(RFP) for Recovery Audit Contractor (RAC) - Texas Health and ...

Tom Suehs, Executive Commissioner
Request for Proposals (RFP)
for
Recovery Audit Contractor (RAC)
RFP No. 529-13-0008
Date of Release: June 11, 2012
CPA Class/Item Code: 946-20, 948-07, 952-59
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Table of Contents
1. General Information ............................................................................................................4
1.1. Scope............................................................................................................... 4
1.2. HHSC Point of Contact .................................................................................... 5
1.3. Procurement Schedule .................................................................................... 5
1.4. Mission Statement ........................................................................................... 5
1.5. Mission Objectives ........................................................................................... 6
1.6. Background...................................................................................................... 7
1.7 Strategic Elements......................................................................................... 11
1.8 Legal and Regulatory Constraints.................................................................. 12
1.9 HHSC Amendments and Announcements Regarding this RFP..................... 14
1.10 RFP Cancellation/Partial Award/Non-Award.................................................. 14
1.11 Right to Reject Proposals or Portions of Proposals ....................................... 14
1.12 Costs Incurred................................................................................................ 14
1.13 Protest Procedures ........................................................................................ 15
1.14 Interpretive Conventions ................................................................................ 15
1.15 Agreement to Accept and Abide by the RFP and RFP Process..................... 15
2. Project Schedule/Scope of Work and General Requirements ......................................16
2.1 Project Schedule............................................................................................ 16
2.2 Project Scope................................................................................................. 16
2.3 Contractor Responsibilities ............................................................................ 16
2.4 State Responsibilities..................................................................................... 24
2.5 Performance Measures and Associated Remedies ....................................... 24
2.6 Location of Services....................................................................................... 25
2.7 Contract Turnover Requirements................................................................... 25
2.8 Turnover Services.......................................................................................... 25
2.9 Post-Turnover Services.................................................................................. 26
3. General Instructions and Proposal Requirements ........................................................26
3.1 Vendor Conference........................................................................................ 26
3.2 Questions and Comments.............................................................................. 26
3.3 Modification or Withdrawal of Proposal.......................................................... 27
3.4 News Releases .............................................................................................. 27
3.5 Incomplete Proposals .................................................................................... 27
3.6 State Use of Ideas ......................................................................................... 27
3.7 Property of the State ...................................................................................... 28
3.8 Copyright Restriction...................................................................................... 28
3.9 Additional Information .................................................................................... 28
3.10 Multiple Responses........................................................................................ 28
3.11 No Joint Proposals......................................................................................... 28
3.12 Use of Subcontractors ................................................................................... 28
3.13 Texas Public Information Act ......................................................................... 28
3.14 Instructions for Submitting Proposals............................................................. 29
3.15 Format and Content ....................................................................................... 30
4. Historically Underutilized Business Participation .........................................................41
4.1 Introduction......................................................................................................... 41
4.2 HHSC’s Administrative Rules ............................................................................. 41
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4.3 Statewide Annual HUB Utilization Goal .............................................................. 41
4.4 Required HUB Subcontracting Plan.................................................................... 41
4.5 CPA Centralized Master Bidders List.................................................................. 42
4.6 HUB Subcontracting Procedures – If a Respondent Intends to Subcontract ...... 42
4.6.1 Identify Subcontracting Areas and Divide Them into Reasonable Lots........ 43
4.6.2 Notify Potential HUB Subcontractors ........................................................... 43
4.7 Method 5: Respondent Does Not Intend to Subcontract............................... 45
4.8 Post-award HSP Requirements ..................................................................... 45
5. Proposal Evaluation..........................................................................................................47
5.1 Evaluation Criteria.......................................................................................... 47
5.2 Initial Compliance Screening.......................................................................... 47
5.3 Competitive Field Determinations .................................................................. 47
5.4 Oral Presentations and Site Visits.................................................................. 48
5.5 Best and Final Offers ..................................................................................... 48
5.6 Discussions with Respondents ...................................................................... 48
6. Financial Approach - Business Terms ...........................................................................48
6.1 Overview of Financial Approach .................................................................... 48
6.2 Business Objective ........................................................................................ 49
6.3 Financial Payment Structure.......................................................................... 49
6.3.1 Contingency Fees .......................................................................................... 50
6.3.2 Fixed Fees ..................................................................................................... 51
6.3.3 Fixed Fee Rates............................................................................................. 52
6.4 General Access to Accounting Records......................................................... 53
6.5 Financial Report Requirements...................................................................... 53
6.5.1 Respondent Responsibilities.......................................................................... 53
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1. General Information
1.1. Scope
The Texas Health and Human Services Commission’s (HHSC) mission in this Request for
Proposals (RFP) is to award a qualified firm (hereinafter referred to as Recovery Audit
Contractor (RAC)) to conduct improper payment recovery audit services for payments made by
the State of Texas (State) to its Medicaid-enrolled providers for services provided under the
Medicaid State Plan or a waiver of the Medicaid State Plan, and other audit services related to
fraud investigations as determined by the State.
The State of Texas, by and through the Texas Health and Human Services Commission
(HHSC), seeks to award a contract to a qualified Recovery Audit Contractor firm to conduct
audit services for the purpose of identifying overpayments and underpayments (hereinafter
referred to as “improper payments”) made by the State of Texas to its providers in accordance
with the specifications contained in this Request for Proposals (“RFP”). The selected RAC will
identify improper payments made by the Texas Medicaid Program to its Medicaid-enrolled
providers for provider types as determined by HHSC. Qualified RAC are to present the State
with a proposal for:
Detection of Medicaid improper payments
Validation of Medicaid improper payments
Tracking and reporting of Medicaid improper payments
Coordination with HHSC in obtaining approval of recoupment/repayment of identified
improper payments, to include providing all supporting documentation obtained by the
RAC from Medicaid providers necessary for HHSC to conduct appeals.
Additionally, HHSC seeks to award a contract to a RAC to perform recovery projects or other
initiatives related to fraud investigations and program integrity efforts as assigned by HHSC,
whether identified solely by HHSC, or as recommended by the RAC. The contract(s)
resulting from this RFP will be primarily for RAC services paid on a contingency
fee basis, but the contract will additionally provide for other audit services related
to fraud investigations and program integrity efforts paid on a fixed fee basis.
The Fixed Fees will be based on individual Fixed Fee Rates included in the Contract and
the level of effort to perform a specific audit, audit services related to fraud
investigations or any other service provided by the RAC that would not be appropriate to
utilize a contingency fee to compensate the RAC for those specific services rendered.
The Fixed Fees for these services will be based on the explicit fixed hourly rates
proposed by the respondent and the projected number of hours to be worked on the
specific audit or specific project by the respondent’s staff or the staff of the respondent’s
subcontractor. The fixed fee will be proposed by the Contractor prior to the start
of activities for fraud investigations and other services assigned by HHSC,
subject to negotiation and acceptance by HHSC.
The selected RAC must be capable of producing timely services and deliverables of sufficient
quality to achieve HHSC results.
The scope of this contract is subject to change and may require amending upon release of any
future amendments to the final federal rules (42 CFR §§455.500-455.518) that may further
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define the requirements of Section 6411 of the Patient Protection and Affordable Care Act
(ACA), Expansion of the Recovery Audit Contractor (RAC) Program.
