J-01_AB_MAC_Statement_of_WorkRFP-CMS-2007-0018083107.doc

Part A and Part B

Medicare Administrative Contractor Statement of Work

Attachment J-1 Jurisdictions 8, 9, and 10 RFP-CMS-2007-0018, 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 Reserved

8C.2 Applicable Documents

8C.2.1 Statutes

8C.2.1.1 Social Security Act (Public Law 74-271)

9C.2.1.2 Medicare Prescription Drug, Improvement and Modernization Act (Public Law 108-173)

9C.2.1.3 Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191)

10C.2.1.3.1 Administrative Simplification Compliance Act of 2002 (Public Law 107-105)

10C.2.1.4 Tax Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248)

10C.2.1.5 Benefit Improvement and Protection Act of 2000 (Public Law 106-554)

10C.2.2 Regulations

10C.2.3 Medicare Manuals

11C.3 Key Definitions

12C.4 Objectives

12C.4.1 Customer Service

13C.4.2 Operational Excellence

13C.4.3 Innovation and Technology

13C.4.4 Financial Management

14C.5 Functional Requirements

15C.5.1 Workload Implementation Requirements

16C.5.1.1 Jurisdiction Implementation Project Plan

16C.5.1.2 Segment Implementation Project Plans

16C.5.1.3 Risk Management Plan

17C.5.1.4 Segment Cutover Plan

17C.5.1.5 Segment Test Plan

17C.5.1.6 Lessons Learned Documentation

17C.5.1.7 Accounts Receivable Reconciliation

18C.5.1.8 Consolidation of Part A and Part B Edits

18C.5.1.8.1 Consolidation of Reason Codes

19C.5.1.8.2 Consolidation of Local Coverage Determinations

20C.5.1.9 Implementation Stakeholder Communication

21C.5.1.10 Implementation Meetings

21C.5.2 Contractor Responsibilities during the Workload Closeout Period (Option that may be exercised at the End of the Contract)

22C.5.2.1 Workload Closeout Project Plan (Option that may be exercised at the End of the Contract)

22C.5.2.2 Workload Closeout Meetings (Option that may be exercised at the End of the Contract)

23C.5.2.3 Workload Closeout Risk Management Plan (Option that may be exercised at the End of the Contract)

23C.5.2.4 Accounts Receivable Reconciliation (Option that may be exercised at the End of the Contract)

23C.5.2.5 Cost Accounting/Audit (Option that may be exercised at the End of the Contract)

23C.5.2.6 Provider Cost Reports and Appeals (Option that may be exercised at the End of the Contract)

