PIVOT PWS draft- RFI.docx

Payment Integrity Validation and Oversight Tool (PIVOT)

VA-26-00015670

PERFORMANCE WORK STATEMENT (PWS)

DEPARTMENT OF VETERANS AFFAIRS

Office of Information & Technology Office of Integrated Veterans Care

Payment Integrity Validation and Oversight Tool (PIVOT) Date: November 12, 2025

VA-26-00015670

PWS Version Number: 1.0

Contents

BACKGROUND

The Department of Veterans Affairs (VA), Office of Information & Technology (OIT), within the Veterans Health Administration (VHA), Office of Integrated Veteran Care (IVC), provides high-quality, effective, and efficient Information Technology (IT) services. These services are crucial for those responsible for delivering care to Veterans at the point of care and throughout all stages of the Veterans’ health care journey, enduring care is provided in an effective, timely and compassionate manner. VA depends on Information Management/Information Technology (IM/IT) systems to meet its mission goals.

VA IVC requires a Payment Integrity Validation and Oversight Tool (PIVOT) to proactively detect and prevent improper VA Community Care healthcare claims payments. These improper payments may result from inaccurate coding, billing, unauthorized services, or other non-compliance with VA or Centers for Medicare & Medicaid Services (CMS) reimbursement policies, including fraud, waste, and abuse (FWA). PIVOT will achieve this through advanced analytics, automation, and seamless integration with existing VA systems.

Currently, VA relies heavily on manual, retrospective processes to detect improper payments, which limits its ability to identify issues in a timely and comprehensive manner. These limitations hinder corrective actions, delay recoupment efforts, and reduce the overall efficiency of the program.

By automating complex compliance checks and aligning with evolving reimbursement policies, PIVOT will reduce financial waste, improve operational efficiency, and safeguard taxpayer resources. Additionally, it supports provider trust and continuity of care for Veterans by ensuring payments are accurate and timely. Without this capability, VA risks continued reliance on manual, retrospective processes that delay issue detection, hinder recoupment efforts, and increase the risk of FWA.

The VA Community Care program has experienced significant growth due to legislative expansions such as the VA Maintaining internal Systems and Strengthening Integrated Outside networks (MISSION) Act, the Promise to Address Comprehensive Toxics (PACT) Act, and the Veterans Comprehensive Prevention, Access to Care and Treatment (COMPACT) Act, and the Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act. This growth has increased the volume and complexity of healthcare claims, creating challenges in ensuring payment accuracy and compliance.

The implementation of PIVOT is a strategic initiative to modernize VA’s payment integrity capabilities. The tool will enable systematic analysis of the entire claims dataset, allowing for the early detection of improper payments and potential FWA. It will support VA staff in developing cost containment strategies, proactively identifying suspicious billing trends and patterns, executing recoupments, and improving compliance with reimbursement policies.

Key stakeholders include various Program and Payment Integrity teams within IVC, and VHA, who are responsible for identifying improper payments, coordinating corrective actions, and managing recoupment activities. PIVOT will also benefit Veterans, providers, and VA staff by improving the accuracy and timeliness of payments, reducing administrative burdens, and enhancing the quality-of-care delivery.

In November 2018, VA issued the Cloud First Policy mandating that all new and existing IT solutions be assessed to determine suitability to be offered as an enterprise cloud computing service. The VA Enterprise Cloud (VAEC) was established by the Enterprise Cloud Solutions Office (ECSO) in 2017, to host cloud computing solutions.

The PIVOT solution shall be implemented and hosted in the VAEC or provided as Software as a Service (SaaS).

APPLICABLE DOCUMENTS

In the performance of the tasks associated with this Performance Work Statement (PWS), the Contractor shall comply with the following:

The contractor shall remain current with updates to these applicable federal laws, regulations, VA policies, and industry standards and documents and incorporate any changes into the system within timeframes specified by the VA.

The following documents and references are applicable to the performance of this contract and shall be used to guide system design, development, integration, and compliance validation. This list is not intended to be exhaustive:

VA Policies and Guidelines:

· VA Directive 6500, “VA Cybersecurity Program,” February 24, 2021 (see VA NOTICE 24-18, dated September 27, 2024, “Update to VA Directive 6500 Cybersecurity Program”, and VA Notice 25-07, dated 3/18/25, “Amending VA Directive 6500 to incorporate M-24-15”)

· VA Handbook 6500, “Risk Management Framework for VA Information Systems VA Information Security Program,” February 24, 2021 (see VA Notice 25-01, dated October 15, 2024, “Update to VA Handbook 6500 Risk Management Framework for VA Information Systems VA Information Security Program”, and VA Notice 25-06, dated 3/18/25, “Amending VA Directive 6500 to incorporate M-24-15”)

· VA Handbook 6500.6, “Contract Security,” March 12, 2010 (see VA Notice 24-12, dated April 22, 2024, “Update to VA Handbook 6500.6, Contract Security, Appendix C VA Information and Information System Security/Privacy Language For Inclusion Into Contracts, As Appropriate”)