1.2. HHSC Point of Contact
The sole point of contact for inquiries concerning this RFP is:
Richard Blincoe
Enterprise Contracts and Procurement Services (ECPS) Department
4405 North Lamar Boulevard, Building 1
Mail Code: 2020
Austin, Texas 78756
512-206-5468
Fax (512) 206-5552
richard.blincoe@hhsc.state.tx.us
All communications relating to this RFP must be directed to the HHSC contact person named
above. All communications between respondents and other HHSC staff members concerning
this RFP are strictly prohibited. Failure to comply with these requirements may result in proposal
disqualification.
1.3. Procurement Schedule
The following table depicts the critical pre-award events for the procurement. All dates are
subject to change at HHSC’s discretion.
Procurement Schedule
RFP Release Date June 11, 2012
RAC Vendor Conference June 22, 2012
RAC Vendor Questions Due June 25, 2012
HHSC Posts Responses to RAC Vendor Questions June 29, 2012
RAC Proposals Due July 9, 2012
Deadline for Proposal Withdrawal July 9, 2012
Tentative Award Announcement August 1, 2012
Anticipated Contract Start Date September 1, 2012
Initial report on Potential Recoveries to State for
review
Approximately 3-4
months after contract
start date (or TBD)
1.4. Mission Statement
The Texas Health and Human Services Commission’s (HHSC) mission in this Request for Proposals
(RFP) is to award a qualified RAC to conduct improper payment recovery audit services for
payments made by the State of Texas (State) to its Medicaid-enrolled providers for services
provided under the Medicaid State Plan or a waiver of the Medicaid State Plan based on a
contingency fee, as well as fixed fees for other audit services related to fraud investigations and
program integrity efforts as determined by the HHSC.
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HHSC invites qualified RACs to submit proposals in accordance with this RFP. HHSC plans to
contract with one or more successful RAC(s) to perform the recovery audit and fraud-related audit
services. The contract activities are anticipated to begin on or about September 1, 2012, or as
soon thereafter as practical.
The requested improper payment audit services include the detection, validation, and tracking and
reporting of improper payments made by Texas Medicaid to providers resulting from: (i) duplicate
payments; (ii) pricing errors; (iii) payments for services not provided; (iv) non-covered services
(including services that are not reasonable and necessary under Section 1862(a) (1) (A) of the
Social Security Act); or (v) any other errors resulting in improper payments. The RAC will be
required to determine the causes of the improper payments, suggest recommendations to remedy
those causes, and issue formal reports to HHSC documenting the results of each audit performed.
Additionally, the other requested audit services include recovery projects or other initiatives related
to fraud investigations and program integrity efforts as determined by HHSC.
It is expected that one award will be made from this RFP; however, HHSC reserves the right, in its
sole discretion, to make more than one contract award as a result of the issuance of this RFP. All
questions in this RFP must be answered with information that is responsive to the request or item.
The RAC, as an independent contractor, shall provide improper payment and other fraud-related
audit services under the contract at its facilities and with its own personnel. The initial term of the
contract is expected to be about September 1, 2012, through August 31, 2015. HHSC shall have
the option, in its sole discretion, to extend the contract for up to three additional one (1) year
periods, one (1) year at a time.
1.5. Mission Objectives
The Texas Health and Human Services Commission’s (HHSC) mission in this Request for
Proposals (RFP) is to award a contract to a qualified RAC to conduct payment recovery audit
services for improper payments made by the State of Texas (State) to its Medicaid-enrolled
providers for services provided under the Medicaid State Plan or a waiver of the Medicaid State
Plan based on a contingency fee, as well as a fixed fee for other audit services related to fraud
investigations and program integrity efforts as determined by the HHSC.
The RAC should be knowledgeable of Expansion of the Recovery Audit Contractor Program as
outlined in Section 6411 of the ACA, which amends Section 1902(a)(42), Social Security Act (42
U.S.C. Section 1396a(a)(42) by adding 42 C.F.R. Sections 455.500-455.518, as well as
applicable guidance established by the Centers for Medicare & Medicaid Services (CMS). To
gain additional knowledge, potential bidders may research: RAC Status Document (see
www.cms.hhs.gov/rac).
The RAC will identify underpayments and overpayments to support Texas implementation of
healthcare reform. Qualified RACs are to present the state with a proposal for:
Detection of Medicaid improper payments;
Validation of Medicaid improper payments;
Tracking and reporting of Medicaid improper payments; and
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Coordination with HHSC in obtaining approval of recoupment/repayment of identified
improper payments, to include providing all supporting documentation obtained by the
RAC from Medicaid providers necessary for HHSC to conduct appeals.
Additionally, qualified RACs shall present a description and examples of experience and
services provided related to program integrity and fraud-related activities under similar type
contracts and the scope of this contract. The description should include proposed strategies that
may be beneficial to the State in its on-going program integrity efforts.
Throughout this document, the term “improper payment” is used to refer collectively to
overpayments and underpayments. Situations where the provider submits a claim containing an
incorrect code but the mistake does not change the payment amount are NOT considered to be
improper payments.
1.6. Background
1.6.1 Overview of the Health and Human Services Commission
Since 1991, the Texas Health and Human Services Commission (HHSC) has overseen and
coordinated the planning and delivery of health and human service programs in Texas. HHSC
is established in accordance with Texas Government Code Chapter 531, and is responsible for
the oversight of all Texas health and human service agencies (HHS Agencies). HHSC’s chief
executive officer is Thomas M. Suehs, Executive Commissioner of Health and Human Services.
As a result of the consolidation due to House Bill 2292 (HB 2292), some of the contracting and
procurement activities for the HHS Agencies have been assigned to the Enterprise Contracting
and Procurement Services (ECPS) section of HHSC. As such, ECPS will administer the initial
stages of the procurement process, prior to the contract award, including RFP announcement
and publication, handling of communications from the respondent, as well as managing the
receipt and handling of valid responses for final review and evaluation. ECPS directs the
execution of the contract after the awarded vendor has been selected.
The contract issued as a result of this solicitation may be utilized by one or all of the Texas
Health and Human Services (HHS) agencies listed below:
Health and Human Services Commission (HHSC)
Department of Family and Protective Services (DFPS)
Department of State Health Services (DSHS)
Department of Assistive and Rehabilitative Services (DARS)
Department of Aging and Disability Services (DADS)
HHSC/ECPS will issue an individual purchase order, contract or release for each HHS agency,
region, city, or location-requiring goods or services under the contract. Each purchase order will
include the delivery/service location and bill to address for the HHS agency requesting
goods/services.
1.6.2 Project Overview
The 82nd Legislature established a requirement (House Bill 1720, Tex. Gov. Code §531.117
(relating to Recovery Audit Contractors)) for implementation of a recovery audit program for
Texas Medicaid, pursuant to Section 1902(a)(42), Social Security Act (42 U.S.C. Section
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1396a(a)(42). HHSC is required to contract with a RAC for purposes of identifying
underpayments and overpayments in the Texas Medicaid Program.