23C.5.3 Infrastructure Requirements

24C.5.3.1 Enterprise Data Center

26C.5.3.1.1 Local Hardware and Software Requirements

26C.5.3.1.1.1 HIPAA Compliant Translation Software

27C.5.3.1.1.2 Electronic Claims Retention

27C.5.3.1.2 Reserved

27C.5.3.2 Telecommunications

29C.5.3.2.1 Telecommunications for Electronic Data Interchange

30C.5.3.2.1.1 Electronic Data Interchange Enrollment Form

31C.5.3.2.1.2 Transaction Error Reporting

31C.5.3.2.1.3 Receipt of Electronic Data Interchange Transactions

32C.5.3.2.1.4 Sending Electronic Data Interchange Transactions

32C.5.3.2.1.5 Automated Clearing House transactions

33C.5.3.2.1.6 Direct Data Entry Capability

33C.5.3.2.2 Testing

33C.5.3.2.2.1 Initial Edits

34C.5.3.2.3 Electronic Data Interchange Help Desk

35C.5.3.2.3.1 Electronic Data Interchange Outreach Activities

36C.5.3.2.4 Electronic Funds Transfer EFT Forms

36C.5.3.2.4.1 Network Service Vendor Agreements

36C.5.3.2.5 HIPAA Code Set Updates

36C.5.3.3 Telephone Service

37C.5.3.4 CMS Audits and Reviews

37C.5.4 Administrative Requirements

37C.5.4.1 Key Personnel

37C.5.4.1.1 Project Manager

38C.5.4.1.2 Claims Processing Manager

38C.5.4.1.3 Chief Financial Officer

38C.5.4.1.4 Compliance Officer

39C.5.4.1.5 Program Safeguard Contractor Liaison

39C.5.4.1.6 Chief Information Officer

40C.5.4.1.7 Systems Security Officer

40C.5.4.1.8 Implementation Project Director

41C.5.4.1.9 Provider Customer Service Program Manager

41C.5.4.1.10 Contract Administrator

42C.5.4.1.11 Contractor Medical Director

42C.5.4.1.12 Audit and Reimbursement Manager/Director

43C.5.4.2 Reserved

43C.5.4.2.1 Reserved

43C.5.4.3 Security

43C.5.4.3.1 Certification by Chief Information Officer for Compliance with CMS Systems Security Requirements

43C.5.4.3.2 Administer Security Program

44C.5.4.3.3 Access to Systems

44C.5.4.3.3.1 Reserved

44C.5.4.3.3.2 Other Systems Access Requirements

45C.5.4.3.4 Correct Deficiencies

45C.5.4.3.4.1 Corrective Action Attestation

46C.5.4.3.5 Security Review and Verification

46C.5.4.4 Quality Assurance Requirements

46C.5.4.4.1 Quality Control Program

47C.5.4.4.2 Reserved

47C.5.4.4.3 Reserved

47C.5.4.4.4 Contractor’s Internal Education

47C.5.4.5 Public Relations

48C.5.4.5.1 Medicare Beneficiary Ombudsman

48C.5.4.6 Responses to Congressional Inquiries

49C.5.4.7 Participation in Conferences, Meetings, and Work Groups

49C.5.4.7.1 Participation in Conferences

50C.5.4.7.1.1 Chief Financial Officer Financial Reporting Conference

50C.5.4.7.2 Participation in Meetings and Work Groups

50C.5.4.7.3 Support Income Tax Reporting

51C.5.4.8 Participation in Change Management Process

53C.5.4.8.1 Review and Comment on Draft Change Requests

54C.5.4.8.2 Early Involvement

55C.5.4.8.3 Successful Implementation of Change Requests

56C.5.4.8.3.1 Walkthroughs

57C.5.4.8.4 Participation in Testing Changes to Systems

58C.5.4.8.5 Successful Post-Implementation Operation

58C.5.4.9 Business Continuity Planning and Disaster Recovery

59C.5.4.10 Internal Controls

59C.5.4.10.1 Written Policies and Procedures

59C.5.4.10.2 Self Assessment Process for Internal Controls

59C.5.4.10.3 Correcting Internal Control Deficiencies – Corrective Action Plan Process

60C.5.4.10.4 Statement on Auditing Standards No. 70 Audit

60C.5.4.11 Compliance Program

61C.5.4.12 Chain Provider Organizations

61C.5.5 Provider Enrollment

62C.5.5.1 Process Initial Enrollment and Revalidation Applications

63C.5.5.2 Process Changes, Updates, Reassignments or Corrections

63C.5.5.3 Revocations/Deactivations

63C.5.5.4 Provider Enrollment Appeals

64C.5.5.5 Maintain State-Specific Licensure/Certification Information

64C.5.5.6 Participating Physician Enrollment

64C.5.6 Local Coverage Determinations

65C.5.6.1 Contractor Advisory Committee

66C.5.7 Provider Customer Service Program

66C.5.7.1 Provider Outreach and Education

67C.5.7.1.1 Data Analysis

67C.5.7.1.2 Provider Outreach and Education Advisory Group

67C.5.7.1.3 “Ask-the-Contractor” Teleconferences

68C.5.7.1.4 Provider Organization Partnerships

68C.5.7.1.5 Promotion of Internal Communication and Development of Provider Education Needs

