J-01_AB_MAC_Statement_of_WorkRFP-CMS-2007-0013083107.doc

Part A and Part B

Medicare Administrative Contractor Statement of Work Attachment J-1 Jurisdictions 6, 11, 14 and 15 RFP-CMS-2007-0013, August 30, 2007

Table of Contents 1C.1 Scope

1C.1.1 Purpose of Contract

2C.1.2 Background

4C.1.3 Contracting Reform

4C.1.4 Roles and Responsibilities

4C.1.4.1 The Centers for Medicare & Medicaid Services

5C.1.4.1.1 Business Function Leads and Technical Monitors

5C.1.4.2 Medicare Administrative Contractor (“The Contractor”)

6C.1.4.3 Unique Requirements for the MAC

6C.1.4.3.1 Unique Core Requirements

7C.1.4.3.2 Jurisdiction-Specific Requirements

7C.1.4.4 Home Health and Hospice Requirements

9C.2 Applicable Documents

9C.2.1 Statutes

9C.2.1.1 Social Security Act (Public Law 74-271)

10C.2.1.2 Medicare Prescription Drug, Improvement and Modernization Act (Public Law 108-173)

10C.2.1.3 Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191)

11C.2.1.3.1 Administrative Simplification Compliance Act of 2002 (Public Law 107-105)

11C.2.1.4 Tax Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248)

11C.2.1.5 Benefit Improvement and Protection Act of 2000 (Public Law 106-554)

11C.2.2 Regulations

11C.2.3 Medicare Manuals

12C.3 Key Definitions

13C.4 Objectives

13C.4.1 Customer Service

14C.4.2 Operational Excellence

14C.4.3 Innovation and Technology

14C.4.4 Financial Management

15C.5 Functional Requirements

16C.5.1 Workload Implementation Requirements

17C.5.1.1 Jurisdiction Implementation Project Plan

17C.5.1.2 Segment Implementation Project Plans

17C.5.1.3 Risk Management Plan

18C.5.1.4 Segment Cutover Plan

18C.5.1.5 Segment Test Plan

18C.5.1.6 Lessons Learned Documentation

18C.5.1.7 Accounts Receivable Reconciliation

19C.5.1.8 Consolidation of Part A and Part B Edits

19C.5.1.8.1 Consolidation of Reason Codes

20C.5.1.8.2 Consolidation of Local Coverage Determinations

21C.5.1.9 Implementation Stakeholder Communication

22C.5.1.10 Implementation Meetings

22C.5.2 Contractor Responsibilities during the Workload Closeout Period (Option that may be exercised at the End of the Contract)

23C.5.2.1 Workload Closeout Project Plan (Option that may be exercised at the End of the Contract)

23C.5.2.2 Workload Closeout Meetings (Option that may be exercised at the End of the Contract)

24C.5.2.3 Workload Closeout Risk Management Plan (Option that may be exercised at the End of the Contract)

24C.5.2.4 Accounts Receivable Reconciliation (Option that may be exercised at the End of the Contract)

24C.5.2.5 Cost Accounting/Audit (Option that may be exercised at the End of the Contract)

24C.5.2.6 Provider Cost Reports and Appeals (Option that may be exercised at the End of the Contract)

24C.5.3 Infrastructure Requirements

25C.5.3.1 Enterprise Data Center

27C.5.3.1.1 Local Hardware and Software Requirements

27C.5.3.1.1.1 HIPAA Compliant Translation Software

28C.5.3.1.1.2 Electronic Claims Retention

28C.5.3.1.2 Reserved

28C.5.3.2 Telecommunications

30C.5.3.2.1 Telecommunications for Electronic Data Interchange

31C.5.3.2.1.1 Electronic Data Interchange Enrollment Form

32C.5.3.2.1.2 Transaction Error Reporting

32C.5.3.2.1.3 Receipt of Electronic Data Interchange Transactions

33C.5.3.2.1.4 Sending Electronic Data Interchange Transactions

33C.5.3.2.1.5 Automated Clearing House transactions

34C.5.3.2.1.6 Direct Data Entry Capability

34C.5.3.2.2 Testing

34C.5.3.2.2.1 Initial Edits

35C.5.3.2.3 Electronic Data Interchange Help Desk

36C.5.3.2.3.1 Electronic Data Interchange Outreach Activities

37C.5.3.2.4 Electronic Funds Transfer EFT Forms

37C.5.3.2.4.1 Network Service Vendor Agreements

37C.5.3.2.5 HIPAA Code Set Updates

37C.5.3.3 Telephone Service

38C.5.3.4 CMS Audits and Reviews

38C.5.4 Administrative Requirements

38C.5.4.1 Key Personnel

38C.5.4.1.1 Project Manager

39C.5.4.1.2 Claims Processing Manager

39C.5.4.1.3 Chief Financial Officer

39C.5.4.1.4 Compliance Officer

40C.5.4.1.5 Program Safeguard Contractor Liaison

40C.5.4.1.6 Chief Information Officer

41C.5.4.1.7 Systems Security Officer

41C.5.4.1.8 Implementation Project Director

42C.5.4.1.9 Provider Customer Service Program Manager

42C.5.4.1.10 Contract Administrator

43C.5.4.1.11 Contractor Medical Director

43C.5.4.1.12 Audit and Reimbursement Manager/Director

44C.5.4.2 Reserved

44C.5.4.2.1 Reserved

44C.5.4.3 Security

44C.5.4.3.1 Certification by Chief Information Officer for Compliance with CMS Systems Security Requirements

