Transfer and Load (“ETL”) interfaces tasks, and Business Intelligence (BI) reporting/analytics tasks related maintenance and operations services. As part of the Maintenance and Support Services, Optum will also provide updated National and Illinois State Medicaid data files, CPT/ICD10 content and system software updates to capabilities and technology at the frequency they are published and/or update.

Annual iEDI Software Support Services: Optum will provide and maintain general support for the iEDI Gateway solution and will use reasonable efforts to resolve any questions and issues reported to the Vendor Support via the Agency portal on a 24 hours a day, 7 days a week basis, excluding scheduled maintenance periods.

Annual Informatica B2B Software Subscription and an annual Informatica Power Center Software Subscription to enhance the intake process allowing for more volume of data files and process request 24 hours a day, 7 days a week, if needed, excluding scheduled maintenance periods. This will increase the file volume intake.

Provide SOC 2 Type 1 within 120 days of contract execution with a certification ensuring that the controls will remain the same for the duration of the contract.

Professional Services to provide support for EDW interfaces maintenance and operations, ACE EDW Analytics, a Business Intelligence resource dedicated to developing and delivering the reporting and analytics as part of the ACE Solution Maintenance and Support services, and an EDW Specialist Support to provide the necessary subject matter expertise on varying aspects of the ACE project.

Q3Answer: Optum is one of only three major clearing houses, and the only clearing house that has built such a solution. It is our understanding if any other clearinghouse can offer this solution it is because they have a license for this product from Optum and their license is restricted against use with Medicaid programs.

Q4Answer: The legislative order 305 ICS 5/5-30.12 specifically states "(3) The technology shall cause all HIPAA-compliant responses to submitted claims, including rejections, denials, and payments, returned to the submitting provider to pass through the established single pipeline. (4) The technology shall give the Department the ability to create edits to be placed at the front end of the pipeline that will reject claims back to the submitting provider with an explanation of why the claim cannot be properly adjudicated by the payer. (5) The technology shall allow the Department to customize the language used to explain why a claim is being rejected and how the claim can be corrected for adjudication. (6) The technology shall send copies of all claims and claim responses that pass through the pipeline, regardless of the payer to whom they are directed, to the Department's Enterprise Data Warehouse."

Optum ACE is one of the three major clearinghouses and the only one that has built this type of solution. The three clearinghouses are Optum, Change Health Care (CHC) Payor Connectivity and Availity. Optum is the only solution that meets the legislative mandate to create edits pre-adjudication and is flexible enough to handle the payor’s line of business. Since the initial contract was signed Optum acquired CHC so they own this solution as well. CHC Payor Connectivity and Availity do not have the ability to pass claim edits or responses to the Medicaid EDW or provide the analytic requirement defined by the legislation.

Availity

have the option to transmit X12 messages to the EDW or perform the analytics. CHC Payor Connectivity is no longer available due to the security breach.

Availity does not have all the edit messages as ACE and does not have the option to transmit X12 messages to the EDW or perform the analytics.

Q5cAnswer: The Department researched both CHC Connectivity’s and Availity’s website which are two of Optum ACE’s primary iEDI competitors and neither vendor has more robust edit messaging available through ACE. Based on the Department’s research Availity’s edit capability is limited and cannot be relaxed to conform to the payor’s line of business. This is critical in assisting providers in resolving unnecessary billing errors.

Neither CHC Connectivity or Availity has the ability to redirect the X12 messages to the Department’s EDW or perform the analytics as mandated in the legislation.

agency negotiated the price which significantly reduced the cost of the continued ACE maintenance and operations and analytic solution.

The cost for a one-year sole source contract with Optum Government Solutions is broken down into the the following services and prices:

Annual Advanced Communication Engine (ACE) Solution Maintenance and Support Services: $4,648,245 Annual iEDI Software Support Services: $175,578 Informatica B2B Software Subscription: $177,553 Informatica Power Center Software Subscription: $221,269 SOC Reporting: $103,000 Professional services for the EDW interfaces and the ACE EDW Analytics: $1,918,684 Total: $7,244,329.00

ILCS 5/5-30.12 “Managed care claim rejection and denial management”. As noted in 5a above no other Vendor has the software necessary to fulfill the requirements of the statute. The Providers, MCOs and the Department have spent a significant amount of time, money and effort in routing these claims through Optum’s iEDI and back to the Department’s EDW. To undo this routing of claims would create a significant burden and cost on both the providers and the MCOs.

The ACE solution has provided transparency into the provider billing MCO adjudication highway. The Department now has the data it needs not only meet the legislative objective to report this information, but also to assist the providers and MCOs in reducing the number of unnecessary rejections and denials.