Long Terms Disability Insurance Administration Service

The State of Michigan, through its Department of Technology, Management and Budget, is soliciting proposals for Long-Term Disability (LTD) Insurance Administration Services under RFP No. 240000001383. The procurement seeks an administrative services only (ASO) contractor to provide comprehensive third-party claims administration for the Michigan Civil Service Commission's self-funded LTD Income Protection Plan serving over 50,000 state employees. Core deliverables include claims processing and investigation, benefit determination and payment issuance, appeal and dispute resolution administration, subrogation services, overpayment recovery, medical review coordination including independent medical examinations (IMEs), call center operations, secure web portal access, and detailed reporting and auditing capabilities. The contractor must establish a dedicated U.S.-based call center (preferably in Michigan) operating Monday through Friday from 8:00 a.m. to 5:00 p.m. EST, maintain service availability of 99.98% monthly with two-second maximum response times for 98% of transactions, and comply with strict service level agreements including call answer times and claim determination timelines. The contract term runs from October 1, 2024, through March 31, 2029, with six optional one-year renewals, an implementation period through March 29, 2025, and full performance commencing March 30, 2025. Evaluation criteria include Statement of Work and technical approach (55 points), staffing qualifications and organization (15 points), project management and financial management capability (15 points), and vendor experience (15 points), with a minimum threshold of 80 points required for pricing consideration. Bidders must submit written questions by March 11, 2024, complete a Non-Disclosure Agreement by March 21, 2024, and submit final proposals electronically through www.michigan.gov/SIGMAVSS by March 29, 2024, at 1:00 p.m. Eastern.

The solicitation does not specify disadvantaged enterprise set-asides or restrictions limiting respondent eligibility. Contractors must comply with comprehensive insurance requirements including Commercial General Liability ($1,000,000 per occurrence), Professional Liability/Errors and Omissions ($3,000,000 per occurrence), Cyber Liability ($1,000,000 per occurrence), and Crime/Fidelity Insurance ($1,000,000), along with strict data security requirements including FedRAMP authorization or annual SSAE 18 SOC 2 Type II audits, AES encryption (minimum 128-bit), multi-factor authentication, and compliance with NIST SP 800-53 controls and Michigan IT policies. The contractor must maintain SOC 1 Type 2 and SOC 2 Type 2 certifications, store all data exclusively in continental U.S. Tier 3 or equivalent data centers, and comply with IRS Publication 1075 safeguarding requirements for Federal Tax Information and Michigan Treasury Department safeguard requirements for confidential tax data. Pricing shall be submitted on a per-claimant-per-month (PCPM) basis for administrative services and by specialty for IME services, with historical data indicating approximately 1,735 open claims per month across three plan types serving approximately 38,500 employees and estimated total contract utilization of $91,414,200 over the four-year base period plus potential six-month renewal option pricing. The State anticipates contract award to a single contractor with anticipated pricing effective October 1, 2024; contracts valued at or exceeding $250,000 require State Administrative Board approval.