HHSC may award the contract to a qualified RAC to perform the improper payment recovery
audit(s) and other audit services related to fraud investigations requested by this RFP. During
the term of this contract, the RAC, as an independent contractor, and not as an employee of the
state, shall provide the improper payment recovery audit(s) and other audit services as more
fully set forth below:
RAC shall be proficient in performing improper payment and fraud-related risk
assessments, detecting improper payments and fraud, waste or abuse, utilizing efficient
methods for improper payment and fraud, waste or abuse detection, handling large
volumes of data, understanding control systems and weaknesses, audit report writing, and
project administration and management;
RAC may utilize statistical sampling, regression, digital analysis, data mining, and other
risk assessment or error detection techniques to increase the efficiency of the improper
payment detection process, and fraud, waste or abuse detection. RAC must utilize those
techniques when the RAC believes that the outcome maximizes the overpayments that will
be identified;
RAC shall identify improper payments made in a population of the State’s payments as
determined by HHSC, or as recommended by the RAC and approved by HHSC. The
RAC’s review shall identify improper payments including, but not limited to: (i) duplicate
payments; (ii) pricing errors; (iii) payments for services not provided; (iv) payments for noncovered
services (including services that are not reasonable and necessary under Section
1862(a)(1)(A) of the Social Security Act); or (v) any other errors resulting in improper
payments. Additionally, claims reviewed or under review by the Texas Health & Human
Services Commission’s Office of Inspector General (OIG), or associated with an audit
already underway (i.e. PERM audit, Federal OIG audit or review, CMS audit or review,
CMS contractor audit or review), or other Federal and State audits or reviews shall be
excluded from the population of State payments subject to RAC audits. HHSC may
exclude other types of payments from RAC audits at their sole discretion. The audit
population will only include eligible payments from fiscal years as determined by HHSC,
which may not exceed a three-year maximum claims look-back period from the date the
claim was filed, unless a different time period is authorized by the State.
RAC shall work cooperatively with entities, including, but not limited to those identified
above. The RAC shall also coordinate, in consultation with HHSC, with the
aforementioned entities or other entities, as directed by HHSC. Such coordination efforts
are intended to ensure an efficient and effective process between the review of the
Medicaid providers and the actual audit and identification of improper payments, and
fraud, waste or abuse. The coordination includes keeping HHSC and all stakeholders
apprised of potential areas of vulnerability and avoiding duplication of efforts. Further
clarification regarding the process for communication and coordination between the HHSC
and the RAC, and all outside entities will be defined further in subsequent operating
procedures.
RAC, when performing auditing tasks under a contingency fee payment arrangement,
shall follow applicable professional standards during the course of each audit to ensure
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due diligence in its efforts to identify funds legitimately owed to the State or the Medicaid
provider in the case of improper payments. When performing auditing tasks under a noncontingency
fee payment arrangement, the RAC shall follow generally accepted
government auditing standards during the course of each audit.
RAC shall work directly with HHSC, as needed, when performing the recovery audit(s) and
fraud-related audit services. RAC must minimize the administrative burden on HHSC to
the extent practicable;
RAC shall furnish all material, labor, equipment, and supplies necessary to perform the
recovery audit(s) and fraud-related audit services required. RAC shall not remove any
original state agency records from the site of their location at the agencies. When travel is
necessary to conduct the recovery audit(s) and fraud-related audit services, RAC shall be
responsible for all travel expenses incurred;
HHSC shall not supply postage, long distance phone service, or email services to RAC for
the recovery audit(s) and/or fraud-related audit services. HHSC shall not pay for any other
related incidental expenses or costs associated with the review process;
RAC shall remain mindful of the sensitive business relationship that exists between the
State and its Medicaid providers. RAC must obtain HHSC approval prior to
communicating, either in writing or orally, with any Medicaid providers regarding any RAC
audit activities; once HHSC has approved a RAC audit(s), the RAC will contact and
correspond with providers in a manner so as to complete the scope of work within the
agreed upon timeframes for the audit(s).
The identification of improper payments shall be the sole responsibility of the RAC as
described in RFP section 2.3. RAC shall work with the Medicaid providers to identify
improper payments and amounts owed to HHSC as a result of the review conducted by
the RAC (Medicaid providers are required to maintain and provide requested medical
records at no cost when requested by HHSC or a designee of HHSC). RAC shall not
accept any recovery payments directly or indirectly from any providers;
The methods the RAC uses to identify the improper payments, or identify fraud, waste or
abuse shall be in accordance with all related laws, statutes, rules and any contract terms;
RAC shall identify any improper payments made, or fraud, waste or abuse by
communicating this information to HHSC prior to notifying providers on the identified
improper payments or fraudulent activities (HHS OIG will provide additional guidance on a
case-by-case basis, as needed for fraud, waste or abuse guidelines). RAC must show
HHSC proof of each improper payment or fraudulent activities with sufficient detailed
supporting information as determined by HHSC so that the agency does not have to
review the respective provider’s payment history in order to determine its agreement with
the improper payment or fraudulent activities finding. At a minimum, the proof must include
the cause of the improper payment or fraudulent activities and the amount of the improper
payment. RAC must provide any information HHSC requests for proof of the improper
payment, or fraudulent activities when the information is available to the RAC. The RAC
may refer to HHS Circular C-027 for general guidelines for reporting fraud, waste, or
abuse by Medicaid providers. HHSC will refer any fraudulent activities identified by the
RAC to the HHS OIG;
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RAC shall implement, maintain and operate a web-based application approved by HHSC
that allows providers to customize addresses, send inquiries related to the audit, etc., and
allows HHSC and providers to check the status of medical records requests and case
review (i.e.: outstanding, received, review underway, review complete, case closed);
HHSC is requesting a respondent to recommend a web-based application to satisfy the
requirement. HHSC will review the recommendation and then, if approved by HHSC, the
successful respondent will be required to implement, maintain and operate the web-based
application. If HHSC does not approve of the recommended web-based application
proposed by a respondent, HHSC may request a respondent to provide additional
alternatives to the original web-based application until an acceptable application is
approved. The successful respondent will be required to implement, maintain and operate
an HHSC approved web-based application.
RAC shall not seek legal representation or pursue any judicial action surrounding the
improper payment recovery audit(s) and/or other fraud-related audit processes performed;
RAC may solicit HHSC’s opinion about whether a detected overpayment should be
recovered or underpayment repaid if determination of the improper payment remains
unclear after normal audit process activities have been exhausted. HHSC shall use its
discretion when determining whether a payment should be recovered or repaid;
RAC shall supply HHSC with an extract (to be defined during the Governance Process) of
the RAC’s data that corresponds to a list of identified improper payments or any fraudulent
activity upon request;
RAC shall supply HHSC with a monthly report, in a format approved by HHSC that
includes: the overpaid or underpaid amounts detected to date; the reason the RAC
determined an improper payment occurred; and any other information related to the
improper payment as requested by HHSC. The report shall contain the status as of the
close of business of the last day of each calendar month, and is due to HHSC no later
than the 7 th day of the month. The first monthly report is due one month after the first audit
begins, or upon a mutually agreed upon date.
RAC shall supply HHSC with a draft provider audit report for each respective audit
completed, in a format approved by HHSC. The draft report is due to HHSC within 30 days
after each provider audit concludes. The draft report(s) shall identify all improper payments
or fraudulent activities, and the reasons thereof. The RAC will be required to provide final
reports incorporating HHSC’s comments. Provider comments will be incorporated into the
report conclusions, at HHSC’s sole discretion.
RAC shall identify improper payments only during the HHSC-defined audit period, which
may not exceed a maximum three-year claims look-back period from the date the claim
was filed, unless a different time period is authorized by the State; for fraud-related
investigations, the look-back period is five years from date of service, unless a different
time period is authorized by the State.