· VA Handbook 6500.8, “Information System Contingency Planning,” March 25, 2025

· VA Acquisition Regulation (VAAR) - https://www.va.gov/oal/library/vaar/

· VA Payment Policies*

· VA Clinical Determinations and Indications (CDI)

· VA Community Care Program Guidelines*

· VA Information Security and Privacy Policies

· VA Technical Reference Model (TRM) -https://www.va.gov/trm/TRMHomePage.aspx

· VA Enterprise Cloud (VAEC) Technical Reference Guide, version 2.0, November 2022

· VA Fee Schedule

· Dental VA Fee Schedule*

Please note that the items marked with an asterisk (*) contain proprietary information. This information will only be shared with individuals within the VA and with Contractors who have a legitimate need to know.

CMS References:

· CMS National Correct Coding Initiative (NCCI) Edits

· Medically Unlikely Edits (MUE)

· Multiple Procedure Payment Reduction (MPPR)

· CMS Prospective Payment System (PPS) Guidelines:

· Inpatient PPS (IPPS)

· Outpatient PPS (OPPS)

· Skilled Nursing Facility PPS (SNF PPS)

· Inpatient Rehabilitation Facility PPS (IRF PPS)

· End-Stage Renal Disease PPS (ESRD PPS)

· Federally Qualified Health Center PPS (FQHC PPS)

· Inpatient Psychiatric Facility PPS (IPF PPS)

· Long-Term Care Hospital PPS (LTCH PPS)

· Home Health PPS (HH PPS)

· Hospice Payment System

· Ambulatory Surgical Center (ASC) Payment System

· Critical Access Hospital (CAH) Cost-Based Pricing Model

· All-Payer State Pricing Model

· PPS-Exempt Cancer Hospitals (PCHs)

· CMS Fee Schedules and MAC Pricing Guidelines

· CMS Medicare Claims Processing Manual

· CMS Coverage Determinations and Local Coverage Determinations (LCDs) Industry Standards and Coding References:

· American Medical Association (AMA) CPT Coding Guidelines

· American Dental Association (ADA) CDT Coding Guidelines

· ICD-10-CM and ICD-10-PCS Coding Guidelines

· Healthcare Common Procedure Coding System (HCPCS)

· X12 Electronic Data Interchange (EDI) Standards

· Strategic National Implementation Process (SNIP) Edits

· CHAMPUS Maximum Allowable Charge (CMAC) Guidelines Data Sources and Registries:

· CMS Physician Specialty Code Set

· National Plan and Provider Enumeration System (NPPES)

· Provider Enrollment, Chain, and Ownership System (PECOS)

· Office of Inspector General (OIG) List of Excluded Individuals/Entities (LEIE)

· TRICARE

· CMS Frequency/Utilization Reports Interoperability and Integration Standards:

· Health Level Seven (HL7)

· Fast Healthcare Interoperability Resources (FHIR) Federal Laws and Regulations:

· Health Insurance Portability and Accountability Act (HIPAA)- Public Law 104-191

· Privacy Act of 1974

· Federal Acquisition Regulation (FAR), as applicable; https://www.acquisition.gov/far

· OMB Circular A-130 – Managing Information as a Strategic Resource and OMB Circular A-11 – Preparation, Submission, and Execution of the Budget; https://www.whitehouse.gov/omb/information-regulatory-affairs/circulars/

· Payment Integrity Information Act of 2019

· False Claims Act (31 USC 3729-3733)

· Social Security Act (Act) - Exclusion Authorities

· Anti-Kickback Statute [(42 USCC 1320a-7b(b)]

· Physician Self-Referral Law (Stark Law) [42 USC 1395nn]

· Section 508 of the Rehabilitation Act - https://www.section508.gov/ NIST Special Publications:

· NIST SP 500-267B Revision 1, “USGv6 Profile,” November 2020

· NIST SP 800-37 Rev 2, “Risk Management Framework for Information Systems and Organizations: A System Life Cycle Approach for Security and Privacy,” December 2018

· NIST SP 800-52 Revision 2, “Guidelines for the Selection, Configuration, and Use of Transport Layer Security (TLS) Implementations

· NIST SP 800-63-3, 800-63A, 800-63B, 800-63C, "Digital Identity Guidelines," updated March 02, 2020

· NIST SP 800-66 Rev. 2, “Implementing the Health Insurance Portability and Accountability Act (HIPAA) Security Rule: A Cybersecurity Resource Guide,” February 2024

· NIST SP 800-88 Revision 1 "Guidelines for Media Sanitization," December 2014

OMB Memorandums:

· OMB Memorandum M-19-17, “Enabling Mission Delivery Through Improved Identity, Credential, and Access Management,” May 21, 2019

· OMB Memorandum M-22-09, “Moving the U.S. Government Toward Zero Trust Cybersecurity Principles,” January 26, 2022, https://www.whitehouse.gov/wpcontent/uploads/2022/01/M-22-09.pdf

SCOPE OF WORK

The contractor shall provide all personnel, equipment, tools, materials, supervision, and other items and services necessary to provide, implement, and support a scalable and efficient PIVOT for VA. The system shall enhance the VA’s ability to detect improper healthcare and dental payments and ensure compliance with established reimbursement policies and guidelines.