68C.5.7.1.6 Bulletin/Newsletter Publication

68C.5.7.1.7 Provider Service Plan

69C.5.7.1.8 Education Activity Report

69C.5.7.2 Provider Contact Center

69C.5.7.2.1 Telephone Inquiries

70C.5.7.2.2 Written Inquiries

71C.5.7.2.3 Provider Relations Research Specialists

72C.5.7.2.3.1 Responding to Complex Beneficiary Inquiries

73C.5.7.2.4 Inquiry Tracking System

73C.5.7.3 Provider Self-Service Technology

73C.5.7.3.1 Interactive Voice Response

74C.5.7.3.2 Web Technology

74C.5.7.3.3 Provider Listserv

74C.5.7.3.4 Provider Customer Service Program Staff Training

75C.5.8 Claims Processing

76C.5.8.1 Standard Paper Remittance Advice Transactions

76C.5.8.1.1 Direct Data Entry Support

77C.5.8.2 General Claims Processing

78C.5.8.2.1 Communication of Claims Processing Problems

79C.5.8.2.2 Resolution of Common Working File Rejected Claims Involving another Medicare Administrative Contractor

79C.5.8.2.3 Resolution of Claims Transaction Replies from Common Working File

79C.5.8.2.4 Resolution of Unsolicited Responses from Common Working File

79C.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

80C.5.8.2.4.2 Identification of Potential MSP Existence

80C.5.8.2.5 Payment of Claims outside Common Working File

80C.5.8.2.6 Handling of Medicare Advantage Claims

81C.5.8.2.6.1 Medicare Advantage Claims for Hospice Care

81C.5.8.2.6.2 Medicare Advantage Claims for National Coverage Decision or Legislative Change in Benefits

81C.5.8.2.7 Local System Edits

82C.5.8.3 Development of Suspended Claims

82C.5.8.4 Back-End Processing

82C.5.8.4.1 Remittance Advice and Medicare Summary Notices

83C.5.8.4.2 Coordination of Benefits Flat Files

83C.5.8.4.3 Generate and Mail Claims Processing Documents

83C.5.8.4.4 The Do Not Forward Initiative

84C.5.8.5 Opt-Out Payment Provisions

84C.5.8.6 Physician Incentive Payments for Services in Health Professional Shortage Area and Physician Scarcity Area

85C.5.8.7 Participating Competitive Acquisition Program Physician Claims for Administering Part B Drugs

85C.5.8.7.1 Listing of Competitive Acquisition Program Participating Physicians and Practitioners

85C.5.8.7.2 Monitoring Competitive Acquisition Program Physicians and Practitioner Claims for Administering Part B Drugs

85C.5.9 Reopening of Medicare Initial Claims Determinations

85C.5.9.1 Reopening

86C.5.9.1.1 Reopenings on the Contractor’s Own Motion

86C.5.9.1.2 Reopenings on the Request of Party

86C.5.9.1.2.1 Redetermination Resolutions for Clerical Errors

86C.5.9.1.2.2 Documentation Requests

86C.5.9.1.3 Reopening Appeal Cases

87C.5.9.2 Establishing Good Cause for Reopening Initial Determinations and Redeterminations

87C.5.9.3 Reopening Decisions

87C.5.10 Appeals of Medicare Initial Claims Determinations

87C.5.10.1 Redetermination Requests

88C.5.10.1.1 Controlling Receipt of Correspondence

88C.5.10.1.2 Document Imaging and Indexing

88C.5.10.1.3 Acceptance of Valid Redetermination Requests

89C.5.10.1.4 Misdirected Redetermination Requests

89C.5.10.1.5 Granting of Extensions for Late Redetermination Requests and Determination of Good Cause

90C.5.10.1.6 Consolidation of Multiple Requests for Same Claim

90C.5.10.1.7 Withdrawals and Eligibility-Based Dismissals

91C.5.10.1.8 Assistance to Beneficiary

91C.5.10.1.9 Conduct and Notice of the Redetermination

92C.5.10.1.10 Documenting the Redetermination Case Files

92C.5.10.1.11 Reserved

92C.5.10.2 Appeal Decision Effectuation

93C.5.10.3 Monthly Statistical Report on Reopening and Appeals Activities (CMS – 2592 & CMS 2590/2591)

