J-01_Statement_of_Work_redline.docx

CMS-RFP-2010-0004

Attachment J-01 Revised 01/27/2010 Attachment J-01

CMS-RFP-2010-0004 Attachment J-01 Attachment J-01 Revised 01/27/2010

Durable Medical Equipment

(DME)

Medicare Administrative Contractor (MAC)

Attachment J-01 - Statement of Work (SOW) Procurement of DME MAC Jurisdictions A & B

Source Selection Information – See FAR 2.101 and 3.104

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A. SCOPE

Independently and not as an agent of the Government, the Contractor shall be required to furnish all the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the Government, as needed to perform the Statement of Work below.

1. 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 their dependents; and (3) individuals with acute kidney failure (End Stage Renal Disease or ESRD). Approximately 43 million persons were enrolled for Medicare coverage in Fiscal Year (FY) 03.

Nearly all Medicare beneficiaries may access their insurance benefits through one of two health care delivery systems. First, in all areas of the country, a beneficiary may enroll in the “traditional” Medicare program (the Medicare fee-for-service 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 provider bills for its services to the appropriate Medicare claims administrator, and payment is made to the provider based on the Medicare Hospital Insurance (HI) and/or Supplementary Medical Insurance (SMI) program’s eligibility, coverage and payment rules. The federal government bears all financial (underwriting) risk for the cost of program benefits under this program, and develops detailed administrative requirements and processes to support the claim administration process. As a national entitlement program, there is 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/regional medical practices.

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” (formerly Medicare+Choice) program. These private Medicare plans may organize themselves in keeping with one of several health care delivery and payment models (e.g., 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 14% of Medicare beneficiaries are currently enrolled in Medicare Advantage.

More than 85 percent of all Medicare beneficiaries – or about 34 million – participate in the traditional Medicare program. 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 shall likely remain enrolled in the traditional Fee-For-Service (FFS) Medicare program. FFS coverage in the Medicare Program consists of two distinct parts: (1) Hospital Insurance (HI), which also provides coverage for Medicare institutional benefits; 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 (e.g., 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, and the SMI program is known as “Medicare Part B,” and only the Medicare Part B trust fund is used to reimburse these claims.

In accordance with Section 1834 (a) (12) of the Social Security Act (the Act), CMS, in the Department of Health and Human Services, entered into contracts in 1992 with four Durable Medical Equipment Regional Carriers (DMERCs) to perform all of the DMERC duties associated with the processing of claims for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) under Part B of the Medicare program. This SOW proposes contracts for Medicare Administrative Contractor (MAC) operations associated with the processing for claims for DMEPOS items. These medical items are included in “medical and other health services” (§1832 (a)(1)(B) of the Act. Other DMERC requirements are listed in 42 C.F.R 421.210. General claims processing guidelines may be found in the Internet Only Manual (IOM). Other more specific guidelines are found in this SOW.

The DME MACs shall process claims based on a Medicare beneficiary’s principal residence by State.

Jurisdiction A: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont

Jurisdiction B: Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin, Kentucky

Jurisdiction C: Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, Virgin Islands, Virginia, West Virginia

Jurisdiction D: Alaska, Arizona, California, Guam, Hawaii, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, Nevada, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming, Mariana Islands, American Samoa

Payment shall be made for most durable medical equipment and surgical dressings on the basis of local, i.e., state-wide, fee schedule amounts limited by the national median of state-wide fees for each item (ceiling) and 85% of the national median of state-wide fees for each item (floor). See §1834 (a) of the Act for payment rules for durable medical equipment. The fee schedule amounts are increased annually by covered item updates. Per §1834(h)(1)(E) of the Act, these rules also apply to ostomy supplies, tracheostomy supplies, and urologicals. See §1834 (i) of the Act for payment rules for surgical dressings.

Payment shall be made for most prosthetic devices, orthotics and prosthetics, and therapeutic shoes and inserts on the basis of regional, i.e., per CMS Region, fee schedule amounts limited by 120% of the national average of the regional fees applied to each state (ceiling) and 90% of the national average of the regional fees applied to each state (floor). The fee schedule amounts are increased annually by covered item updates. See §1834 (h) of the Act for payment rules for prosthetic devices, orthotics and prosthetics, and therapeutic shoes and inserts.

Payment shall be made for parenteral and enteral nutrients, equipment and supplies on the basis of national fee schedule amounts. The fee schedule amounts are increased annually by covered item updates. See §1842 (s) of the Act for payment rules for parenteral and enteral nutrients, equipment and supplies.

Payment shall be made for home dialysis supplies and equipment on a reasonable charge basis (§§1833 (a) and 1842 (b)(3) of the Act). Total monthly payments for home dialysis supplies and equipment are limited by a per patient cap (§1881 (b)(6) of the Act).