RAC shall retain all documentation relating to each respective audit during the contract
period and for 3 years following the date the final payment is made to the RAC, or the date
upon which all questions involving the improper payments or fraudulent activities validity
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are resolved, whichever happens last. In addition, the documentation may be subject to
review by the State Auditor’s Office;
RAC shall begin assigned work within 30 days of entering into the contract, or on October
1, 2012, whichever occurs last. Once a task or audit is assigned, HHSC and the RAC will
discuss and agree upon a reasonable date, based on the complexity of audit type and
audit work required to complete audit planning, fieldwork, appeals activities, and issue a
draft report to HHSC. The draft report shall include identification of improper payments, or
fraudulent activity, causes, and recommendations. It is the responsibility of the RAC to
communicate any potential improper payments or fraudulent activity to the provider prior to
the draft audit report in an effort to resolve any discrepancies or misunderstandings. The
RAC shall give providers sufficient time to address any identified improper payments or
fraudulent activity, including a reasonable time to respond and resolve any errors noted by
the RAC. Any funds recovered by HHSC for overpayments or underpayments actually
paid to providers by the state after each agreed upon audit completion date will be
excluded from the contingency and/or fixed fee calculation and payment;
HHSC may adopt rules regarding certain exemptions to the recovery audit and fraudrelated
audit process. RAC shall adhere to those rules; and
RAC shall perform all recovery audit(s) and fraud-related audit services and all services
reasonably related to such recovery audit and fraud-related audit services. RAC shall
provide all the recovery audit(s) and fraud-related audit services in compliance with all
requirements of this RFP and the contract. RAC shall perform the recovery audit(s) and
fraud-related audit services consistent with HHSC’s guidelines, directives, and rules, which
may be passed and as amended in the future. RAC shall comply with such current
guidelines and rules and any such amended guidelines and rules throughout the term of
the contract. All required recovery audit(s) and fraud-related audit services must be
provided at a highly competitive fee level, (i.e., the fee quoted should be the best value to
HHSC when all evaluation criteria are considered). HHSC reserves the right, in its sole
discretion, to enter into preliminary negotiations with more than one of the top
respondents.
These new responsibilities will require a significant investment of time and resources to plan for
and successfully execute.
While the federal government initiated these changes and will provide regulatory guidance to
states, it is state government that will ultimately be responsible for implementing and managing
requirements of the Affordable Care Act (ACA) at the local level.
1.7 Strategic Elements
1.7.1 Contract Type and Term
HHSC will award one contingency and fixed fee rate contract for this project that meet all scope
of work requirements outlined in this document (RAC services will be on a contingency basis
and all other services will be fixed fee based on negotiated scope of work). The initial term of
the contract is expected to be about September 1, 2012, through August 31, 2015. HHSC shall
have the option, in its sole discretion, to extend the contract for up to three additional one (1)
year periods, one (1) year at a time.
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1.7.2 Contract Elements
The term “contract” means the contract awarded as a result of this RFP and all exhibits thereto.
At a minimum, the following documents will be incorporated into the contract: this RFP and all
attachments and exhibits; any modifications, addendum or amendments issued in conjunction
with this RFP; HHSC’s Uniform Contract Terms and Conditions (UTCs), Version 1.4.1; and the
successful respondent’s proposal.
One or more of the “Special Terms” located in Article 16 of the UTCs may apply to the contract,
and HHSC reserves the right to negotiate additional contract terms and conditions.
Respondents are responsible for reviewing the UTCs and noting any exceptions, reservations,
and limitations on the respondent Information and Disclosures form.
In addition, the contractor shall comply with the requirements of the Illegal Immigration Reform
and Immigrant Responsibility Act of 1996 ("IIRIRA"), enacted on September 30, 1996.
1.7.3 HHSC’s Basic Philosophy: Contracting for Results
HHSC’s fundamental commitment is to contract for results. HHSC defines a successful result as
the generation of defined, measurable, and beneficial outcomes that satisfy the contract
requirements and support HHSC’s missions and objectives. This RFP describes what is
required of the RAC in terms of services, deliverables, performance measures and outcomes,
and unless otherwise noted in the RFP, places the responsibility for how they are accomplished
on the RAC.
1.7.4 Overview of Vendor Experience Sought
In general, HHSC is seeking a RAC who will be responsive to the Mission Objectives of the
procurement and willing to include reasonable tasks even if they were not specifically listed in
the scope. Further details regarding the type of experience sought by HHSC are presented in
the Evaluation Criteria in Section 5.1.
1.7.5 External Factors
Other external factors may affect the project, including budgetary and resource constraints. Any
contract resulting from the RFP is subject to the availability of state and federal funds. As of the
issuance of this RFP, HHSC anticipates that budgeted funds will be available to reasonably
fulfill the project requirements. If, however, funds are not available, HHSC reserves the right to
withdraw the RFP or terminate the resulting contract without penalty.
1.8 Legal and Regulatory Constraints
1.8.1 Delegation of Authority
State and federal laws generally limit HHSC’s ability to delegate certain decisions and functions
to a contractor, including but not limited to: (1) policy-making authority, and (2) final decisionmaking
authority on the acceptance or rejection of contracted services.
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1.8.2 Conflicts of Interest
A conflict of interest is a set of facts or circumstances in which either a respondent or anyone
acting on its behalf in connection with this procurement has past, present or currently planned
personal, professional or financial interests or obligations that, in HHSC’s determination, would
actually or apparently conflict or interfere with the respondent’s contractual obligations to HHSC.
A conflict of interest would include circumstances in which a party’s personal, professional or
financial interests or obligations may directly or indirectly:
make it difficult or impossible to fulfill its contractual obligations to HHSC in a manner
that is consistent with the best interests of the State of Texas;
impair, diminish or interfere with that party’s ability to render impartial or objective
assistance or advice to HHSC; or
provide the party with an unfair competitive advantage in future HHSC procurements.
Neither the respondent nor any other person or entity acting on its behalf, including but not
limited to subcontractors, employees, agents and representatives, may have a conflict of
interest with respect to this procurement. Before submitting a proposal, Respondents should
carefully review Article 12 of the Uniform Terms and Conditions for additional information
concerning conflicts of interests.
A respondent must certify that it does not have personal or business interests that present a
conflict of interest with respect to the RFP and resulting contract (see the Required
Certifications form). Additionally, if applicable, the respondent must disclose the details of all
actual or arguable potential conflicts of interest. The respondent must describe the specific
measures it will take to ensure that there will be no actual conflict of interest and that its
fairness, independence and objectivity will be maintained (see the respondent Information and
Disclosures form). HHSC will determine to what extent, if any, a potential conflict of interest can
be mitigated and managed during the term of the contract. Failure to identify potential conflicts
of interest may result in HHSC’s disqualification of a proposal or termination of the contract.
Examples of potential conflicts of interest under this contract include any auditing services (i.e.
improper payment and fraud, waste, or abuse identification), or any other type services that you
or others may in any way construe as a potential conflict with or duplication of RAC services,
provided to any HHSC agencies or Texas Medicaid-contracted managed care organizations.
Respondents must disclose and describe any contracts it, its parent, subsidiary, sister or
affiliated entity currently holds, or anticipates holding, or performed during the past 5 years with
entities for federal or state audit services, such as the Payment Error Rate Measurement
(PERM), Medicaid Integrity Program (MIP), or other federal and state audits or reviews.
1.8.3 Former Employees of a State Agency
Respondents must comply with Texas and federal laws and regulations relating to the hiring of
former state employees (see e.g., Texas Government Code §572.054 and 45 C.F.R. §74.43).
Such “revolving door” provisions generally restrict former agency heads from communicating
with or appearing before the agency on certain matters for two years after leaving the agency.
The revolving door provisions also restrict some former employees from representing clients on
matters that the employee participated in during state service or matters that were in the
employees’ official responsibility.
