BANKING SOW FINAL no water mark.docx

STATEMENT OF WORK

Commercial Banking Services for Medicare Claims Processing Contractors

I. SCOPE

The U.S. Department of Health and Human Services (DHHS)/Centers for Medicare & Medicaid Services (CMS) intends to contract with commercial banks to provide banking services to its Medicare claims processing contractors. The basic functions required of the banks under this SOW include: communicating and coordinating with the Medicare claims processing contractors; drawing funds from Medicare Trust Fund using a Letter of Credit issued by CMS in coordination with the U.S. Department of the Treasury; processing and paying electronic fund transfers (EFTs) and paper checks disbursed by the claims processing contractors; and reconciling Medicare bank accounts, preparing reports, and keeping records.

A. Background

Title XVIII of the Social Security Act authorizes CMS to use claims processing contractors to make payments for Medicare services. A Medicare claims processing contractor is an organization that has entered into an agreement with the CMS to perform specified functions under the Hospital Insurance Program (Part A) and/or under the Supplemental Medical Insurance Program (Part B). These functions include, but are not limited to: making payments to providers of Part A and Part B services and making payments to beneficiaries, physicians and suppliers furnishing Part B medical services. Currently, these Medicare claims processing contractors include Part A and B Medicare Administrative Contractors (MACs), Part B Durable Medical Equipment Regional Carriers (DMERCs)/Durable Medical Equipment MACs (DMACs), Part A Fiscal Intermediaries (FIs), and Part B Carriers. Notably, CMS is currently converting all claims processing contractors to MACs; this conversion will result in 15 MACs and 4 DMACs located in separate jurisdictions throughout the United States.

CMS also uses commercial banks to process Medicare payments. Using a Letter of Credit issued by CMS in coordination with the U.S. Department of the Treasury, commercial banks draw funds from the Medicare Trust Fund and deposit them into Part A and Part B Medicare bank accounts; these bank accounts are referred to as Federal Health Insurance Benefits Accounts (FHIBAs). The funds deposited into these FHIBA accounts are used to cover the electronic and paper check Medicare payments that are disbursed by the Medicare claims processing contractors and presented for payment each day. The banks are required to conduct both a weekly reconciliation and a monthly full reconciliation of each FHIBA as well as invoice CMS on a monthly basis for the fees associated with servicing these accounts. The Medicare claims processing contractors, in turn, verify that the account services were provided using reports supplied to them by the bank.

B. Purpose

The purpose of this SOW is to contract with banks capable of providing the full range of commercial banking services needed by the Medicare claims processing contractors. CMS intends to award contracts to multiple banks in order to enhance efficiency and safeguard the Medicare payment system.

II. REQUIREMENTS

Independently, and not as an agent of the Government, the bank shall furnish all the necessary services, qualified personnel, material, equipment, and facilities not otherwise provided by the Government as needed to perform the requirements of this SOW.

In addition to the tasks under the SOW, CMS requires banks to: 1) meet the minimum financial stability criteria established by CMS and the U.S. Department of the Treasury; 2) comply with the rules and regulations for electronic banking established by the Office of the Comptroller of the Currency /U.S. Department of the Treasury and the Federal Financial Institutions Examination Council; 3) demonstrate the ability to process a combined total of between 250,000 and 800,000 EFT and paper check Medicare payments on a weekly basis; and 4) transition the Medicare claims processing contractors in either workload area A or B within 90 days of the contract award.

Under this SOW, on a daily basis, the banks shall be required to draw funds from the Medicare Trust Fund using a Letter of Credit, deposit these funds into the appropriate FHIBA account, and process the Medicare payments (EFTs and paper checks) disbursed by the Medicare claims processing contractors that are presented for payment. On a weekly basis, the banks shall forward reports to the Medicare claims processing contractors for accounts reconciliation. On a monthly basis, the banks shall forward to both CMS and the Medicare claims processing contractors a Monthly Schedule of Itemized Bank Services Provided Report, a Recap of Daily Available Balances, and an invoice for banking services. The tasks are detailed in IIA and IIB below.