2. Purpose

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

The Contractor shall perform numerous functions on behalf of Medicare beneficiaries and shall establish relationships with providers of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS), for a defined geographic area or “jurisdiction.” The Contractor shall 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 shall utilize or interact with certain CMS-required payment schedules, systems, equipment and/or operational capabilities in the performance of its functions. Further, the Contractor shall coordinate its activities not only with 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 shall receive and control Medicare claims from DMEPOS suppliers and beneficiaries within its jurisdiction, as well as perform edits on these claims to determine whether the claims are complete and should be paid. An edit is defined as: Logic within the Shared Claims Processing System that selects certain claims, evaluates or compares information on the selected claims or other accessible source, and depending on the evaluation, takes action on the claims, such as pay in full, pay in part, or suspend for manual review.

In addition, the Contractor calculates Medicare payment amounts and remits these payments to the appropriate party. The Contractor also conducts a variety of different supplier services, such as answering written inquiries, and educating them on Medicare’s rules and regulations and billing procedures. The Contractor also operates Medicare’s provider toll-free lines across the country to answer a wide-range of provider questions. Additionally, the Contractor conducts redeterminations on appeals of claims and responds to complex beneficiary inquiries referred from the Beneficiary Contact Centers.

This SOW, existing regulations and the Internet-only Manuals (IOM)s use the term “carrier” to describe the Durable Medical Equipment Medicare Administrative Contractor. Effective October 1, 2005, pursuant to the MMA, Section 911(e), the term “carrier” should be read as “Medicare Administrative Contractor.”

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

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 Fee-for-Service (FFS) Contracting Reform (MCR). Contracting reform requires that the CMS use competitive procedures to replace its current fiscal intermediaries (FIs) and carriers with a uniform type of administrative entity, referred to as Medicare Administrative Contractors (MACs). FIs handle claims processing and benefit payment functions for institutional providers under Part A and Part B of the Medicare Program; while carriers perform the same functions for professional providers under Part B of the program.

3.1.1. The Centers for Medicare & Medicaid Services

The Medicare program’s authorizing statutes charge the Secretary of the Department of Health and Human Services (HHS) with administrative responsibility for the Medicare program. In turn, the Secretary has delegated the program authority for Medicare (both the traditional fee-for-service program as well as Medicare Advantage) to the Administrator of the CMS. (Before mid-2001, the CMS was known as the Health Care Financing Administration (HCFA)).

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. CMS is the largest purchaser of health care in the United States and provides health care coverage to nearly one in four Americans. CMS’ annual budget places it among the largest businesses in the world; our programs channel one out of every three dollars in the health care market and our policies influence the other two dollars. In 2008, CMS Contractors processed approximately 1.2 billion Medicare claims.

As part of its responsibility to administer the Medicare program, CMS manages the work of the Contractors engaged in its day-to-day operation. This management is accomplished through a variety of avenues, e.g. conferences held periodically 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 CMS engages them to do.

Within CMS, specialists on various Medicare topics shall serve as Business Function Leads (BFLs) to assist the Project Officer and the Contracting Officer in administering the contract. These BFLs can supply technical guidance, but it must be conveyed through the Project Officer. The BFL shall consult with the Project Officer on Technical Direction as necessary. The BFL is not authorized to direct changes to contract work.

3.1.2. Customer Relationship Management

Regional Office (RO) staffs serve an important role as the focal point for continuing the beneficiary outreach and assistance activity in the resolution of program issues raised by individual beneficiaries and providers. This RO management activity, known as “customer relationship management” is defined as the development and maintenance of relationships external to the Agency that are required to assure that the Agency mission, goals, and objectives are accomplished.

3.1.3. Medicare Administrative Contractor (“The Contractor”)

Section 1861 of the Social Security Act defines the items and services for which Medicare may pay. It also defines the provider types recognized by the Medicare program.

The complexity of Medicare payment systems and policies, and the numbers of Contractors, providers, and insurers involved in the Medicare fee-for-service program create vulnerabilities for error. In order 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 advice from CMS on questions of law and policy as they arise.

4. Objectives

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

Consistent with the Government Performance and Results Act (GPRA) principles, 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

4.1 Customer Service

Customer service activities support the business relationship between fee-for-service Medicare providers/suppliers and the Medicare program. Quality services increase the overall level of customer satisfaction. In support of the objective, the Contractor shall:

· Maintain effective provider/supplier education that achieves accurate billing with prompt and correct provider/supplier payment;

· Effectively respond to provider/supplier inquiries and complex beneficiary inquiries about the Medicare program;

· Maintain a high level of provider/supplier service and satisfaction through good communication and relationships with providers/suppliers;

· Facilitate Medicare beneficiary healthcare through well-informed fee-for-service providers/suppliers; and

· Work collaboratively with CMS and its Contractors to foster integration of Medicare operations.