The contractor shall provide a PIVOT solution capable of supporting a minimum of 100 concurrent users that integrate with existing VA systems, ingests a wide variety of claims and healthcare data, and leverages advanced analytics and machine learning to identify improper payments, including FWA. The contractor shall also provide ongoing support, project management, testing, training, customer service, business continuity and disaster recovery, and system enhancements to ensure the success of the PIVOT during the period of performance.

The PIVOT solution shall be implemented as a SaaS or in the VAEC. The Contractor shall deliver PIVOT as a complete, turnkey service. The Contractor shall be responsible for all aspects of the solution, including provisioning, configuration, maintenance, patching, monitoring, and support of the software and platform components. The solution shall comply with the Federal Risk and Authorization Management Program (FedRAMP) High baseline, VA Handbook 6500, VA Handbook 6517, and VA Directive 6513. It shall support secure, scalable, and elastic deployment models, and integrate with VA’s identity and access management infrastructure, including Personal Identity Verification (PIV) authentication and role-based access controls. The system shall be accessible via VA-approved remote access methods (e.g., Azure Virtual Desktop, Citrix Access Gateway), and shall support high availability, disaster recovery, and secure multi-tenancy. All data storage, processing, and transmission shall occur within the United States and comply with VA data residency and security requirements.

If the PIVOT solution is implemented and hosted in the VAEC, the Contractor shall not be responsible for providing or acquiring cloud capacity or server hosting infrastructure for this contract. VA will furnish VAEC capacity as Government Furnished Equipment (GFE).

Objectives The contractor shall ensure that PIVOT meets the following objectives:

1. Integrate Seamlessly with VA Systems:

The system shall integrate with existing VA systems, and other Federal systems as directed by VA, using secure Application Programming Interfaces (APIs) or other approved methods. It shall support real-time data exchange and interoperability with VA’s financial, eligibility, referral, and provider systems, as well as external data sources, using standards such as HL7 and FHIR.

2. Ensure Claims Compliance:

PIVOT shall validate post-adjudicated claims against applicable CMS and VA reimbursement policies, including pricing, coding, billing, coverage, and business rules, anticipate >1000 rules. This includes the integration of CMS edits, VA-specific rules, and industry-standard compliance frameworks to ensure accurate and compliant claims processing.

3. Automate and Enhance Audit Efficiency:

PIVOT shall automate post-payment auditing processes to replace manual, retrospective methods with proactive, scalable, and efficient workflows. The system shall support real-time rule execution and automated flagging of improper payments to reduce administrative burden and improve audit throughput.

4. Detect Improper Payments and FWA:

PIVOT shall leverage advanced analytics and artificial intelligence (AI), including machine learning (ML), to detect improper payments, including potential FWA. Detection shall occur at multiple levels, including individual claims, providers, patients, and services, using both rules-based and pattern recognition models. Periodic review, and intervention by subject matter experts (SMEs) to research and report improper or fraudulent findings to the VA will be critical for validating business rules to ensure that FWA detection and Payment schemas remain accurate and relevant.

5. Aggregate and Normalize Data for Analysis:

PIVOT shall ingest and normalize data from diverse sources, including claims, eligibility, referral/authorization, provider files, and external healthcare datasets. The system shall ensure data consistency and integrity to support comprehensive and accurate analysis.

6. Deliver Actionable Insights and Reporting:

The system shall provide dashboards, reports, and visualization tools that enable VA staff to monitor flagged issues, track potential cost savings, and support decision-making. These tools shall be customizable by user role and support export and integration with other VA systems.

7. Support Continuous Improvement through Feedback Loops:

The system shall incorporate Human-in-the-Loop (HITL) learning and feedback mechanisms that allow VA users to confirm or dismiss system-generated flags. These outcomes shall be used to retrain AI/ML models and refine business rules, improving detection accuracy over time.

The contractor shall implement PIVOT using an agile, phased delivery model, beginning with a Minimum Viable Product (MVP) focused on a limited set of claim types and core functionality. Additional capabilities shall be delivered iteratively through scheduled releases, as defined in the project plan and approved by VA.

PERFORMANCE DETAILS

PERFORMANCE PERIOD

The Period of Performance (PoP) shall be 12 months from date of award, with four 12-month option periods. The overall PoP shall not exceed 60 months.

Any work at the Government site shall not take place on Federal holidays or weekends unless directed by the Contracting Officer (CO).

There are 11 Federal holidays set by law (USC Title 5 Section 6103) that VA follows:

Under current definitions, five are set by date:

If any of the above falls on a Saturday, then Friday shall be observed as a holiday. Similarly, if one falls on a Sunday, then Monday shall be observed as a holiday.