44C.5.4.3.2 Administer Security Program

45C.5.4.3.3 Access to Systems

45C.5.4.3.3.1 Reserved

45C.5.4.3.3.2 Other Systems Access Requirements

46C.5.4.3.4 Correct Deficiencies

46C.5.4.3.4.1 Corrective Action Attestation

47C.5.4.3.5 Security Review and Verification

47C.5.4.4 Quality Assurance Requirements

47C.5.4.4.1 Quality Control Program

48C.5.4.4.2 Reserved

48C.5.4.4.3 Reserved

48C.5.4.4.4 Contractor’s Internal Education

48C.5.4.5 Public Relations

49C.5.4.5.1 Medicare Beneficiary Ombudsman

49C.5.4.6 Responses to Congressional Inquiries

50C.5.4.7 Participation in Conferences, Meetings, and Work Groups

50C.5.4.7.1 Participation in Conferences

51C.5.4.7.1.1 Chief Financial Officer Financial Reporting Conference

51C.5.4.7.2 Participation in Meetings and Work Groups

51C.5.4.7.3 Support Income Tax Reporting

52C.5.4.8 Participation in Change Management Process

54C.5.4.8.1 Review and Comment on Draft Change Requests

55C.5.4.8.2 Early Involvement

56C.5.4.8.3 Successful Implementation of Change Requests

57C.5.4.8.3.1 Walkthroughs

58C.5.4.8.4 Participation in Testing Changes to Systems

59C.5.4.8.5 Successful Post-Implementation Operation

59C.5.4.9 Business Continuity Planning and Disaster Recovery

60C.5.4.10 Internal Controls

60C.5.4.10.1 Written Policies and Procedures

60C.5.4.10.2 Self Assessment Process for Internal Controls

60C.5.4.10.3 Correcting Internal Control Deficiencies – Corrective Action Plan Process

61C.5.4.10.4 Statement on Auditing Standards No. 70 Audit

61C.5.4.11 Compliance Program

62C.5.4.12 Chain Provider Organizations

62C.5.5 Provider Enrollment

63C.5.5.1 Process Initial Enrollment and Revalidation Applications

64C.5.5.2 Process Changes, Updates, Reassignments or Corrections

64C.5.5.3 Revocations/Deactivations

64C.5.5.4 Provider Enrollment Appeals

65C.5.5.5 Maintain State-Specific Licensure/Certification Information

65C.5.5.6 Participating Physician Enrollment

65C.5.6 Local Coverage Determinations

66C.5.6.1 Contractor Advisory Committee

67C.5.7 Provider Customer Service Program

67C.5.7.1 Provider Outreach and Education

68C.5.7.1.1 Data Analysis

68C.5.7.1.2 Provider Outreach and Education Advisory Group

68C.5.7.1.3 “Ask-the-Contractor” Teleconferences

69C.5.7.1.4 Provider Organization Partnerships

69C.5.7.1.5 Promotion of Internal Communication and Development of Provider Education Needs

69C.5.7.1.6 Bulletin/Newsletter Publication

70C.5.7.1.7 Provider Service Plan

70C.5.7.1.8 Education Activity Report

70C.5.7.2 Provider Contact Center

71C.5.7.2.1 Telephone Inquiries

72C.5.7.2.2 Written Inquiries

72C.5.7.2.3 Provider Relations Research Specialists

73C.5.7.2.3.1 Responding to Complex Beneficiary Inquiries

74C.5.7.2.4 Inquiry Tracking System

75C.5.7.3 Provider Self-Service Technology

75C.5.7.3.1 Interactive Voice Response

75C.5.7.3.2 Web Technology

75C.5.7.3.3 Provider Listserv

76C.5.7.3.4 Provider Customer Service Program Staff Training

77C.5.8 Claims Processing

78C.5.8.1 Standard Paper Remittance Advice Transactions

78C.5.8.1.1 Direct Data Entry Support

79C.5.8.2 General Claims Processing

80C.5.8.2.1 Communication of Claims Processing Problems

81C.5.8.2.2 Resolution of Common Working File Rejected Claims Involving another Medicare Administrative Contractor

81C.5.8.2.3 Resolution of Claims Transaction Replies from Common Working File

81C.5.8.2.4 Resolution of Unsolicited Responses from Common Working File

82C.5.8.2.4.1 Medicare Secondary Payer Claim with Complete Primary Payer Notification of Benefits Paid: Explanation of Benefit, Remittance Advice, or Such Other Acceptable Notice: Update Common Working File

82C.5.8.2.4.2 Identification of Potential MSP Existence

82C.5.8.2.5 Payment of Claims outside Common Working File

83C.5.8.2.6 Handling of Medicare Advantage Claims

83C.5.8.2.6.1 Medicare Advantage Claims for Hospice Care

83C.5.8.2.6.2 Medicare Advantage Claims for National Coverage Decision or Legislative Change in Benefits

84C.5.8.2.7 Local System Edits

84C.5.8.3 Development of Suspended Claims

84C.5.8.4 Back-End Processing

85C.5.8.4.1 Remittance Advice and Medicare Summary Notices

85C.5.8.4.2 Coordination of Benefits Flat Files

85C.5.8.4.3 Generate and Mail Claims Processing Documents

86C.5.8.4.4 The Do Not Forward Initiative

86C.5.8.5 Opt-Out Payment Provisions

86C.5.8.6 Physician Incentive Payments for Services in Health Professional Shortage Area and Physician Scarcity Area

87C.5.8.7 Participating Competitive Acquisition Program Physician Claims for Administering Part B Drugs

87C.5.8.7.1 Listing of Competitive Acquisition Program Participating Physicians and Practitioners

87C.5.8.7.2 Monitoring Competitive Acquisition Program Physicians and Practitioner Claims for Administering Part B Drugs

87C.5.9 Reopening of Medicare Initial Claims Determinations

87C.5.9.1 Reopening

88C.5.9.1.1 Reopenings on the Contractor’s Own Motion

88C.5.9.1.2 Reopenings on the Request of Party

88C.5.9.1.2.1 Redetermination Resolutions for Clerical Errors

88C.5.9.1.2.2 Documentation Requests

89C.5.9.1.3 Reopening Appeal Cases

89C.5.9.2 Establishing Good Cause for Reopening Initial Determinations and Redeterminations