93C.5.10.4 Quality Improvement / Data Analysis

93C.5.11 Financial Management of Trust Fund Dollars

94C.5.11.1 Use of Trust Fund

94C.5.11.1.1 Certification of Financial Reporting by Chief Financial Officer for Medicare Operations

95C.5.11.1.2 Validation of Financial Data

95C.5.11.1.3 Resolution of Financial Deficiencies

95C.5.11.2 Banking Relations

96C.5.11.2.1 Time Account Balance

96C.5.11.2.2 Benefits Account

96C.5.11.2.3 Account Reconciliation

97C.5.11.2.4 Letter-of-Credit Limitation

97C.5.11.3 Cost Reporting and Reimbursement Payment Policy

97C.5.11.3.1 The Medicare Cost Report

98C.5.11.3.1.1 CMS Cost Report and Reimbursement Inquiries

98C.5.11.3.2 Audit of Institutional Provider Cost Reports

98C.5.11.3.2.1 Cost Report Reminder Letter

98C.5.11.3.2.2 Cost Report Acceptance

99C.5.11.3.2.3 Late Cost Reports

99C.5.11.3.2.4 Rejected Cost Reports

99C.5.11.3.2.5 Tentative Settlements

99C.5.11.3.2.6 Desk Reviews of Providers’ Cost Reports

100C.5.11.3.2.7 Wage Index

100C.5.11.3.2.8 Cost Report Audits

100C.5.11.3.2.9 Audit Plan

100C.5.11.3.2.10 Final Settlement

101C.5.11.3.2.11 Cost Report Reopenings

101C.5.11.3.2.12 Reopening Notices or Denials

101C.5.11.3.2.13 Provider Change in Contractors

102C.5.11.3.2.14 Audits of Home Office Cost Statements

102C.5.11.3.2.15 Provider Permanent Files

102C.5.11.3.2.16 Cost Report Hearings

102C.5.11.3.2.17 Cost Report Appeals: Provider Reimbursement Review Board

103C.5.11.3.2.18 Cost Report Appeals: Court Hearing / Settlements

103C.5.11.3.2.19 Cost Report Appeals: Final Decisions

103C.5.11.3.2.20 Requests for Cost Report, Audit and Reimbursement Information

103C.5.11.3.3 Institutional Provider Reimbursement

104C.5.11.3.3.1 Provider-Specific File Correctness

104C.5.11.3.3.2 Provider Statistical and Reimbursement Report

104C.5.11.3.3.3 System for Tracking Audit and Reimbursement System

105C.5.11.3.3.4 Hospice Cap

105C.5.11.3.3.5 Target Limits: Tax Equity and Fiscal Responsibility Act

105C.5.11.3.3.6 Exception Requests: End-Stage Renal Disease

106C.5.11.3.3.7 Exception Requests: Tax Equity and Fiscal Responsibility Act

106C.5.11.3.3.8 Health Care Provider Cost Report Information System

107C.5.11.3.3.9 Provider-Based Determinations

107C.5.11.3.3.10 Special Payment Status

107C.5.11.3.3.11 Interns and Residents Information System

108C.5.11.3.3.12 Institutional Provider Reimbursement – Reimbursement for Federally Qualified Health Centers and Rural Health Clinics

108C.5.11.3.3.13 Medicare Supplemental Payments for FQHCs under contract with Medicare Advantage Plans

108C.5.11.4 Non-Medicare Secondary Payer Overpayment

109C.5.11.4.1 Identification of Overpayment Cause

109C.5.11.4.2 Applications for Extended Repayment Plan

110C.5.11.5 Non-Medicare Secondary Payer Debt Collection

110C.5.11.6 Non-Medicare Secondary Payer Debt Referral

110C.5.11.6.1 Non-Medicare Secondary Payer Debt Collection Improvement Act Intent to Refer Letter