The other six are set by a day of the week and month:

PLACE OF PERFORMANCE

Tasks under this PWS shall be performed at Contractor facilities. The Contractor shall identify the Contractor’s place of performance in their proposal submission.

TRAVEL

The Government anticipates travel under this effort to perform the tasks associated with the effort, as well as to attend program-related meetings or conferences throughout the PoP. Include all estimated travel costs in your firm-fixed price line items. These costs will not be directly reimbursed by the Government.

The total estimated number of trips in support of the program related meetings for this effort is equal to or greater than 2 trips per calendar year. Anticipated locations include the following, estimated at 2 or more days in duration:

1. Washington, D.C.

1. Denver, CO

SPECIFIC TASKS AND DELIVERABLES

The Contractor shall perform the following:

PROJECT MANAGEMENT

KICKOFF MEETING

The Contractor shall conduct a project kickoff meeting within 10 days following award to introduce key stakeholders, define roles and responsibilities, and review project objectives and deliverables. During this phase, the Contractor shall collaborate with VA stakeholders to gather and clarify all requirements, ensuring alignment with VA needs and expectations.

CONTRACTOR PROJECT MANAGEMENT PLAN

The Contractor shall deliver a comprehensive Contractor Project Management Plan (CPMP) that outlines the approach, timeline, tools, and methodology for the execution of PIVOT implementation. The CPMP should present both narrative and graphic formats to display the schedule, milestones, risks, and resource allocation. The CPMP shall also detail how the Contractor will coordinate and execute planned, routine, and ad hoc data collection, as well as reporting requests as identified within the PWS. The Contractor shall provide comprehensive documentation for all project phases and deliverables, ensuring clarity and consistency. The initial baseline CPMP shall be concurred upon and updated in accordance with Section B of the contract. The Contractor shall update and maintain the VA PM-approved CPMP throughout the PoP.

The CPMP shall include the following components:

1. Comprehensive Project Plan

The Contractor shall develop a detailed project plan that includes:

· Project charters, plans, and schedules

· Requirements documentation

· Technical specifications and design documents

· User manuals and training materials This plan shall outline the overall timeline, key milestones, resource allocation, and risk management strategies. A high-level implementation roadmap, including proposed phases, MVP scope, and release cadence, shall also be part of the project plan. This roadmap shall be refined in collaboration with VA stakeholders and updated regularly throughout the project lifecycle.

2. Agile Delivery Framework Schedule

The Contractor shall adopt an agile delivery framework to guide the development, implementation, and enhancement of the PIVOT. An iterative release schedule, subject to VA review and approval, will enable incremental delivery of functionality over time. Each release shall include clearly defined capabilities, testing milestones, and stakeholder engagement activities.

3. Stakeholder Engagement Plan

To maintain regular communication and updates throughout the project lifecycle, the CPMP shall include a stakeholder engagement plan. The Contractor shall define and implement a stakeholder engagement plan to maintain regular communication and updates throughout the project lifecycle.

4. Project Design

The Contractor shall develop detailed system design documentation, including system architecture, integration points, and user interface design. The Contractor shall present the system design to VA stakeholders for review and obtain necessary approvals prior to development.

5. Deployment Plan The Contractor shall develop a comprehensive deployment plan that outlines the steps, timeline, and contingency measures for system go-live. The contractor shall execute the deployment plan to launch the PIVOT into the production environment and provide immediate post-deployment support to address any issues encountered during the initial usage phase.

Deliverables:

A. Contractor Project Management Plan

REPORTING REQUIREMENTS

The Contractor shall provide the COR with monthly Progress Reports in electronic form in Microsoft Word and Project formats. The report shall include detailed instructions/explanations for each required data element, to ensure that data is accurate and consistent. These reports shall reflect data as of the last day of the preceding month.

The monthly Progress Reports shall cover all work completed during the reporting period and work planned for the subsequent reporting period. The report shall also identify any problems that arose and a description of how the problems were resolved. If problems have not been completely resolved, the Contractor shall provide an explanation including their plan and timeframe for resolving the issue. The report shall also include an itemized list of all Information and Communication Technology (ICT) deliverables and their current Section 508 conformance status. The Contractor shall monitor performance against the CPMP and report any deviations. It is expected that the Contractor will keep in communication with VA accordingly so that issues that arise are transparent to both parties to prevent escalation of outstanding issues.