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As a result of such laws and regulations, a respondent must certify that it has complied with all
applicable laws and regulations regarding former state employees (see the Required
Certifications form). Furthermore, a respondent must disclose any relevant past state
employment of the respondent’s or its subcontractors’ employees and agents in the respondent
Information and Disclosure form.
1.8.4 Procurement Documents
This entire RFP, including Appendices and Attachments, may be downloaded through the
HHSC website at: http://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunities.asp and
the ESDB website at: http://esbd.cpa.state.tx.us/.
1.8.5 Inducements
HHSC submits this RFP setting forth certain information regarding the objectives of the contract
and HHSC’s desire to mitigate risk throughout the life of the contract by use of expert
respondent services. Therefore, HHSC will consider all representations contained in a proposal,
oral or written presentations, correspondence, discussions, and negotiations as representations
of the respondent’s expertise. HHSC accepts these representations as inducements to contract.
1.9 HHSC Amendments and Announcements Regarding this RFP
HHSC will post all official communication regarding this RFP on its website, including the notice
of tentative award. HHSC reserves the right to revise the RFP at any time. Any changes,
amendments, or clarifications will be made in the form of written responses to respondent
questions, amendments, or addendum issued by HHSC on its website. Respondents should
check the website frequently for notice of matters affecting the RFP. To access the website, go
to the “HHSC Contracting Opportunities” page and enter a search for this procurement.
1.10 RFP Cancellation/Partial Award/Non-Award
HHSC reserves the right to cancel this RFP, to make a partial award, or to make no award if it
determines that such action is in the best interest of the State of Texas.
1.11 Right to Reject Proposals or Portions of Proposals
HHSC may, in its discretion, reject any and all proposals or portions thereof.
1.12 Costs Incurred
Respondents understand that issuance of this RFP in no way constitutes a commitment by
HHSC to award a contract or to pay any costs incurred by a respondent in the preparation of a
response to this RFP. HHSC is not liable for any costs incurred by a respondent prior to
issuance of or entering into a formal agreement, contract, or purchase order. Costs of
developing proposals, preparing for or participating in oral presentations and site visits, or any
other similar expenses incurred by a respondent are entirely the responsibility of the
respondent, and will not be reimbursed in any manner by the State of Texas.
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1.13 Protest Procedures
Texas Administrative Code, Title 1, Part 15, Chapter 392, Subchapter C outlines HHSC’s
respondent protest procedures.
1.14 Interpretive Conventions
Whenever the terms “shall,” “will”, “must,” or “is required” are used in this RFP in conjunction
with a specification or performance requirement, the specification or requirement is mandatory.
A respondent’s failure to address or meet any mandatory requirement in a proposal may be
cause for HHSC’s rejection of the proposal.
Whenever the terms “can,” “may,” or “should” are used in this RFP in conjunction with a
specification or performance requirement, the specification or performance requirement is a
desirable, but not mandatory, requirement. Accordingly, a respondent’s failure to address or
provide any items so referred to will not be the cause for rejection of the proposal, but will likely
result in a less favorable evaluation.
1.15 Agreement to Accept and Abide by the RFP and RFP Process
The respondent that submits a proposal in response to this RFP agrees, on its own behalf and
on behalf of any parent or subordinate organization and all proposed Subcontractors, to the
following:
1. It accepts without reservation or limitation as lawful and binding the proposal submission
requirements and rules and the procurement procedures, processes, and specifications
identified in this RFP, including any RFP addenda and all appendices to this RFP.
2. It accepts without reservation or limitation as lawful and binding HHSC’s use of the
evaluation methodology and evaluation process as described in Section 5 of this RFP.
3. It accepts without reservation or limitation as lawful and binding HHSC’s sole,
unrestricted right to reject any or all proposals submitted in response to this RFP.
4. It accepts without reservation or limitation as lawful and binding the substantive,
professional, legal, procedural, and technical propriety of the scope of work in the RFP.
5. A respondent may raise objections to certain contractual language in the RFP, including
the General Terms and Conditions, if the objections are clearly stated in the respondent
Transmittal Letter as described in Section 3.14.4. A Bidder may not object to contractual
language that is required by federal or state laws or regulations. HHSC will more
favorably evaluate a Bidder that raises few or no objections to the contractual terms and
conditions. HHSC reserves the right to consider a proposal as non-responsive if the
respondent objects to contractual language required by federal or state laws or
regulations.
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2. Project Schedule/Scope of Work and General Requirements
2.1 Project Schedule
Milestones and due dates for deliverables will be determined later by HHSC.
2.2 Project Scope
RAC shall perform all recovery audit(s) and fraud-related audit services and all services
reasonably related to such recovery audit(s) and fraud-related audit services. RAC shall provide
all the recovery audit(s) and fraud-related audit services in compliance with all requirements of
this RFP and the contract. RAC shall perform the recovery audit(s) and fraud-related audit
services consistent with HHSC’s guidelines, directives, and rules, which may be passed and as
amended in the future. RAC shall comply with such current guidelines and rules and any such
amended guidelines and rules throughout the term of the contract. All required recovery audit(s)
and fraud-related audit services must be provided at a highly competitive fee level, i.e., the fee
quoted should be the best value to HHSC when all evaluation criteria are considered. HHSC
reserves the right, in its sole discretion, to enter into preliminary and/or final negotiations with
more than one of the top respondents.
Contractor will:
2.3 Contractor Responsibilities
2.3.1. General Requirements
a. Illustrate a good understanding of the Texas Medicaid program and propose a Medicaid
improper payment recovery audit solution that will identify improper payments resulting
in the recovery of payments, or refund of payments, of inappropriate billings by
providers, including both Fee For Service (FFS) and managed care claims. Although the
Texas Medicaid program does not intend to include managed care claims for review
under the RAC Program initially, the RAC should take into consideration in its proposal
that managed care claims may be included in the RAC Program after the Centers for
Medicare & Medicaid Services (CMS) provides further guidance and best practices
regarding managed care.
b. Illustrate a good understanding of the Texas Medicaid program related to program
integrity and propose audit workplans and solutions for fraud, waste and abuse
identification, including managed care organizations (MCOs), and pharmacy benefit
managers (PBMs).
c. Be proficient in performing improper payment and fraud-related risk assessments,
detecting improper payments and fraud, waste or abuse, utilizing efficient methods for
improper payment and fraud, waste or abuse detection, handling large volumes of data,
understanding control systems and weaknesses, audit report writing, and project
administration and management.
d. Hold entrance conference with HHSC prior to start of any audit activities.
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e. Establish a Governance process with HHSC and hold Governance meetings on a
schedule as determined by HHSC; the governance meetings will serve as a means to
establish processes for all audits and also serve as a means to monitor the project and
escalate issues.
f. Coordinate with a State designee(s) for all audit activities and communication between
the Texas Medicaid claims administrator, managed care organizations, and other Health
and Human Services Enterprise agencies including the Office of Inspector General
(OIG), the Department of Aging and Disability Services (DADS), Department of
Assistance and Rehabilitative Services (DARS), the Department of Family and
Protective Services (DFPS), and the Department of State Health Services (DSHS), as
appropriate.
g. Furnish all material, labor, computers, software, equipment and supplies necessary to
perform their services.
h. Be responsible for all travel expenses.
i. Not remove any original records from the State offices.
j. Provide postage, long distance phone service, and email services for their staff; HHSC
will not pay for incidental expenses related to the recovery audit(s) and/or fraud-related
audit services.
k. Follow all federal and state related laws, statutes, rules and contract terms in its
recovery audit(s) and fraud-related audit activities.
l. Retain all audit documentation for three years following the final payment under this
contract or the date upon which all questions involving the improper payments and
fraudulent activities validity are resolved, whichever happens last.