89C.5.9.3 Reopening Decisions

90C.5.10 Appeals of Medicare Initial Claims Determinations

90C.5.10.1 Redetermination Requests

90C.5.10.1.1 Controlling Receipt of Correspondence

91C.5.10.1.2 Document Imaging and Indexing

91C.5.10.1.3 Acceptance of Valid Redetermination Requests

92C.5.10.1.4 Misdirected Redetermination Requests

92C.5.10.1.5 Granting of Extensions for Late Redetermination Requests and Determination of Good Cause

93C.5.10.1.6 Consolidation of Multiple Requests for Same Claim

93C.5.10.1.7 Withdrawals and Eligibility-Based Dismissals

94C.5.10.1.8 Assistance to Beneficiary

94C.5.10.1.9 Conduct and Notice of the Redetermination

95C.5.10.1.10 Documenting the Redetermination Case Files

95C.5.10.1.11 Reserved

95C.5.10.2 Appeal Decision Effectuation

95C.5.10.3 Monthly Statistical Report on Reopening and Appeals Activities (CMS – 2592 & CMS 2590/2591)

95C.5.10.4 Quality Improvement / Data Analysis

96C.5.11 Financial Management of Trust Fund Dollars

97C.5.11.1 Use of Trust Fund

97C.5.11.1.1 Certification of Financial Reporting by Chief Financial Officer for Medicare Operations

97C.5.11.1.2 Validation of Financial Data

97C.5.11.1.3 Resolution of Financial Deficiencies

98C.5.11.2 Banking Relations

98C.5.11.2.1 Time Account Balance

98C.5.11.2.2 Benefits Account

99C.5.11.2.3 Account Reconciliation

99C.5.11.2.4 Letter-of-Credit Limitation

99C.5.11.3 Cost Reporting and Reimbursement Payment Policy

100C.5.11.3.1 The Medicare Cost Report

101C.5.11.3.1.1 CMS Cost Report and Reimbursement Inquiries

101C.5.11.3.2 Audit of Institutional Provider Cost Reports

101C.5.11.3.2.1 Cost Report Reminder Letter

101C.5.11.3.2.2 Cost Report Acceptance

101C.5.11.3.2.3 Late Cost Reports

101C.5.11.3.2.4 Rejected Cost Reports

101C.5.11.3.2.5 Tentative Settlements

102C.5.11.3.2.6 Desk Reviews of Providers’ Cost Reports

102C.5.11.3.2.7 Wage Index

102C.5.11.3.2.8 Cost Report Audits

103C.5.11.3.2.9 Audit Plan

103C.5.11.3.2.10 Final Settlement

104C.5.11.3.2.11 Cost Report Reopenings

104C.5.11.3.2.12 Reopening Notices or Denials

104C.5.11.3.2.13 Provider Change in Contractors

104C.5.11.3.2.14 Audits of Home Office Cost Statements

104C.5.11.3.2.15 Provider Permanent Files

105C.5.11.3.2.16 Cost Report Hearings

105C.5.11.3.2.17 Cost Report Appeals: Provider Reimbursement Review Board

106C.5.11.3.2.18 Cost Report Appeals: Court Hearing / Settlements

106C.5.11.3.2.19 Cost Report Appeals: Final Decisions

106C.5.11.3.2.20 Requests for Cost Report, Audit and Reimbursement Information

106C.5.11.3.3 Institutional Provider Reimbursement

107C.5.11.3.3.1 Provider-Specific File Correctness

107C.5.11.3.3.2 Provider Statistical and Reimbursement Report

107C.5.11.3.3.3 System for Tracking Audit and Reimbursement System

107C.5.11.3.3.4 Hospice Cap

108C.5.11.3.3.5 Target Limits: Tax Equity and Fiscal Responsibility Act

108C.5.11.3.3.6 Exception Requests: End-Stage Renal Disease

108C.5.11.3.3.7 Exception Requests: Tax Equity and Fiscal Responsibility Act

109C.5.11.3.3.8 Health Care Provider Cost Report Information System

109C.5.11.3.3.9 Provider-Based Determinations

109C.5.11.3.3.10 Special Payment Status

110C.5.11.3.3.11 Interns and Residents Information System

110C.5.11.3.3.12 Institutional Provider Reimbursement – Reimbursement for Federally Qualified Health Centers and Rural Health Clinics

110C.5.11.3.3.13 Medicare Supplemental Payments for FQHCs under contract with Medicare Advantage Plans

110C.5.11.4 Non-Medicare Secondary Payer Overpayment

111C.5.11.4.1 Identification of Overpayment Cause

111C.5.11.4.2 Applications for Extended Repayment Plan

112C.5.11.5 Non-Medicare Secondary Payer Debt Collection

112C.5.11.6 Non-Medicare Secondary Payer Debt Referral

113C.5.11.6.1 Non-Medicare Secondary Payer Debt Collection Improvement Act Intent to Refer Letter

113C.5.11.6.2 Non-Medicare Secondary Payer Debt Referral Inquiries

113C.5.11.6.3 Debt Collection System Database

113C.5.11.6.4 Posting of Debts Collected by Treasury

113C.5.11.7 Reserved

113C.5.11.7.1 Unsolicited/Voluntary Refunds

113C.5.11.8 Overpayment Related to Bankruptcy

115C.5.11.8.1 Administrative Freeze Payments

115C.5.11.8.2 Closed Bankruptcy Case

115C.5.11.9 Financial Reporting and Accounting

116C.5.11.9.1 Accounts Receivable Trend Analyses

117C.5.11.9.2 Financial Reporting Audits/Reviews

117C.5.11.10 Medicare Credit Balance Report Activities

117C.5.12 Medical Review

118C.5.12.1 Development of Medical Review Strategy

118C.5.12.1.1 Medical Review Data: Data Analysis

118C.5.12.1.2 Medical Review Data: Edit Effectiveness

119C.5.12.1.3 Medical Review Data: Probe Reviews

119C.5.12.1.4 Provider Tracking

119C.5.12.1.5 Medical Review of Claims

120C.5.13 Coordination with Program Safeguard Contractors

120C.5.13.1 Support of Benefit Integrity

120C.5.13.2 Support of Comprehensive Error Rate Testing

121C.5.14 Medicare Secondary Payer

122C.5.14.1 Implementation of Medicare Secondary Payer Operations

122C.5.14.2 Electronic Correspondence Referral System Status Inquiries

122C.5.14.3 Identification and Adjudication of Medicare Secondary Payer Claims and Application of Benefits and Processing Formula