Deliverable:

Monthly Progress Report

PIVOT Core Functional Requirements The Contractor shall ensure the system supports access for a minimum of 100 concurrent users, including auditors, analysts, and administrative personnel, with scalability to accommodate future growth. PIVOT shall provide the following core functional requirements:

Data Ingest and Management

1. The Contractor shall provide a system that can receive and parse 837P, 837I, 837D, and NCPDP post-adjudicated internal claims history, and gather and integrate data from various sources such as CMS Physician Specialty Code Set, NPPES/PECOS specialty files, OIG LEIE list, CMS frequency/utilization reports, Prospective Payment Systems (PPS), CMS/VA Fee schedules, National Drug Codes (NDC), FDA Approved Drugs, VA eligibility systems, VA Referral/Authorization systems, Provider file information, and other relevant healthcare databases. The Contractor shall comply with the department’s Authoritative Data Source (ADS) requirement that VA systems, services, and processes throughout the enterprise shall access VA data solely through official VA ADSs where applicable. The system shall store point-in-time data for designated sources as specified by the VA, ensure such data is retrievable upon request within 24 hours, and retain it in accordance with defined retention schedules and regulatory requirements.

The Contractor shall ensure the system aggregates, parses, and normalizes this data to ensure consistency and facilitate comprehensive analysis. The Contractor shall normalize data from multiple adjudication systems and EDI transaction types, including 837P, 837I, 837D, NCPDP, and 835s. The normalization process shall standardize data structures, code sets, and field formats across all sources. The Contractor shall ensure accurate mapping of claims and remittance data into a unified schema. Claims and payments must be linked using control numbers and other identifiers to maintain traceability. The system shall resolve duplicate or inconsistent records and preserve referential integrity across all integrated systems and flag any unauthorized data duplication within 24 hours of detection. All normalized data shall include metadata identifying the source, transformation logic, and processing timestamps.

The Contractor shall ensure system functions as a pass-through for incoming claims, such that all received 837P, 837I, 837D, 835, and NCPDP transactions are forwarded to designated downstream VA systems after undergoing compliance checks through the rules engine. Following rules engine processing, the system shall transmit the original claim—along with any appended metadata or flags—via standard EDI formats to designated VA systems for further adjudication, payment or reimbursement, or archival. The system shall maintain a complete audit trail for each claim, capturing timestamps, processing steps, applied rules, generated flags, and transmission status to downstream systems.

The Contractor shall ensure that the system is designed and configured for high throughput performance, capable of processing all incoming claims in real-time or near real-time without introducing delays that impact downstream payment workflows. The system must be capable of handling peak volumes efficiently to avoid any backlog, ensuring that claims are processed and forwarded to designated downstream VA systems promptly. The Contractor shall include robust monitoring and alert mechanisms to immediately identify and mitigate any issue that might impede timely claim processing. The Contractor shall ensure the system performs data validation and integrity checks to ensure the accuracy and completeness of the ingested data. The system shall be able to handle updates to data sources and ensure that changes are accurately reflected in analyses and reports. The system shall provide mechanisms for revalidation of data when source updates occur.

The Contractor shall provide a monthly data quality assessment reports which shall include archived and backed-up data repositories and audit logs for all claims processed.

Performance Metric:

· Data ingest latency: ≤ 2 minutes per transaction

· Data quality resolution rate: ≥ 98% of VA-reported data errors resolved within 3 business days

· Data updates: 100% of source data updates reflected in system outputs within 5 business days

· Revalidation logs: 100% of revalidation events logged and traceable to source change events

· Data issues: ≤ 1% recurring data integrity issues across reporting periods

· System uptime for ingest module: ≥ 99.9%

· Audit trail completeness: 100% of claims processed must have full traceability

Deliverable:

Data Quality Assessment Report

2. The Contractor shall ensure that the system includes a comprehensive and easily navigable data dictionary. The data dictionary must catalog all definitions of each data element, key data features, including detailed information on primary and foreign keys, primary source system, EDI loop and segments, and include a database diagram. The data dictionary must allow for filtering, searching, and reporting capabilities. Additionally, the Contractor shall ensure the data dictionary is continuously updated and accessible to authorized VA personnel, ensuring transparency and ease of reference for users. Updates to the data dictionary must be communicated to VA-designated personnel, including changelogs and rationale for any modifications.

Data Dictionary UI (Data Dictionary Deliverable) updated monthly or upon system changes, including:

· Complete catalog of all data elements with definitions

· Metadata for each field (e.g., data type, source system, EDI loop/segment, key relationships)

· Database schema diagram

· Searchable/filterable interface or exportable format (e.g., Excel, PDF, or web-based UI)

· Changelog documenting all updates, additions, or removals, with rationale

· Access control list showing authorized VA users with access permissions

Performance Metric:

· Update frequency: 100% of system changes reflected in the data dictionary within 5 business days

· Accessibility: 100% availability to authorized VA users

· Documentation completeness: ≥ 99% of data elements documented with required metadata

· Changelog accuracy: 100% of updates include rationale and effective date

3. The Contractor shall archive data that is no longer actively used but must be retained for regulatory, legal, or historical purposes. Archived data shall be indexed and searchable to support retrieval and reference. Archived data shall be:

· Indexed and searchable to support timely retrieval and reference.

· Indexed at three key points: (1) Ingestion into the system, (2) After system decision, and (3) Upon response and ingestion from bidirectional feed.