2.3.2. Identification of Specific Providers for Audit (Provider Based
Approach)
a. Audits of Medicaid providers shall be based on such activities as improper payment risk
assessments, regression, digital analysis, data mining, and other risk assessment or
error detection techniques. Provider audits may also be indicated by HHSC based on
other sources of information, including complaints, investigations, other audits, etc.
b. Provide timeline for each proposed provider audit, format to be determined by HHSC, for
approval by HHSC prior to the start of audit activities. The timeline should include all
audit activities associated with the audit, including proposed major milestones such as
engagement letter, entrance conference, exit conference, preliminary draft report, final
draft report, final report.
2.3.3. Identification of Specific Claims for Audit (Claims Based Approach)
a. Provide a timeline for each audit type as determined by HHSC for approval by HHSC
prior to the start of audit activities for each audit type. The timeline should include all
audit activities associated with the audit type beginning with submittal of audit concepts
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for approval by HHSC to be used in claims identification to submission of claims
adjustment information by the RAC to HHSC for recovery/repayment.
b. Perform analysis of paid claims from Medicaid Management Information Systems
(MMIS) data to determine if services were provided based on federal and state policies
and procedures in effect on the adjudication date for the claim date of service; analysis
includes review of medical documentation to determine if services were medically
necessary.
c. Define each specific improper payment scenario or audit concept to be utilized by the
RAC for each audit type. Each scenario or audit concept must describe the complete
process for identifying incorrect payments and show HHSC the proof of the improper
payment with sufficient detailed supporting information as determined by HHSC and the
specifics regarding the providers, clients and services that the scenario or audit concept
covers.
d. Describe the source authorities utilized to determine the validity of the improper
payments.
e. Present recommendation and impact analysis for each scenario or audit concept to
HHSC subject matter experts (Policy/Operations) and executive management for
approval before pursing identification of improper payments.
f. Conduct medical chart/documentation review.
g. Identify potential improper payments only for service dates and provider types as
determined and approved by HHSC.
h. After consultation with HHSC, develop a process to identify and exclude from audit
review claims reviewed or under review by HHSC OIG, or associated with an audit
already underway (i.e. PERM audit, Federal OIG audit or review, CMS audit or review,
CMS contractor audit or review), or other Federal and State audits or reviews.
i. Once claims have been identified by the RAC with potential improper payments and
approved by HHSC, RAC will utilize current CMS provider abrasion guidelines when
determining and providing to HHSC the timeline for each audit type.
2.3.4. Provider Communication and Support - Claims Based Approach
Obtain HHSC approval of the content for all written and oral communication before commencing
recovery audit(s) and fraud-related audit activities with the Medicaid providers. All
correspondence will be approved by HHSC in advance of use, or when any changes to
approved correspondence is determined necessary.
a. Once the RAC has identified a claim with a potential improper payment, the RAC will
send a letter to the provider requesting medical documentation associated with the
claim. The RAC will follow all HHSC required timelines allowed to providers to respond
to such requests, and must also be able to accept electronic submission of medical
records on CD/DVD or via facsimile at the provider’s request. Upon approval by HHSC,
RAC audits may be conducted either on-site or via desk review, if needed. RAC will
send reminder letters for medical documentation requests, as needed.
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. Notify providers in writing of potential improper payments within 60 calendar days; letters
to providers must include information regarding the audit review (i.e. audit
name/description), reason for the potential improper payment, and information regarding
the provider’s right to appeal, first through an internal dispute resolution process
conducted by the RAC, and what process should be followed for the dispute resolution
process and/or formal appeal to HHSC.
c. If a provider chooses to dispute the initial improper payment finding through
the RAC’s internal dispute resolution process, RAC will follow-up with letter to the
provider indicating the result of the dispute review, and will include information regarding
the formal appeal process.
d. Establish a system to compile and maintain provider approved addresses and points of
contact, and a mechanism for providers to update changes in address and points of
contact throughout the audit period.
e. Establish a toll-free number and mail address for provider inquiries and customer
support, to be included on all provider correspondence. Toll-free numbers must be
staffed during normal business hours of 8:00 a.m. to 4:30 p.m. Central Time (CT).
Provider support will address items such as provider inquiries regarding medical record
requests, rebuttal deadline extensions, audit process, medical record receipt verification,
audit status, and requests for copies of provider correspondence from the RAC.
f. After consultation with HHSC,, develop an education and outreach program regarding
the recovery audit efforts/processes to providers and stakeholders, as requested.
Examples of education and outreach may include items such as provider notification of
audit policies and procedures, attending provider association and stakeholder meetings,
making presentations on RAC processes and results, answering questions, etc.
2.3.5. Provider Communication and Support – Provider Based Approach
a. At the conclusion of fieldwork on provider based audits, the RAC will adhere to the
following with respect to reporting the results of the audit:
1. Preliminary Draft – RAC submits to HHSC for review;
2. Final Draft – RAC incorporates HHSC preliminary draft comments and forwards
to the audited provider for review and response; and
3. Final Report – RAC considers provider responses, updates revised draft with
approval of HHSC, and issues final report to HHSC and the audited provider.
b. The audit reports will be submitted to HHSC at the conclusion of audit activities for each
audit type conducted. The final audit reports should also include the following:
1. Coversheet with the title “Health and Human Services Commission Provider
Improper Payment Recovery Audit”
2. Date the report is issued
3. RAC’s name and contact information
4. Executive summary in letter format addressed to HHSC summarizing overall
findings
5. Table of contents
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6. Detailed findings organized by type of improper payment or fraudulent activity,
including amount of improper payment or fraudulent activity, complete description
of the cause of the improper payment or fraudulent activity, and a
recommendation to remedy the cause.
c. RAC must recommend a web-based application that allows providers to customize
addresses, send inquiries related to the audit, etc., and allows HHSC and providers to
check the status of medical records requests and case review (i.e.: outstanding,
received, review underway, review complete, case closed); HHSC is requesting a
respondent to recommend a web-based application to satisfy the requirement. HHSC
will review the recommendation and then, if approved by HHSC, the successful
respondent will be required to implement, maintain and operate the web-based
application. If HHSC does not approve of the recommended web-based application
proposed by a respondent, HHSC may request a respondent to provide additional
alternatives to the original web-based application until an acceptable application is
approved. The successful respondent will be required to implement, maintain and
operate an HHSC approved web-based application.
d. Recommend system changes to prevent future improper payments.
e. Recommend solutions/concepts to improve the Texas Medicaid program based on
findings from audits related to fraud investigations.
2.3.6. Data Sharing and Security
a. After consultation with HHSC, identify and provide a complete list/description of required
data fields necessary from HHSC for review of claims associated with the audit.
b. Propose a solution that will have minimal impact on the current operations of the MMIS;
include a high-level diagram of expected data flow.
c. Provide secure transmission of data exchange, and provide a description to the HHSC of
the process that will be used for secure data exchange.
d. Follow all federal and state rules and regulations as they apply to the disclosure of
protected health information (PHI) obtained from HHSC that is necessary for the
performance of the recovery audit and fraud-related audit services. This applies to a
person acting under this contract, and each employee or agent of the person.