122C.5.14.3.1 Medicare Secondary Payer Claims Payment Determinations

122C.5.14.3.2 Medicare Secondary Payer Claims Adjudication and Validation

123C.5.14.3.3 Medicare Secondary Payer Claims Inquiries

123C.5.14.4 Transfer of Documentation and Phone Calls to the Coordination of Benefits Contractor

123C.5.14.5 Medicare Secondary Payer Hospital Audits

123C.5.14.6 Medicare Secondary Payer Post Payment Recovery

124C.5.14.6.1 Duplicate Primary Payments

124C.5.14.6.2 Inquiries Specific to Debt Collection Efforts for Providers, Physicians and other Suppliers

125C.5.14.6.3 Debt Collection Referral Activities for Providers, Physicians and other Suppliers

125C.5.14.6.4 MSP Savings Report

125C.5.14.6.5 Misrouted Medicare Secondary Payer Recovery Checks

126C.5.14.6.6 Misrouted Medicare Secondary Payer Recovery Correspondence

126C.5.15 Provider Oversight

127C.5.15.1 Review of Provider Billing Records

127C.5.15.2 Review of Comprehensive Outpatient Rehabilitation Facility Billing Records

127C.5.15.3 Review of Inpatient Rehabilitation Facilities and Critical Access Hospitals’ Rehabilitation Distinct Part Units

128C.5.15.4 Conduct of Site Visits

128C.5.16 Reserved

128C.5.17 End Stage Renal Disease Clinical Trial

128C.5.18 Rural Health Clinics

128C.5.18.1 Education Materials

129C.5.19 Federally Qualified Health Centers

129C.5.19.1 Education Materials

129C.5.20 Foreign Claims

130C.5.21 Laboratory Competitive Bidding Demonstration

130C.5.22 Shipboard/Foreign Travel Services

130C.5.23 Program Management Office

131C.5.23.1 Post-Award Meeting

131C.5.23.2 Project Management Plan

131C.5.23.3 Cost Management

132C.5.23.4 Monthly Status Report and Meeting

133C.5.23.5 Ad Hoc Reporting

133C.5.23.6 CMS ART

133C.5.23.7 CAFM

133C.5.23.8 CROWD

134C.5.23.9 ASCA Enforcement and Reporting

134C.5.23.10 Freedom of Information Act Requests

135C.5.24 Medicare Contractor Provider Satisfaction Survey

135C.5.25 Clinical Laboratory Fee Schedule – Gap-Fill Fees

136C.6 Interface Requirements

136C.6.1 Successful Collaboration with Entities Requiring Joint Operating Agreements

138C.6.1.1 Joint Operating Agreement: Quality Improvement Organization

138C.6.1.1.1 Referrals to Quality Improvement Organization

138C.6.1.1.2 Referrals from Quality Improvement Organization

138C.6.1.1.2.1 Payment Adjustments

138C.6.1.1.2.2 Billing Errors

139C.6.1.2 Joint Operating Agreement: Qualified Independent Contractor

139C.6.1.2.1 Supply of Appeals Case Files

139C.6.1.2.2 Misrouted Requests for Reconsideration

139C.6.1.2.3 Preparation of Case Files

140C.6.1.3 Joint Operating Agreement: Medicare Secondary Payer Recovery Contractor

140C.6.1.4 Joint Operating Agreement: Beneficiary Contact Center

141C.6.1.5 Joint Operating Agreement: Coordination of Benefits Contractor

141C.6.1.6 Joint Operating Agreement: Appeals Support Contractor

142C.6.1.7 Joint Operating Agreement: Non-Medicare Secondary Payer Recovery Audit Contractor

143C.6.2 Successful Collaboration and Coordination with Other Internal and External Entities

143C.6.2.1 State Agencies Responsible for Licensing Institutional Providers (e.g., Survey and Certification, Licensing Authorities)

144C.6.2.2 Investigative Agencies

144C.6.2.2.1 Access to Files, Records, Data, and Personnel

144C.6.2.2.2 Search Warrants

144C.6.2.3 CMS Field Offices

145C.6.2.4 Medicare Advantage Plans, Prescription Drug Plans, and Nontraditional Fee-for-Service Entities

145C.6.2.5 Other Medicare Administrative Contractors

146C.6.2.6 Professional Associations

146C.6.2.7 Infrastructure Service Providers

146C.6.2.8 Bank Interface

146C.6.2.9 Reserved

147C.7 Jurisdiction-Specific Requirements

147C.7.1 Reserved

147C.7.2 Reserved

147C.7.3 Low Vision Demonstration – Jurisdictions Eleven and Fourteen

148C.7.4 Reserved

148C.7.5 Reserved

148C.7.6 Reserved

148C.7.7 Reserved

148C.7.8 Reserved

148C.7.9 Reserved

148C.7.10 Reserved

148C.7.11 Medicare Part B Drug Code Crosswalk File – Jurisdiction 11

149C.7.12 Home Health Third Party Liability Demo – Jurisdiction 14

149C.7.13 Medical Adult Day Care Services Demonstration – Jurisdictions 11, 14, 15

150C.7.14 Reserved

150C.7.15 Reserved

150C.7.16 Reserved

150C.7.17 Reserved

150C.7.18 Reserved

150C.7.19 Reserved

150C.7.20 Medicare Home Health Agency Provider Enrollment Demonstration – Jurisdictions 6 and 11

152C.8 Contract Options

152C.8.1 Contractor Furnished Data Center Service Option

C.1 Scope The Contractor, as an independent Contractor and not as an agent of the government, shall furnish all the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the government, as needed to perform the work described in this Statement of Work (SOW).