A. General Tasks

1. Using a Letter of Credit the banks shall draw funds daily from the Medicare Trust Fund and deposit them into the respective FHIBA established for each Part A and/or Part B Medicare claims processing contractor. Note: banks may need to establish multiple subaccounts under each FHIBA to address the workload of the Medicare claims processing contractors; the requirements of this SOW apply to each FHIBA and any subaccounts established under the FHIBA.

2. The bank shall ensure that all Federal funds withdrawn under the Letter of Credit system shall be kept separate from all other funds. These funds shall retain their special character (Federal funds) and at no time shall become part of the Medicare claims processing contractor’s general or other funds. The Letter of Credit for each FHIBA account shall be used for processing/payment of EFTs and paper checks disbursed by the Medicare claims processing contractor. The FHIBA shall also be used by the Medicare claims processing contractors to make deposits from overpayment collections, etc.

3. The bank shall coordinate with the Medicare claims processing contractor to ensure that a daily zero balance is maintained in each FHIBA.

4. The bank shall post and total all EFT and paper checks presented for payment during the day to the Medicare claims processing contractor’s respective FHIBA and, using the Letter of Credit/Request for Funds, draw funds from the Medicare Trust Fund to cover that amount less any items presented for deposit during the day to each FHIBA. The Medicare claims processing contractor shall be provided with a copy of each Request for Funds on a daily basis.

The earnings or losses resulting from any average daily available positive or negative balances in each FHIBA shall be computed monthly at the Financial Management Services (FMS) Earnings Credit Rate and either added or subtracted from the following month’s invoice for banking services.

5. The bank shall be required to prepare a weekly reconciliation for each FHIBA and subaccount. The Medicare claims processing contractor shall furnish the bank with a file or other record of EFT and paper check items issued (numerically identified) on a weekly basis to be matched against those EFT and paper check items that have cleared through each FHIBA. The results of the weekly bank reconciliation shall be sent to the Medicare claims processing contractor for verification within 2 business days from the end of the reporting week.

6. The bank shall be required to submit to the Medicare claims processing contractor on a weekly basis a bank statement/report reflecting the daily total EFT and paper check items debited, daily total deposits credited, and the daily balance in each FHIBA. Request for Funds deposits and other deposits must be shown separately on the statement.

7. The bank shall, on a monthly basis, forward to both CMS and the Medicare claims processing contractors: a Monthly Schedule of Itemized Bank Services Provided Report, a Recap of Daily Available Balances, and an invoice for banking services.

8. The bank shall collateralize balances in each FHIBA in accordance with U.S. Department of the Treasury requirements. The amount of collateral to be pledged must be based on the highest balances maintained in each FHIBA less the Federal Deposit Insurance Corporation (FDIC) coverage.

9. The bank shall accept imaged checks for deposit from the Medicare claims processing contractors as required.

10. The bank shall provide the Medicare claims processing contractors with full service internet banking capability.

11. The bank shall provide technical assistance to the Medicare claims processing contractors during normal business hours and shall provide responses/updates to technical problems within 24 hours.

12. The bank shall provide dedicated customer service representatives for each Medicare claims processing contractor.

13. The bank shall provide dedicated testing coordinators to ensure a single point of contact for each Medicare claims processing contractor.

14. The bank shall ensure that testing of bank issue and void files, EFT files, clears files, as well as any other required system testing is conducted promptly with minimal interruption or interference with services provided.

15. The bank shall ensure that paid check files are “scrubbed” to correct any checks that were encoded incorrectly before the paid check file is forwarded to the Medicare claims processing contractor.

16. The bank shall assist the Medicare claims processing contractor with transferring any funds that are incorrectly deposited.

17. The bank shall notify the Medicare claims processing contractor and request approval from CMS prior to making any service changes.

18. The bank shall verify the accuracy of the parameters and characteristics of electronic files received from the Medicare claims processing contractor prior to processing.