2.3.7. Recoupment and Appeals Process
a. Identify claims with improper payments and provide the details to HHSC for recoupment
of overpayments or repayment of underpayments.
b. Invoice and receive payment for only those funds recovered by HHSC for overpayments,
or for underpayments actually paid to providers by the state, during the life of the
contract; any funds recovered by HHSC for overpayments or underpayments actually
paid to providers by the state after each agreed upon audit completion date will be
excluded from the contingency and/or fixed fee calculation and payment. Each audit
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timeline will include reasonable and sufficient time for the RAC to complete the entire
audit process and resolve issues, including completion of appeals associated with the
audit and collection of improper payments to providers.
c. Exhibit the ability to show and ensure appeal rates, as well as appeal overturn rates, will
be kept at a minimum. If at any time during the course of the contract period, appeal
rates for a specific provider type/audit concept exceed HHSC expectations, the RAC will
be required to submit an action plan to HHSC detailing actions the RAC will take to
reduce appeal rates for future review.
d. Providers have the right to appeal recoupments through existing HHSC appeal
procedure processes for HHSC paid claims, pursuant to 1 Tex. Admin. Code §354.2217
(relating to Provider Appeals and Reviews) or 1 Tex. Admin. Code §371.1709 (relating to
Recoupment of Overpayments Pursuant to Audit) depending on contract type; for HHS
agency (DADS, DSHS, DARS) paid claims, appeals processes in place for those
agencies may also be applicable; all required timelines for the appeal processes in place
at HHSC will be followed.
e. Upon request by HHSC, the RAC will provide copies of all medical documentation on file
for any appeal received by HHSC within 21 days of request date.
f. HHSC’s decision on any provider appeal is the final decision and the case will be
considered closed. Additionally, there is no further avenue for the RAC to appeal the
final decision made by HHSC.
g. The RAC must participate in formal hearings/appeals and provide expert testimony, as
needed, and be available to review testimony and evidence with HHSC legal counsel at
least two days in advance of any scheduled testimony. HHSC explicitly maintains a right
of access to RAC working papers (including copies of documentation collected from the
provider and all chain of custody and authenticating affidavits related to the working
papers and all underlying records and documents) and requires that evidence collected
(including expert opinions) be obtained in accordance with Texas law, including the
Texas Rules of Evidence.
2.3.8. Key Personnel and Staffing
Key personnel are those identified below. These are persons essential to the successful
performance under the RFP and contract. HHSC reserves the right to add key personnel
positions within individual assignments or audits, as necessary for the appropriate performance
of the work. The educational requirements are only required, if specified below.
Provided below are skill sets considered essential in the performance of this contract:
a. Project Director: Individual with relevant experience in managing a complex system or
project for at least 5 years.
b. Medical Director: Individual licensed to practice medicine in the State of Texas is
required; must have relevant Medicaid experience in the health insurance industry, with
a utilization review firm or a health care claims processing organization in a role that
involved developing coverage or medical necessity policies and guidelines. Education
(Required): The Medical Director shall be a Doctor of Medicine or Doctor of Osteopathy
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in good standing with the relevant State licensing authorities; must possess a medical
license from an accredited Medical School.
NOTE: As federally mandated, the RAC must hire a minimum of one full-time Medical
Director for the RAC Program contract.
c. Audit Manager: Individual with relevant experience in Medicaid claims reimbursement,
policies and regulations and auditing techniques and procedures, including, but not
limited to, Medicaid provider cost reports; working knowledge of government auditing
standards is valuable. Certified as a Fraud Investigator or other similar credentials are
preferred.
d. Medical Review/Utilization Manager: Individual with recent and relevant supervisory
experience in medical utilization review. Education (Required): The Medical Review
Manager shall possess a bachelor’s degree in nursing and/or social or health service
with an active Registered Nurse license.
e. Statistician: Individual with relevant and recent experience in the use of statistics to
support corporate business information needs; experience in the use of statistics to
detect fraud, the use of fuzzy logic, the development of mathematical models, neural
networks and data mining methods of analysis. Knowledge of health care information
and claims data (ICD-9 codes, physician specialty codes, HCPCS codes for the
appropriate year of review, survey, certification data and ICD-10, when implemented,
etc.) is also considered valuable.
f. Technical Point of Contact for Information Technology: Individual with relevant IT
experience who can initiate, focus, and facilitate ongoing communications and
information exchange with regard to telecommunications.
g. Ensure clinical staff are experienced or knowledgeable in Texas Medicaid claims
payment processes, medical documentation review and recovery auditing. Whenever
performing complex coverage or coding reviews for specialty providers (i.e., reviews
involving the medical record), the RAC shall ensure that coverage/medical necessity
determinations are made by specialty RNs or therapists and that coding determinations
are made by certified coders. The RAC shall ensure that no nurse, therapist or coder,
specialist or non-specialist, reviews claims from any provider who was their employer
within the previous 12 months. RAC shall maintain and provide documentation upon any
provider’s request for the credentials of the individuals making the medical review
determinations.
h. Provide list of administrative staff that will coordinate all audit activities with HHSC.
i. Provide credentials of clinical and administrative staff to HHSC, as requested.
2.3.9. Reporting (Claims Based Approach)
a. Report and refer all potential/suspected fraud cases to HHSC OIG in a timely manner.
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. Provide monthly status reports to HHSC detailing all audit activities. The status report
should include, at a minimum, the following data fields:
1. Audit Concept (Description)
2. Number of claims selected for review
3. Number medical documentation requests sent
4. Number medical documentation requests received
5. Number of audits (claims) in progress
6. Percent of audit completed
7. Number of “no findings” results letters sent
8. Number overpayment results letters sent
9. Number of underpayment results letters sent
10. Percent of overpayments and underpayments identified from both the entire
universe of claims provided by claims administrator, and pool of claims
identified for review with potential improper payment
11. Number of dispute resolution requests received
12. Estimated improper payment amount
13. Number of claims adjustment requests submitted
14. Estimated dollar amount of claims adjustments submitted
15. Dollar amount of recoupments completed
16. Provider inquiries received, broken out by reason for provider inquiry
17. Number of referrals to HHSC OIG for suspected fraud, waste, or abuse
18. Any other data fields as identified during course of audit activity and requested
by HHSC
c. After consultation with HHSC, provide and compile required annual reporting regarding
the effectiveness of the Texas Medicaid RAC Program, as defined and requested by
CMS. Elements will include, but are not limited to, general program descriptors and
program metrics to evaluate the effectiveness of the RAC Program.
2.3.10. Coordination
a. Coordinate with HHSC to identify other audits underway to avoid overlap and
duplication of effort with other recovery efforts; this may include, but is not limited to,
coordination with federal and state law enforcement entities, such as the U.S.
Department of Justice, federal OIG, CMS, GAO, State Medicaid Fraud Control Units
(MFCUs), and State Surveillance and Utilization Review Units.
b. Submit claims information selected for potential improper payment review to HHSC
prior to start of review; HHSC will compare, identify and provide to contractor any
claims that should be excluded from the review because it is already under review
under another audit or investigation (i.e. PERM audit, Federal OIG audit or review, CMS
audit or review, CMS contractor audit or review), or other Federal and State audits or
reviews.
c. Coordinate with OIG in scope of work and project plan development for any fraudrelated
audit service activities assigned and agreed upon by HHSC and the RAC.