The Contractor shall perform all Medicare Administrative Contractor (MAC) functions specified in this SOW and outlined in both the Internet-Only-Manuals (IOMs, http://www.cms.hhs.gov/Manuals/IOM/list.asp#TopOfPage) and Paper-Based Manuals. For purposes of this contract, when differences or conflicts occur, this SOW shall take precedence over the IOMs unless otherwise specified. The Contractor shall contact the Contracting Officer and the Project Officer if budgetary concerns occur because of this conflict. The Contractor is advised that any and all references in the SOW (including manuals, IOMs, etc.) to “RO-Regional Office” shall be replaced with “CO-Contracting Officer” unless otherwise specified in this SOW. Appendix E contains definitions of all abbreviations used in this SOW.

C.1.1 Purpose of Contract

The purpose of this contract is to obtain a Medicare Administrative Contractor (hereinafter, referred to as “the Contractor” or “MAC”) to provide specified health insurance benefit administration services, including Medicare claims processing and payment services, in support of the Medicare fee-for-service (FFS) program. The Contractor will perform its responsibilities under the direction of the Centers for Medicare & Medicaid Services (CMS).

Under this contract, the Contractor will perform numerous functions to support health care services for Medicare beneficiaries, which include performing claims-related activities and establishing relationships with providers of health care services, both institutional and professional, for a defined geographic area or “jurisdiction.” The Contractor will perform the requirements of this contract in accordance with applicable laws, regulations, Medicare manuals, and CMS requirements to ensure the financial integrity of the Medicare program. The Medicare program’s legal, policy, and operating environment is complex, and the Contractor will utilize or interact with certain CMS-required payment schedules, systems, equipment, and operational capabilities in the performance of its functions. Further, the Contractor will coordinate its activities not only with the CMS, but also with a broad range of agencies (at the federal, state, and local levels of government), other CMS partners and Contractors, and a diverse range of stakeholders within the health care system of the United States.

The Contractor will receive and control Medicare claims from institutional and professional providers (including home health agencies and hospices), suppliers, and beneficiaries within its jurisdiction and will perform standard or required editing on these claims to determine whether the claims are complete and should be paid. In addition, the Contractor will calculate Medicare payment amounts and arrange for remittance of these payments to the appropriate party. The Contractor also will enroll new providers; conduct redeterminations on appeals of claims; operate a Provider Customer Service Program (PCSP) that educates providers about the Medicare program and responds to provider telephone and written inquiries; respond to complex inquiries from Beneficiary Contact Centers (BCCs); and make coverage decisions for new procedures and devices in local areas. The Contractor also will conduct a variety of different provider services, such as enrolling new providers in the program, answering written inquiries, and educating providers on Medicare’s rules, regulations, and billing procedures.

The mission of CMS is to ensure health care security for beneficiaries. This contract specifically applies to that mission by fostering excellence in the design and administration of CMS’ programs.

C.1.2 Background

The Medicare program is an integral component of the federal government’s commitment to the health and welfare of the American people, which includes the Social Security system, the Medicaid program (which is primarily administered by the states), and other programs. The Medicare program provides affordable health insurance to (1) eligible individuals aged 65 and over; (2) certain individuals eligible for disability benefits under the Social Security system; and (3) individuals with acute kidney failure (end-stage renal disease, or ESRD). Approximately 42 million people were enrolled for Medicare coverage in FY2005.

Nearly all Medicare beneficiaries may access their insurance benefits through one of two health care delivery systems:

a. First, in all areas of the country, a beneficiary may enroll in the traditional Medicare program (the Medicare FFS program) under which benefits are largely provided in keeping with an indemnity insurance model. That is, the beneficiary chooses his/her health care providers, the providers bill the appropriate Medicare claims administrator for their services, and the claims administrator pays the provider based on the eligibility, coverage, and payment rules of the Medicare Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) programs. The federal government bears all financial (underwriting) risk for the cost of program benefits and develops detailed administrative requirements and processes to support the claim administration process. This national entitlement program has a strong imperative to provide a common level of benefits and service in all areas of the country, while maintaining adequate flexibility to account for local and regional medical practices. More than 87% of all Medicare beneficiaries—or about 37 million—participate in the traditional Medicare program.

b. Second, in many areas of the country, beneficiaries have the option to enroll in one or more privately sponsored Medicare plans under the Medicare Advantage (MA, formerly Medicare+ Choice) program. These private Medicare plans may organize themselves in keeping with one of several health care delivery and payment models (health maintenance organizations, preferred provider organizations, etc.). These private Medicare plans are required to cover the same basic benefits that the traditional Medicare program offers, but they are given fairly broad responsibility and latitude to set up their internal requirements and processes as they see fit. About 13% of Medicare beneficiaries are enrolled in Medicare Advantage.

The recently enacted Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) includes significant incentives to increase the participation in Medicare Advantage. However, for the next decade at least, a significant majority of all Medicare beneficiaries will likely remain enrolled in the traditional FFS Medicare program. FFS coverage in the Medicare program consists of two distinct parts: (1) HI, and (2) SMI, which provides coverage for the professional medical services of physicians and certain other licensed practitioners, as well as coverage for a variety of other services and items (ambulance, durable medical equipment, etc.). In common usage, the HI program is known as “Medicare Part A,” although both the Part A and B trust funds are used to reimburse institutional claims. The SMI program is known as “Medicare Part B”; only the Medicare Part B trust fund is used to reimburse Part B claims.

Services covered under Part A are: hospital inpatient services, skilled nursing facility (SNF) inpatient services, swing bed services (SNF level in a rural hospital having less than 50 beds), hospice services, and some Home Health services. Institutional services processed by FIs but paid under Part B include: hospital outpatient services, SNF outpatient services, all specialty facility services, such as dialysis for End Stage Renal Disease beneficiaries, outpatient rehabilitation services, regardless of the type of institution, and some Home Health services.