110C.5.11.6.2 Non-Medicare Secondary Payer Debt Referral Inquiries

110C.5.11.6.3 Debt Collection System Database

111C.5.11.6.4 Posting of Debts Collected by Treasury

111C.5.11.7 Reserved

111C.5.11.7.1 Unsolicited/Voluntary Refunds

111C.5.11.8 Overpayment Related to Bankruptcy

112C.5.11.8.1 Administrative Freeze Payments

112C.5.11.8.2 Closed Bankruptcy Case

113C.5.11.9 Financial Reporting and Accounting

114C.5.11.9.1 Accounts Receivable Trend Analyses

114C.5.11.9.2 Financial Reporting Audits/Reviews

115C.5.11.10 Medicare Credit Balance Report Activities

115C.5.12 Medical Review

115C.5.12.1 Development of Medical Review Strategy

116C.5.12.1.1 Medical Review Data: Data Analysis

116C.5.12.1.2 Medical Review Data: Edit Effectiveness

116C.5.12.1.3 Medical Review Data: Probe Reviews

117C.5.12.1.4 Provider Tracking

117C.5.12.1.5 Medical Review of Claims

117C.5.13 Coordination with Program Safeguard Contractors

118C.5.13.1 Support of Benefit Integrity

118C.5.13.2 Support of Comprehensive Error Rate Testing

118C.5.14 Medicare Secondary Payer

119C.5.14.1 Implementation of Medicare Secondary Payer Operations

119C.5.14.2 Electronic Correspondence Referral System Status Inquiries

120C.5.14.3 Identification and Adjudication of Medicare Secondary Payer Claims and Application of Benefits and Processing Formula

120C.5.14.3.1 Medicare Secondary Payer Claims Payment Determinations

120C.5.14.3.2 Medicare Secondary Payer Claims Adjudication and Validation

120C.5.14.3.3 Medicare Secondary Payer Claims Inquiries

120C.5.14.4 Transfer of Documentation and Phone Calls to the Coordination of Benefits Contractor

120C.5.14.5 Medicare Secondary Payer Hospital Audits

121C.5.14.6 Medicare Secondary Payer Post Payment Recovery

121C.5.14.6.1 Duplicate Primary Payments

122C.5.14.6.2 Inquiries Specific to Debt Collection Efforts for Providers, Physicians and other Suppliers

122C.5.14.6.3 Debt Collection Referral Activities for Providers, Physicians and other Suppliers

123C.5.14.6.4 MSP Savings Report

123C.5.14.6.5 Misrouted Medicare Secondary Payer Recovery Checks

123C.5.14.6.6 Misrouted Medicare Secondary Payer Recovery Correspondence

124C.5.15 Provider Oversight

124C.5.15.1 Review of Provider Billing Records

124C.5.15.2 Review of Comprehensive Outpatient Rehabilitation Facility Billing Records

125C.5.15.3 Review of Inpatient Rehabilitation Facilities and Critical Access Hospitals’ Rehabilitation Distinct Part Units

125C.5.15.4 Conduct of Site Visits

125C.5.16 Reserved

125C.5.17 End Stage Renal Disease Clinical Trial

126C.5.18 Rural Health Clinics

126C.5.18.1 Education Materials

126C.5.19 Federally Qualified Health Centers

127C.5.19.1 Education Materials

127C.5.20 Foreign Claims

127C.5.21 Laboratory Competitive Bidding Demonstration

128C.5.22 Shipboard/Foreign Travel Services

128C.5.23 Program Management Office

128C.5.23.1 Post-Award Meeting

129C.5.23.2 Project Management Plan

129C.5.23.3 Cost Management

129C.5.23.4 Monthly Status Report and Meeting

130C.5.23.5 Ad Hoc Reporting

130C.5.23.6 CMS ART

131C.5.23.7 CAFM

131C.5.23.8 CROWD

131C.5.23.9 ASCA Enforcement and Reporting

132C.5.23.10 Freedom of Information Act Requests

132C.5.24 Medicare Contractor Provider Satisfaction Survey

133C.5.25 Clinical Laboratory Fee Schedule – Gap-Fill Fees

134C.6 Interface Requirements

134C.6.1 Successful Collaboration with Entities Requiring Joint Operating Agreements