Archived data shall be classified in accordance with:

· The Principle of Provenance: Data must be categorized based on its source.

· The Principle of Order: Data must retain its original structure and classification hierarchy.

4. The Contractor shall maintain a backup solution for current and active data to support operational recovery in the event of data loss or corruption. The Contractor shall ensure that data archiving and data backup are treated as distinct functions with separate storage, processes, and objectives. The Contractor shall comply with all applicable federal, VA, and industry data retention and privacy regulations.

5. The Contractor shall routinely update the system to incorporate the latest CMS and VA updates, technological advancements, security enhancements, and compliance with regulatory changes. This includes both scheduled updates and urgent patches. The contractor must incorporate feedback from VA users to continuously improve the system’s functionality, usability, and performance.

5. The Government requires delivery of computer software that does not contain any code that will, upon the occurrence or the nonoccurrence of any event, disable the software. Such code includes but is not limited to a computer virus, restrictive key, node lock, time-out, or other function, whether implemented by electronic, mechanical, or other means, which limits or hinders the use or access to any computer software based on residency on a specific hardware configuration, frequency of duration of use, or other limiting criteria. If any such disabling code is present, the Contractor agrees to indemnify the Government for all damages suffered as a result of a disabling caused by such code, and the contractor agrees to remove such code upon the Government’s request at no extra cost to the Government. Inability of the Contractor to remove the disabling software code will be considered an inexcusable delay and a material breach of contract, and the Government may exercise its right to terminate for cause. In addition, the Government is permitted to remove the code as it deems appropriate and charge the Contractor for consideration for the time and effort expended in removing the code.

Rules Engine The Contractor shall design and manage a Rules Engine to meet all specified functional, technical, programmatic, and compliance requirements. The Contractor shall ensure that all ingested claims are processed through the Rules engine, and all relevant rules are applied/checked based on the type of claim, services provided, and criteria indicated within each rule. The Contractor shall provide a system with a customizable logic engine capable of executing and continuously updating rules, including but not limited to, CMS edits, PPS logic, VA business rules, and Prospective Payment System (PPS)/Fee Schedule rate validations.

The Rules engine shall execute rules in real-time as claims are ingested to identify improper payments, errors, unauthorized services or anomalies efficiently. The Contractor shall ensure the Rules engine supports rule threshold tuning (e.g., MUE, frequency limits, provider specialties) to adapt to ever-changing rules, coverage criteria and ensure accurate and up-to-date compliance. The Contractor shall ensure the system allows for the prioritization and sequencing of rules to ensure critical rules are applied first, followed by secondary checks. The Contractor shall ensure the system includes mechanisms to identify, flag, and manage contradictions or conflicts between overlapping rules, reimbursement policies, coding guidelines, or regulation/statues rules. The system shall support a rule conflict resolution framework that:

· Detects overlapping or contradictory rules during rule creation or execution

· Prioritizes rule execution based on configurable VA-defined hierarchies (e.g., VA > CMS > industry standard)

· Documents all rule conflicts in the Rules Library, including specific rule(s) violated with applicable statues and regulations, rationale for resolution, affected claim types, and any temporary overrides The system shall account for geographic adjustments, apply any local rules specific to different regions or provider types, and able to utilize more than one fee schedule. The system shall have built-in modules for key prospective payment systems (PPS) to ensure accurate pricing and compliance. These modules shall include, at a minimum, IPPS, OPPS, Acute Inpatient PPS, Ambulatory Surgical Center (ASC), Federal Qualified Health Center PPS, Home Health PPS, SNF PPS, IRF PPS, Long-Term Care PPS Inpatient Psychiatric Facility PPS and ESRD PPS. The system shall utilize these modules to price claims accurately according to the respective payment system guidelines. The system shall have the ability to validate pricing against various Fee Schedules, applying necessary geographic adjustments, including at a minimum:

· CMS

· CMS Medicare Administrative Contractor (MAC)

· CMS/MAC Critical Access Hospital rates

· VA Fee Schedules

· CHAMPUS Maximum Allowable Charge (CMAC)

The Contractor shall ensure the system integrates with a comprehensive set of compliance, billing, and reimbursement rules to ensure alignment with VA, CMS, and contractual reimbursement policies and guidelines. This includes, but is not limited to, CMS compliance edits such as NCCI, MUE, MPPR, global surgical package rules, etc.; VA-specific policies including VA Payment Policies, Clinical Determinations and Indications guidelines, and other VA reimbursement guidelines.

The Contractor shall provide and maintain all applicable CMS billing, reimbursement, and compliance rule sets as part of the PIVOT solution. The system must incorporate relevant industry standards and guidelines for correct coding compliance, such as CMS NCCI, CMS MUE, CMS procedure to procedure edits, CMS Status indicators, CMS Prospective Payment System (PPS) rules, CMS Fee Schedules and MAC pricing guidelines, CMS Coverage Determinations and Local Coverage Determinations (LCDs), AMA coding manuals, X12 standard edits, Strategic National Implementation Process (SNIP) edits, and other authoritative coding references. The system shall incorporate additional industry rules and edits to ensure compliance with all applicable statutes, regulations, and reimbursement frameworks to facilitate the identification of improper claims adjudication.