Nearly all Medicare beneficiaries are entitled to receive their Medicare Part A (HI) without payment of any insurance premium. Beneficiaries must elect to enroll in Medicare Part B (SMI), for which they must pay a monthly premium, and nearly all do so. In Fiscal Year (FY) 2005, about 42.4 million individuals were enrolled in both Medicare Part A and Part B. A relatively small number of beneficiaries were enrolled in Part A only (2.7 million) or Part B only (0.4 million).

Under Medicare law, the Medicare HI (Part A) benefit is funded through the HI trust fund. The primary revenue source for the HI trust fund is a wage tax administered through the Social Security system. The HI trust fund accumulates a significant balance in excess of the amount needed for ongoing satisfaction of claims. The trustees of the HI trust fund include the Secretaries of the Treasury, Labor, and Health and Human Services. The Social Security Administration (SSA) Commissioner and two members of the public also serve as trustees of the HI trust fund.

The Medicare SMI (Part B) benefit is administered through the SMI trust fund. Unlike the HI fund, however, the SMI trust fund does not accumulate a significant balance in excess of the amount needed for ongoing satisfaction of claims. In addition to receipts from beneficiary premiums, the primary revenue source for the SMI trust fund is an annual congressional appropriation from the Treasury’s general revenues. The trustees for the SMI trust fund are the same as those for the HI trust fund.

Medicare spending – both HI and SMI – is a substantial portion of the federal government’s annual budget and the health care economy of the United States. In FY2005, total HI spending equated to $182.9 billion (offset by $2.4 billion in premiums), and total SMI spending equated to $153.5 billion (offset by $37.5 billion in premiums).

The CMS relies on a network of contractors to process Medicare claims; enroll health care providers in the Medicare program and educate them on Medicare billing requirements; handle claims appeals; and answer beneficiary and provider inquiries. Fiscal intermediaries (FIs) handle claims processing and benefit payment functions for institutional providers under Part A and Part B of the Medicare program; carriers perform the same functions for professional providers under Part B of the program.

C.1.3 Contracting Reform

On December 8, 2003, the President signed into law the MMA (Public Law 108-173). Section 911 of MMA directed implementation of Medicare FFS Contracting Reform. Medicare Contracting Reform (MCR) requires that the CMS use competitive procedures to replace its current FIs and carriers with a uniform type of administrative entity, referred to as a MAC.

C.1.4 Roles and Responsibilities

The roles and responsibilities of the parties are outlined below.

C.1.4.1 The Centers for Medicare & Medicaid Services

The Medicare program’s authorizing statutes charge the Secretary of the Department of Health and Human Services (DHHS) with administrative responsibility for the Medicare program. The Secretary has delegated the program authority for Medicare (both the traditional FFS program and Medicare Advantage) to the CMS Administrator.

The CMS administers the Medicare program, including formulation and promulgation of Medicare program policy and guidance, contract execution, operation and management, maintenance and review of utilization records, and general Medicare financing. The CMS is the largest purchaser of health care in the United States and provides health care coverage to nearly one in four Americans. The CMS’ annual budget places it among the largest businesses in the world; its programs channel one out of every three dollars in the health care market, and its policies influence the other two dollars. In FY 2006, CMS Contractors processed approximately 1.15 billion Medicare claims.

As part of its responsibility to administer the Medicare program, the CMS manages the work of the Contractors engaged in its day-to-day operation. This management is accomplished through a variety of avenues such as periodic conferences on topics of general interest; targeted sessions with selected subsets of the Contractors; issuance of manual updates describing changes in coverage, pricing, and eligibility; and evaluation of the performance of those Contractors within the description of the work the CMS engages them to do.

C.1.4.1.1 Business Function Leads and Technical Monitors Within the CMS, specialists on various Medicare topics shall serve as Business Function Leads (BFLs) and Technical Monitors (TMs) to assist the Project Officer and the Contracting Officer in administering the contract. These BFLs/TMs shall provide technical guidance to the Contractor on matters within each BFL’s/TM’s area of responsibility. The BFL/TM shall consult with the Project Officer on Technical Direction as necessary. The BFL/TM is not authorized to direct changes to contract work.

The MACs shall support the CMS field offices in their efforts to combat fraud and abuse and protect the Medicare Trust Fund.

C.1.4.2 Medicare Administrative Contractor (“The Contractor”) Section 1861 of the Social Security Act (“the act”) defines the items and services for which Medicare may pay. It also defines the provider types recognized by the Medicare program. Attachment J-2, Categories of Benefits and Provider/Supplier Types for the MAC Contract, briefly lists each category and provider type. The Contractor is responsible for handling all the claims identified in Attachment J-2, and related requirements identified in section C.5 of this Statement of Work (SOW), that are within its jurisdiction, except for the distinct types of claims that are identified as additional services in section C.7 of this SOW. The MAC is also responsible for processing Part A claims for Railroad Retirement Board Beneficiaries (RRB). The types of claims identified as additional services in Section C.7 are also mandatory requirements under the contract.

The complexity of Medicare payment systems and policies and the numbers of Contractors, providers, and insurers involved in the Medicare FFS program create vulnerabilities for error. To minimize these vulnerabilities and reduce the Medicare claims payment error rate, CMS has made paying claims right, the first time, one of its primary goals. This means paying the right amount, to legitimate providers, for Medicare-covered, reasonable and necessary services provided to eligible beneficiaries. Paying right the first time saves resources required to recover improper payments and ensures the proper expenditure of valuable Medicare trust fund dollars.

In the interest of consistency across the Medicare program, during the performance of this contract, the Contractor is expected to seek and follow advice from CMS on questions of law and policy as they arise.