136C.6.1.1 Joint Operating Agreement: Quality Improvement Organization

136C.6.1.1.1 Referrals to Quality Improvement Organization

136C.6.1.1.2 Referrals from Quality Improvement Organization

136C.6.1.1.2.1 Payment Adjustments

136C.6.1.1.2.2 Billing Errors

137C.6.1.2 Joint Operating Agreement: Qualified Independent Contractor

137C.6.1.2.1 Supply of Appeals Case Files

137C.6.1.2.2 Misrouted Requests for Reconsideration

137C.6.1.2.3 Preparation of Case Files

138C.6.1.3 Joint Operating Agreement: Medicare Secondary Payer Recovery Contractor

138C.6.1.4 Joint Operating Agreement: Beneficiary Contact Center

139C.6.1.5 Joint Operating Agreement: Coordination of Benefits Contractor

139C.6.1.6 Joint Operating Agreement: Appeals Support Contractor

140C.6.1.7 Joint Operating Agreement: Non-Medicare Secondary Payer Recovery Audit Contractor

141C.6.2 Successful Collaboration and Coordination with Other Internal and External Entities

141C.6.2.1 State Agencies Responsible for Licensing Institutional Providers (e.g., Survey and Certification, Licensing Authorities)

142C.6.2.2 Investigative Agencies

142C.6.2.2.1 Access to Files, Records, Data, and Personnel

142C.6.2.2.2 Search Warrants

142C.6.2.3 CMS Field Offices

143C.6.2.4 Medicare Advantage Plans, Prescription Drug Plans, and Nontraditional Fee-for-Service Entities

143C.6.2.5 Other Medicare Administrative Contractors

143C.6.2.6 Professional Associations

144C.6.2.7 Infrastructure Service Providers

144C.6.2.8 Bank Interface

144C.6.2.9 Reserved

145C.7 Jurisdiction-Specific Requirements

145C.7.1 Reserved

145C.7.2 Reserved

145C.7.3 Low Vision Demonstration – Jurisdiction Ten

146C.7.4 Reserved

146C.7.5 Reserved

146C.7.6 Reserved

146C.7.7 Reserved

146C.7.8 Reserved

146C.7.9 Reserved

146C.7.10 Reserved

146C.7.11 Reserved

146C.7.12 Reserved

146C.7.13 Reserved

146C.7.14 Limited Purpose Insurance Company – Jurisdiction Ten

147C.7.15 Independent Organ Procurement Organizations – Jurisdiction Ten

148C.7.16 Religious Non-medical Health Care Institution (RNHCI) – Jurisdiction Ten

148C.7.17 Histocompatibility Lab – Jurisdiction Ten

148C.7.18 Spanish Translation of HCPCS Code Descriptors – Jurisdiction Nine

149C.7.19 High Risk Fraud and Abuse Areas – Jurisdictions Eight and Nine

150C.7.20 Reserved

150C.7.21 Medicare Integrity Program Demonstration for Providers of Infusion Therapy in High Risk Areas – Jurisdiction Nine

150C.7.21.1 Provider Enrollment

153C.7.21.2 Medical Review

153C.7.21.3 Customer Service

155C.8 Contract Options

155C.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, 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, and swing bed services (SNF level in a rural hospital having less than 50 beds). 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, and outpatient rehabilitation services, regardless of the type of institution.

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 Reserved

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 3. 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 the orderly transfer of all Medicare data, records, and operations from all outgoing carriers and intermediaries (segments) within its jurisdiction in accordance with the Jurisdiction Implementation Project Plan.

The Contractor shall establish and maintain through the course of the implementation an experienced implementation management team.

All Medicare functions specified in this SOW are performed by the Contractor beginning on the Segment Operational Start Date (SOSD). All Medicare functions specified in this SOW for the entire jurisdiction are performed by the Contractor beginning on the Jurisdiction Operational Start Date (JOSD).

Downloads/MACImplementationHandbook.pdf

C.5.1.1 Jurisdiction Implementation Project Plan

The Contractor shall develop, execute, and maintain a Jurisdiction Implementation Project Plan consistent with the Contractor’s proposed Jurisdiction Implementation Project Plan that was submitted in response to the Request for Proposal (RFP) and report its status.