The Contractor shall continuously monitor and assess updates to national and federal billing, coding, pricing, reimbursement, and payment policies and/or guidelines, including but not limited to CMS National Correct Coding Initiative (NCCI) edits, Medicare Physician Fee Schedule (MPFS), Medicare Administrative Contractor (MAC) Rates, Outpatient Prospective Payment System (OPPS), Inpatient Prospective Payment System (IPPS), Tricare reimbursement policies, and other applicable regulatory or industry-standard rules. The Contractor shall ensure timely identification and incorporation of relevant updates into the rules engine, subject to VA review and approval prior to implementation. The Contractor shall ensure that no new rules are added, no existing rules are modified, and no rules are removed from the Rules engine without prior written approval from the VA. The system shall support a governance workflow that enables VA-designated personnel to review, approve, and authorize all rule changes before implementation.

Each type-specific rule must validate claims against applicable business rules, fee schedules, and other industry standards. The Contractor shall ensure the system provides access to supporting information for each rule, including but not limited to, the necessary statutes, CMS guidelines/manual sections that justify and explain the rule's implementation. This documentation should be easily accessible and clearly linked to the corresponding rules to ensure transparency and ease of reference for users.

The Contractor shall ensure the rules engine validates billed pharmaceutical procedure codes by cross-referencing Healthcare Common Procedure Coding System (HCPCS) Codes with corresponding National Drug Codes (NDCs) and verifying FDA approval status. The system shall flag claims for review when a mismatch is identified between the billed code and the associated NDC, or when the NDC corresponds to a drug that is not FDA-approved for the billed indication or use. This validation shall be incorporated into the Rules Engine and applied in real-time during claim ingestion to support compliance with VA and CMS reimbursement policies.

The Contractor shall ensure the system allows for the prioritization and sequencing of rules to ensure critical rules are applied first, followed by secondary checks. The Contractor shall ensure the system includes mechanisms to identify, flag, and manage contradictions or conflicts between overlapping reimbursement policies, coding guidelines, or regulatory rules. This includes conflicts between:

· CMS and VA-specific payment policies

· National and local coverage determinations (NCDs vs. LCDs)

· Industry-standard coding rules (e.g., AMA CPT, NCCI) and VA Clinical Determinations and Indications (CDIs)

The system shall support a rule conflict resolution framework that:

· Detects overlapping or contradictory rules during rule creation or execution

· Prioritizes rule execution based on configurable VA-defined hierarchies.

· Logs and alerts VA users when a conflict is detected, with contextual information and recommended resolution paths

· Supports version control and audit trails for all rule changes and overrides

The Contractor shall ensure that all rule conflicts are documented in the system’s rules library, including rationale for resolution, affected claim types, and any temporary overrides. The system shall use and support sandbox testing of new or modified rules to assess potential conflicts before deployment to production.

The Contractor shall ensure the Rules Engine includes logic to validate that billed services align with the services authorized on the corresponding VA referral or authorization. The system shall cross-reference billed services against the approved codes (or code sets), frequencies, and taxonomies listed in the referral or authorization record. The Contractor shall ensure the Rules Engine includes logic to detect duplicate claims and validate that billed services have not been previously paid by VA. The system shall compare incoming claims against historical claims data to identify potential duplicates or services already reimbursed, and flag such claims for further review.

The system shall support:

· Validation of services against referral/authorization data at the claim and line-item level

· Identification of mismatches between billed and authorized services

· Flagging of unauthorized services

· Configuration of rule logic to accommodate program-specific authorization models The Contractor shall ensure this rule logic is configurable and can be updated as VA referral and authorization policies evolve.

The Contractor shall support a structured process for VA-initiated rule development. When VA identifies a new regulation, statue, policy, or business requirement that necessitates a new compliance rule, the Contractor shall:

· Accept documentation from VA (e.g., policy memos, regulatory guidance, payment policy) that defines the basis and intent of the new rule.

· Collaborate with VA stakeholders to translate the requirement into rule logic, including applicable claim types, conditions, thresholds, and references.

· Design and implement the new rule within the pre-production (sandbox) environment for testing and validation.

· Provide VA with a multi-layered environment to test the rule against sample or historical claims data to ensure accuracy and alignment with the intended policy This environment shall include development > testing > pre-production > production.

· Incorporate VA feedback and make necessary adjustments prior to requesting production approval.

· Ensure the new rule is documented in the Rules Library with appropriate metadata, including effective date, end date, logic, source references, and status.