Information relating to A/B MAC claims processing, information flows, interfaces and other supporting processes with “functional Contractors” can be found in both the Concept of Operations document located at the following URL: http://www.cms.hhs.gov/MedicareContractingReform/Downloads/ConOps.pdf and the A/B Claims Processing Enterprise Architecture which can be found at the following URL: http://www.cms.hhs.gov/MedicareContractingReform/downloads/Processing_Claims_for_Part_A&B_Enterprise_Architecture.pdf.

C.1.4.3 Unique Requirements for the MAC Under Title XVIII of the Social Security Act, the CMS contracted with individual fiscal intermediaries (FIs) and carriers to perform unique work and tasks beyond the base scope of the FI and Carrier contracts. These special contract arrangements were for work that may have affected beneficiaries and/or providers in every state and/or region.

C.1.4.3.1 Unique Core Requirements

Under MCR, the CMS has decided to include some of these unique contract tasks within the core work requirements for each A/B MAC jurisdiction. Table 1 lists the activities that are incorporated into the core requirements for each A/B MAC jurisdiction.

Table 1: Unique Core Requirements

All bidders should ensure they understand the impact to the functional requirements of these workloads.

C.1.4.3.2 Jurisdiction-Specific Requirements In addition to the requirements described in section C.1.4.3.1, the CMS has identified requirements for the MACs that are specific to a jurisdiction. Table 2 lists the requirements that will be incorporated into select A/B MAC jurisdictions.

Table 2: Jurisdiction-Specific Requirements

C.1.4.4 Home Health and Hospice Requirements

Under Title XVIII of the Social Security Act, the CMS contracted with four (4) Regional Home Health Intermediaries (RRHI) to provide services to home health agencies and hospices. The current Regional Home Health Intermediaries (RHHIs) and their services areas are available on the CMS website at: http://www.cms.hhs.gov/MedicareContractingReform/downloads/currentmaps.pdf.

Under Medicare Contracting Reform (MCR), the CMS will assign this unique home health and hospice (HH+H) workload to four A/B MAC jurisdictions (6, 11, 14 and 15). This workload will be grouped under four service areas that geographically align to the A/B MAC jurisdictions and mirror those for the Durable Medical Equipment (DME) MACs. The service areas for HH+H are available on the CMS website at: http://www.cms.hhs.gov/MedicareContractingReform/Downloads/Specialty_MAC_Jurisdiction_MAP.pdf. Table 3 lists the assignments of the HH+H service areas to the A/B MAC jurisdictions.

Table 3: HH+H Jurisdiction Assignments

C.2 Applicable Documents

The following statutes, regulations, manuals, and documents apply to this contract.

C.2.1 Statutes

The Contractor must comply with all applicable laws. The major statute governing the Medicare program is Title XVIII of the Social Security Act (“the Act”), as amended. The Act and major amendments to the Act are outlined below. The identified amendments include legislation that significantly changed the Medicare program, are being implemented, or significantly affect the scope of work. Congress may pass new legislation at any time, and the Centers for Medicare & Medicaid Services (CMS) must act to implement such legislation as timely and accurately as possible.

C.2.1.1 Social Security Act (Public Law 74-271)

The Act was enacted on August 14, 1935, with subsequent amendments. The Act consists of 20 titles, four of which have been repealed. The Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) programs are authorized by Title XVIII of the Act. The vast bulk of the traditional Medicare program’s authorizing law is codified in Parts A, B and E of Title XVIII. (Part C is primarily devoted to private Medicare plans, and Part D governs the new Medicare prescription drug benefit.) Other Medicare-related authorizing statutes are in Titles II and XI of the Act; other governing provisions are in the Internal Revenue Code and other statutes.

To the extent that there is no conflicting Medicare requirement, the administration of the traditional Medicare program is also governed by numerous statutes pertaining to the general administration of federal programs. The following are among the general statutory authorities with broad implications for the traditional Medicare program and the Medicare Administrative Contractor (MAC) contract:

a. Acquisition (Competition in Contracting Act, etc.)

b. Federal Information Security Management Act of 2002 (FISMA)

c. Government Performance and Results Act (GPRA)

d. Personnel and civil rights law (Drug-Free Workplace Act, Americans with Disability Act)

e. Privacy and information technology requirements (Privacy Act of 1974, Information Technology Management Reform Act of 1996).

f. Rehabilitation Act of 1998 (section 508, Accessibility Standards)

C.2.1.2 Medicare Prescription Drug, Improvement and Modernization Act (Public Law 108-173)

On December 8, 2003, the President signed the Medicare Prescription Drug, Improvement and Modernization Act (MMA) into law. This statute makes the most sweeping changes in the structure of the Medicare program since its inception in 1966. The significant changes made by this statute include the following:

a. Establishment of a temporary Medicare prescription drug discount card program.

b. Establishment of a permanent Medicare prescription drug program.

c. Renaming of the Medicare+Choice to Medicare Advantage and provision of significant new incentives to facilitate the participation of private plans in Medicare.

d. Provision of certain preventive benefits under both traditional Medicare and Medicare Advantage.

e. Implementation of many changes in coverage and payment policy within traditional Medicare.

f. Implementation of many administrative and regulatory reforms within traditional Medicare.

g. Under Section 911 of the MMA, restructuring of the acquisition statutes that govern traditional Medicare, commonly known as Medicare contracting reform (MCR).

h. Under Section 912 of the MMA, requirements for information security program and independent evaluations.

i. Under Section 921 of the MMA, provision requiring toll-free lines for provider inquiries and an expansion of provider education.

The work under this contract will be affected by many of these provisions; however, the primary authority governing the terms and conditions of this contract is Section 911.

C.2.1.3 Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191)

The Health Insurance Portability and Accountability Act (HIPAA) was enacted on August 21, 1996. Title II, Subtitle F, of HIPAA gives the Department of Health and Human Services (DHHS) the authority to mandate the use of standards for the electronic exchange of health care data; to specify what medical and administrative code sets should be used within those standards; to require the use of national identification systems for health care patients, providers, payers (or plans), and employers (or sponsors); and to specify the types of measures required to protect the security and privacy of personally identifiable health care information.