19. The bank shall, upon request, provide CMS with documentation to verify that they are in compliance with all electronic banking requirements imposed by the Department of the Treasury.

20. The bank shall actively monitor the Letter of Credit and ensure that the Medicare claims processing contractor is notified when they are approaching the Letter of Credit monthly limitation.

B. Transfer of Information Tasks

The following section details the transfer of information task requirements between the Medicare claims processing contractor and the bank.

1) Medicare Claims Processing Contractor to Bank

Daily

a) The Medicare claims processing contractor shall prepare miscellaneous deposits of checks.

b) The Medicare claims processing contractor shall transmit via Network Data Mover (NDM) or other designated file transfer system an EFT file to the bank for Automated Clearing House (ACH) transactions; the format of this file shall be in accordance with National Automated Clearing House Association (NACHA) standards. Control totals of ACH file transmissions shall be communicated and verified with the bank each day prior to being processed by the bank.

c) The Medicare claims processing contractor shall transmit via NDM or other designated file transfer system a positive pay file to the bank containing Medicare claims processing contractor issued, voided, and/or stale check files to match against checks presented for payment. The fields in the file shall at a minimum include: check date, payee name, check number, and check amount.

Weekly

a) The Medicare claims processing contractor, in order to facilitate the weekly reconciliation, shall furnish the bank with a file or other record of EFT and paper check items issued (numerically identified) on a weekly basis to be matched against those EFT and paper check items that have cleared through each FHIBA. The results of the weekly bank reconciliation shall be sent by the bank to the Medicare claims processing contractor for verification.

b) The Medicare claims processing contractor shall request corrective action on errors identified during the weekly bank account verification/reconciliation.

2) Bank to Medicare Claims Processing Contractor

Daily

a) The bank shall transmit, via a designated system, a file of successful and unsuccessful EFTs and paper checks that posted to each respective FHIBA.

b) The bank shall credit the appropriate FHIBA for overpayment collections, etc., deposited by the Medicare claims processing contractor.

c) The bank shall prepare inquiries regarding daily beginning balance, transactions, and ending balance for each FHIBA.

d) The bank shall provide online details of specific transactions and provide confirmation acknowledgement via U.S. mail next business day; online confirmation shall be available the same business day.

e) The bank shall post and total all EFT and paper checks presented for payment during the day to the Medicare claims processing contractor’s respective FHIBA and, using the Letter of Credit/Request for Funds, draw funds from the Medicare Trust Fund to cover that amount less any items presented for deposit during the day to each FHIBA. The Medicare claims processing contractor shall be provided with a copy of each Request for Funds on a daily basis.

f) The bank shall provide a clears file of all items paid from the previous business day in which the charge was not reversed.

g) The bank shall provide a Pay/No Pay request on positive pay mismatched items from the previous business day.

Weekly

The bank shall provide bank statements, bank reconciliations, supporting documentation, and deposit slips weekly as well as a CD ROM of imaged checks paid.

Monthly

The bank shall provide a final reconciliation to the Medicare claims processing contractor no later than the 5th business day after the end of the reporting month.

Ongoing

The bank shall coordinate routine testing of EFT systems with the Medicare claims processing contractor to ensure compliance with FISMA and OCC security policy.

C. Period of Performance The period of performance for this contract is the base year with four option years.

D. Government Property

N/A

E. Personnel Requirements

N/A

III. QUALITY ASSURANCE

All transactions, services, and reports provided under this contract shall be subject to audit. The bank shall submit all required reports and deliverables in accordance with the following schedule. Reports and/or deliverables submitted under this contract shall be in accordance with (IAW) the SOW.

ITEMS TO BE FURNISHED AND DELIVERABLE SCHEDULE

Note: all deliverables (items 1-3) are due to CMS no later than the 15th calendar day of each month. Copies of these items must also be forwarded to the respective Medicare claims processing contractor (IAW SOW II.A.7).

IV. ATTACHMENTS

V. REFERENCES

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