The Contractor shall ensure that the system includes a comprehensive and easily navigable rules library. This rules library shall catalog all active, inactive, and VA disapproved rules within the payer compliance tool (PCT), including detailed information on each rule's status (e.g., active, inactive, under review), VA program or payment authority the rule applies to, logic, applicable transaction/claims types, and the effective date and end date (if applicable) of each rule. The library shall provide clear documentation and linkage to the underlying logic, including any relevant statutes, guidelines, or industry standards that justify and explain the rule's implementation. The library shall allow for filtering, searching, and reporting capabilities to enable VA personnel to easily find and reference specific rules. Additionally, the Contractor shall ensure the rules library is continuously updated and accessible to authorized VA personnel, ensuring transparency and ease of reference for users. Regular updates to the rules library must be communicated to VA-designated personnel, including changelogs and the rationale for any modifications.

The Contractor shall ensure the system maintains full version control for all rules within the Rules Engine. This includes:

· A complete audit trail of all rule changes, including timestamps, user identity, change rationale, and version history.

· The ability to view and compare historical versions of a rule The ability to revert to a previous version/rule if needed Integration of versioning metadata into the Rules Library for transparency and traceability.

The Contractor shall provide a secure, VA-accessible multi-tiered release process when developing new rules. The release process shall consist of four tiers including development, test, pre-production, and production environments. The Contractor shall implement a structured change promotion process that allows tested rules to be reviewed, approved, and migrated through the following environments:

· The development environment will function as a sandbox which enables authorized VA users and contract developers the ability to develop and create new or modified rules without impacting live operations or data.

· The test environment will function as a testing environment when approved rules created in the sandbox are approved by VA and promoted for additional tests including regression testing, functional testing, and user validation.

· The pre-production environment will function as a mirror of the production environment where VA users can complete User Acceptance Testing (UAT) of new rules against relevant claims.

· The production environment will function in near real time to implement the rules engine and score claims.

The Contractor shall ensure the system includes functionality to simulate the impact of new or modified rules on historical claims data. This simulation capability shall:

· Allow VA users to test rule logic against a defined dataset without affecting production claims

· Provide metrics on how many claims would have been flagged, the types of flags generated, and estimated financial impact

· Support side-by-side comparisons of rule versions or logic changes

· Be accessible within the pre-production environment and integrated into the rule change governance workflow

The Contractor shall ensure the system includes tools to monitor and evaluate the effectiveness of individual rules and rule sets. This includes:

· Tracking the frequency of rule execution and the volume of claims impacted

· Measuring false positive and false negative rates for each rule

· Calculating the financial impact of each rule (e.g., potential cost avoidance, recoupments triggered)

· Providing dashboards and reports that summarize rule performance over time

· Enabling VA personnel to use these insights to refine or retire underperforming rules

Pattern Recognition Engine The system shall provide real-time and retrospective analysis of post-adjudicated claims data, leveraging advanced technologies such as artificial intelligence (AI), machine learning (ML), and customizable rule engines. The primary objectives are to ensure compliance with VA and CMS reimbursement guidelines and proactively detect potential improper payment patterns or trends so VA can proactively mitigate future improper payments.

The Contractor shall ensure the system incorporates a Pattern Recognition Engine that leverages AI and ML to detect post-payment anomalies, trends, and suspicious billing behaviors that may indicate improper payments, fraud, waste, or abuse (FWA). The system shall incorporate anomaly detection models that analyze claims data at the provider, claims, referral, patient, and service levels. The system must identify patterns inconsistent with peer norms, historical utilization, and/or clinical/financial expectations. This includes, but not limited to:

· Upcoding

· Unbundling

· Unusual billing frequencies or volumes

· Modifier misuse

· High-frequency repeat procedures

· Overlapping services

· Billing outside of provider specialty norms

· Excessive use of unlisted or Not Otherwise classified (NOC) codes

· Sudden shifts in billing behavior

· Billing for deceased patients

· Gender-or age-inappropriate services

· Code switching The Pattern Recognition Engine shall operate in parallel with the Rules Engine and support retrospective analysis of post-adjudicated claims. The Contractor shall ensure the system includes predictive modeling capabilities that assess the likelihood of improper payment at the claim, provider, and facility level (e.g., clusters similar specialty claims and flags statistical outliers in real time, tracks each provider’s historical coding mix and alerts on sudden deviation, and monitors incoming claim distribution and flags when volume, modifiers or units drift). The system shall generate risk scores based on historical patterns, peer comparisons, service types, and all other relevant data attributes. These scores shall be used to prioritize flagged claims for further analysis, targeted reviews, and mitigation strategies. The predictive model’s methodology shall be documented, transparent, auditable, and explainable to VA users.

The system shall generate medium/low severity flags for further review and provide explainable AI (xAI) outputs to support investigative workflows resulting in numerical or categorical risk scores. The system shall provide a clear, concise justification or summary explaining the underlying factors contributing to the assigned risk level.

The Contractor shall ensure the system incorporates Human-in-the-Loop (HITL) learning capabilities that allow authorized personnel to review and confirm or dismiss…