C.2.1.3.1 Administrative Simplification Compliance Act of 2002 (Public Law 107-105) The Administrative Simplification Compliance Act requires that providers of healthcare submit their claims to Medicare electronically, with limited exceptions, to qualify for payment.

C.2.1.4 Tax Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248)

The Tax Equity and Fiscal Responsibility Act (TEFRA) made Medicare the secondary payer for certain employees and dependents.

C.2.1.5 Benefit Improvement and Protection Act of 2000 (Public Law 106-554)

Section 521 of the Benefit Improvement and Protection Act (BIPA) changed the Medicare appeals process to create a uniform procedure for handling all Medicare appeals (Parts A and B) and specified time frames for filing appeals and rendering decisions.

C.2.2 Regulations

Generally, Medicare regulations are located in Title 42 and 45 of the Code of Federal Regulations (CFR).

C.2.3 Medicare Manuals

Medicare manuals (e.g., Internet-only manuals—IOMs) are CMS program instructions, day-to-day operating instructions, policies, and procedures that are based on statutes and regulations, guidelines, models, and directives. CMS program components, providers, Contractors, and state survey agencies use Medicare manuals to administer CMS programs. As CMS paper-based manuals are updated, the updated materials are published in the IOMs and eliminated from the paper-based manuals. The IOMs have precedence over paper-based manuals. The CMS will continue this phase-out/phase-in process until all manual instructions are in the IOMs. IOMs and paper-based manuals can be found at http://www.cms.hhs.gov/Manuals/IOM/list.asp#TopOfPage.

Citations in this SOW are generally to an IOM Publication (IOM Pub.). Paper-based manual citations are used only where necessary (indicated as CMS Pub. XX).

C.3 Key Definitions

Several Statement of Work (SOW) appendices contain definitions critical to understanding this SOW. Appendix E is an alphabetical listing of key definitions and Appendix I describes the different terms used to describe the function of reevaluating a decision. These appendices are not intended to be an all-inclusive list of definitions for terms used throughout the SOW. Additional definitions are available on http://www.cms.hhs.gov/apps/glossary/.

C.4 Objectives

This acquisition supports the mission of the Centers for Medicare & Medicaid Services to ensure health care security for beneficiaries. The CMS’ strategic goals and objectives, developed in conjunction with the Department of Health and Human Services’ strategic plan, emphasize the themes of accountability, stewardship, and a renewed focus on the customer. For the CMS, this has resulted in a commitment to beneficiaries as the ultimate focus of all CMS activities, expenditures, and policies. To ensure that the CMS remains a responsive, dynamic, and relevant government agency that serves its citizens, the CMS is committed to monitoring and evaluating the effectiveness of its programs. The CMS will communicate, collaborate, and cooperate with key customers, both public and private, to help achieve the desired outcomes.

Consistent with Government Performance and Results Act principles, the CMS has used a balanced-scorecard approach to develop objectives for the Contractor in the following four categories: customer service, operational excellence, innovation and technology, and financial management. In this Statement of Work, the CMS has identified meaningful, outcome-oriented performance standards and measures that speak to fundamental program purposes and to CMS’ role as a steward of taxpayer dollars.

C.4.1 Customer Service

Customer service addresses the ability to provide quality services effectively and to increase the overall level of customer service and satisfaction. In support of customer service, the Contractor shall do the following:

a. Provide an overall environment where providers understand the fee-for-service (FFS) Medicare program.

b. Respond to provider telephone and written inquiries promptly, clearly, and accurately.

c. Maintain effective provider education that achieves accurate billing with prompt and correct provider payment.

d. Maintain a high level of provider service and satisfaction by good communication and relationships with providers.

e. Maintain a high level of beneficiary service and satisfaction related to the complex inquires referred to the MAC by the Beneficiary Contact Center.

C.4.2 Operational Excellence Operational excellence addresses the ability of employees, the quality of information systems, and the effects of organizational alignment in supporting the accomplishment of organizational goals. In support of achieving operational excellence, the Contractor shall do the following:

a. Effectively manage the combined administration of Medicare Parts A and B.

b. Promote corporate integrity and establish internal controls and an effective compliance program to achieve contractual goals and objectives.

c. Work collaboratively with CMS, providers, and other CMS contractors to foster integration of Medicare operations.

C.4.3 Innovation and Technology Innovation and technology addresses internal business results that lead to financial success and satisfied customers. In support of innovation and technology, the Contractor shall do the following:

a. Develop and continually refine business processes to foster excellence and quality in the administration of the Medicare program.

b. Foster efficiencies in the administration of the Medicare FFS program to promote best value for the government.

c. Use innovative and creative solutions to improve program operations.

C.4.4 Financial Management Improving financial management is a key initiative in the President’s Management Agenda and has been a long-term focus in achieving CMS’ mission. Under the Medicare Integrity Program (MIP), the CMS is focused on paying the right amount to legitimate providers for covered, reasonable and necessary services. Financial management also addresses efforts to promote cost efficiency and the ability to deliver maximum value to the customer. In support of financial management, the Contractor shall do the following:

a. Promote the fiscal integrity of the Medicare FFS program and be an accountable steward of public funds.

b. Pay claims and process overpayments timely, accurately, and reliably.

C.5 Functional Requirements

The following sections list the Centers for Medicare & Medicaid Services’ (CMS’) requirements, which are grouped by functional area. Table 4 lists the requirements sections.

Table 4. Requirements Sections

Requirement sections present the following information when applicable:

a. Requirement number – unique number identifying the requirement

b. Requirement name and description – descriptive title and words conveying the requirement (a few sections contain only a requirement name, relying on subsections to describe requirements)

c. Background – information providing the context for a requirement (background information is provided as needed).

d. Deliverable(s) – deliverables due to CMS are indicated with links to Appendix B where a full description is provided.

e. Standard(s) – defined levels of performance against which the quality of services can be determined.

C.5.1 Workload Implementation Requirements

The Contractor shall carry out…