4.2 Operational Excellence

Operational Excellence addresses the ability of employees, the quality of information systems, and the effects of organizational alignment in meeting the standards and requirements set forth in this DME MAC Statement of Work. In support of achieving operational excellence the Contractor shall:

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

· Pay claims timely, accurately, and reliably.

4.3 Innovation and Technology

Innovation and Technology addresses internal business results that lead to financial success and satisfied customers. In the area of Innovation and Technology, the Contractor shall:

· Foster efficiencies in the administration of the Medicare FFS program to promote best value for the Government;

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

· Use innovation and creative technological solutions to improve program operations.

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, 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 the area of Financial Management, the Contractor shall:

· Promote the fiscal integrity of the Medicare FFS program and be an accountable steward of public funds; and

· Process adjustments timely, accurately, and reliably.

5. Applicable Documents

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

5.1. Statutes

The Contractor must comply with all applicable laws. The major statute governing the Medicare program is the Social Security Act (Public Law 74-271) (“the Act”), as Amended. The Act and major amendments to the Act are outlined below. The identified amendments include legislation that made significant changes to the Medicare program, are in the process of being implemented, and/or significantly impact the scope of work. Congress may pass new legislation at any time, and CMS must act to implement such legislation as timely and accurately as possible. Laws and regulations can be found at: http://www.cms.hhs.gov/home/regsguidance.asp.

5.1.1. 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. Title XVIII of the Social Security Act authorizes the HI and SMI programs. The vast bulk of traditional Medicare’s program authorizing law is codified in Title XVIII of the Social Security Act, Parts A, B and E (Part C is primarily devoted to private Medicare plans, and the recently-enacted Part D governs the new Medicare prescription drug benefit). Other Medicare-related authorizing statutes may be found in Titles II and XI of the Social Security Act; other governing provisions may be found 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. General statutory authorities with broad implications for the traditional Medicare program and the contract include, but are not limited to –

· Acquisition (e.g., the Federal Acquisition Regulation (FAR), etc.);

· Financial management and internal controls (e.g., the Federal Managers’ Financial Integrity Act of 1982 (FMFIA), the Chief Financial Officers’ Act of 1990, etc.);

· Federal Information Security Management Act of 2002 (FISMA);

· Government Performance and Results Act (GPRA);

· Personnel and civil rights law (e.g., the Drug-Free Workplace Act, the Americans with Disability Act, etc.); and

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

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

On December 8, 2003, the President signed into law the MMA. This statute makes the most sweeping changes in the structure of the Medicare program since its inception in 1966. The very significant changes made by this statute include:

· The establishment of a temporary Medicare prescription drug discount card program;

· The establishment of a permanent Medicare prescription drug program;

· The Medicare+Choice program is renamed Medicare Advantage, and significant new incentives are provided to facilitate the participation of private plans in Medicare;

· The provision of certain preventative benefits under both traditional Medicare and Medicare Advantage;

· The implementation of many changes in coverage and payment policy within traditional Medicare;

· The implementation of many administrative and regulatory reforms within traditional Medicare;

· Under section 911 of the MMA, the restructuring of the acquisition statutes that govern traditional Medicare, commonly known as Medicare contracting reform;

· Under section 912 of the MMA, the requirements for information security program and independent evaluations; and

· Under section 921 of the MMA, the provision of provider education and technical assistance.

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

5.1.3. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Public Law 104-191)

HIPAA was enacted on August 21, 1996. Title II, Subtitle F, of HIPAA gives HHS 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 numbers for patients (individuals), covered health care providers, payers (or health plans), and employers (or sponsors); and to specify the types of measures required to protect the security and privacy of personally identifiable healthcare information. The identification number for patients or individuals is on indefinite hold.

5.1.4. The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) made Medicare the secondary payer for certain employees and dependents.

5.1.5. Benefits Improvements and Protection Act of 2000 (BIPA)

Section 521 of the BIPA changed the Medicare appeals process to create a uniform procedure for handling all Medicare appeals (Parts A and B). BIPA also specified new time frames for filing appeals and revised the timeframe Contractors have to issue decisions.

5.1.6. Other Key Statutes

· The Rehabilitation Act of 1998, Section 508 Accessibility Standards (“Section 508”)

· The Federal Information Security Management Act of 2002 (“FISMA”)

· The Federal Claims Collection Act of 1966

· The Privacy Act of 1974, Public Law 93-579, as amended (“Privacy Act”)

· Executive Order 13410: Promoting Quality and Efficient Health Care in Federal Government Administered or Sponsored Health Care Programs

To the extent applicable and practical, the MAC shall follow Executive Order 13410: Promoting Quality and Efficient Health Care in Federal Government Administered or Sponsored Health Care Programs.