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State will:
2.4 State Responsibilities
a. Participate in established governance process with contractor.
b. Review and approve all provider correspondence communicated and sent to providers
by RAC.
c. Determine and provide to RAC the provider types and dates of service timelines to be
reviewed.
d. Review and approve all audit scenarios or audit concepts proposed by the RAC for
specific provider types approved for review.
e. Provide an extract of claims/encounters for provider types and dates of services
approved for review.
f. Identify claims provided by the RAC with potential improper payments that should be
excluded from the audit because the State or other authorities have already initiated
investigations, collections, reviews, audits, etc.
g. Make claims adjustments by either recouping or repaying improper payments as
identified by the RAC.
h. Provide a report with recoupment or repayment information to the RAC after claims
adjustments requests have been submitted by RAC and processed by HHSC.
i. Work with RAC to compile data of audit activities for required annual CMS reporting.
j. Request medical documentation from contractor for appeals received and will review the
documentation for final determination of improper payment.
k. Provide a monthly report to RAC with final determination information regarding all
appeals received by HHSC.
l. Provide a final reconciliation report at end of audit activity for each provider type that
reflects final recoupment figures and contingency or fixed fee paid (or reimbursement
due to HHSC) to RAC after all adjustments, including any appeals adjustments that have
been made.
m. Monitor contractor’s performance.
2.5 Performance Measures and Associated Remedies
HHSC will monitor the performance of the contract issued under this RFP. All services and
deliverables under the contract will be provided at an acceptable quality level and in a manner
consistent with acceptable industry standard, custom, and practice. Deliverables that are
inaccurate, incomplete or not received in accordance with the timelines contained herein will be
assessed liquidated damages in the amount of $500.00 per calendar day.
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2.6 Location of Services
The RAC will be responsible for providing its own equipment and office resources for business
related to this project and contract. HHSC will provide meeting space for all joint meetings and
work-sessions, if needed. HHSC may provide office space and equipment for the selected
vendor for key day-to-day personnel.
2.7 Contract Turnover Requirements
This section presents the Turnover Requirements to which the selected vendor must agree.
Turnover is defined as those activities that are required for the selected vendor to perform in
order to transition contract operations to a subsequent RAC and/or HHSC, or its designee.
2.8 Turnover Services
Six months prior to the end of the base contract period or any extension thereof, the selected
vendor must develop, submit, and implement an HHSC approved Turnover Plan covering the
possible turnover of contract requirements to HHSC, its designee, or a successor vendor. The
Turnover Plan must be a comprehensive document detailing the proposed schedule, activities,
and resource requirements associated with the turnover tasks outlined in this section below.
HHSC reserves the right to have the RAC submit an additional updated Turnover Plan one
month prior to the end of the base contract or any extension thereof.
The plan will describe the RAC’s approach and schedule for transfer of activities and
operational support information. The information must be supplied on media specified by and
according to the schedule approved by HHSC.
The time frames and turnover task requirements are provided herein. The timing and data
requirements are illustrative only and do not limit or restrict HHSC’s ability to require additional
information from the selected vendor or modify the turnover schedule as necessary. Proprietary
software programs will not be required to be delivered to HHSC pursuant to these Turnover
Requirements.
As part of the Turnover Plan, the RAC must provide HHSC with copies of all relevant nonproprietary
data, all documentation, including but not limited to the following:
a. Copies of working papers, including procedures, programs, and schedules;
b. Status of current projects
c. Copies of correspondence (internal and external);
d. Listings of third-party software used by the contractor(s), including availability of the
software for transfer or purchase by HHSC or successor vendor(s);
e. Description of functional business process flows;
f. Operational and system information concerning subcontractors;
g. Documentation of ongoing outstanding issues;
h. Other documentation necessary to support contract operations; and
i. Other pertinent information necessary to take over and operate the project or to assume
the operational activities successfully.
The RAC will provide HHSC or its agent all updated non-proprietary computer programs, data
and reference tables, scripts, and other documentation/records within 15 business days of the
request.
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Three months prior to the end of the contract or any extension thereof, the RAC must begin
training HHSC staff or its designated agent in the operation of non-proprietary systems and
business processes. Such training must be completed at least two months prior to the end of
the contract or any extension thereof. HHSC may, at its discretion, modify this timing.
Two months prior to the end of the contract or any extension thereof, the RAC will appoint, with
HHSC approval, a manager to coordinate and supervise all turnover activities.
The RAC will not reduce operational staffing levels during the turnover period without prior
HHSC approval.
2.9 Post-Turnover Services
One month after the scheduled end of the contract, the RAC must provide HHSC with a
Turnover Results Report documenting the completion and results of each part of the Turnover
Plan. The outline and format of the Turnover Results Report must be approved in advance by
HHSC. Turnover will not be considered complete until this document is approved by HHSC.
The RAC may also be required to provide the services (“Turnover Assistance”) of a
knowledgeable employee who has worked on the contract for at least one year and who has
access to other technical experts within the RAC’s operations. If so requested by HHSC, this
individual may be required to be available for at least 60 calendar days following contract
termination. The individual proposed by the RAC must be approved by HHSC. HHSC may
provide working space and assign work to be done on a partial or full-time basis to support postturnover
activity.
3. General Instructions and Proposal Requirements
3.1 Vendor Conference
HHSC will hold a vendor conference on June 22, 2012 at 1:30 p.m. in the Lone Star Conference
Room located at 11209 Metric Boulevard, Building H, Austin, Texas 78758. Vendor conference
attendance is strongly recommended, but is not required.
Respondents may email questions for the conference to the HHSC Point of Contact (see
Section 1.2) no later than three days before the conference. HHSC will also give respondents
the opportunity to submit written questions at the conference. All questions should reference the
appropriate RFP page and section number. HHSC will attempt to respond to questions at the
vendor conference, but responses are not official until posted in final form on the HHSC
website. HHSC reserves the right to amend answers prior to the proposal submission deadline.
3.2 Questions and Comments
All questions and comments regarding this RFP should be sent to the HHSC Point of Contact
(see Section 1.2). Questions must reference the appropriate RFP page and section number,
and must be submitted by the deadline set forth in Section 1.3. HHSC will not respond to
questions received after the deadline. HHSC’s responses to vendor questions will be posted to
the HHSC website. HHSC reserves the right to amend answers prior to the proposal submission
deadline.
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Respondents must notify HHSC of any ambiguity, conflict, discrepancy, exclusionary
specification, omission or other error in the RFP by the deadline for submitting questions and
comments. If a respondent fails to notify HHSC of these issues, it will submit a proposal at its
own risk, and if awarded a contract: (1) will have waived any claim of error or ambiguity in the
RFP or resulting contract, (2) will not contest HHSC’s interpretation of such provision(s), and (3)
will not be entitled to additional compensation, relief or time by reason of the ambiguity, error, or
its later correction.
3.3 Modification or Withdrawal of Proposal
Prior to the proposal submission deadline set forth in Section 1.3, a respondent may: (1)
withdraw its proposal by submitting a written request to the HHSC Point of Contact, or (2)
modify its proposal by submitting a written amendment to the HHSC Point of Contact. HHSC
may request proposal modifications at any time.
HHSC reserves the right to waive minor informalities in a proposal and award a contract that is
in the best interest of the State of Texas. A “minor informality” is an omission or error that, in
HHSC’s determination, if waived or modified when evaluating proposals, would not give a bidder
an unfair advantage over other bidders or result in a material change in the proposal or RFP
requirements. When HHSC determines that a proposal contains a minor informality, it may at its
discretion provide the respondent with the opportunity to correct.
3.4 News Releases
Prior to tentative award, a vendor may not issue a press release or provide any information for
public consumption regarding its participation in the procurement. After tentative award, a
vendor must receive prior written approval from HHSC before issuing a press release or
providing information for public consumption regarding its participation in the procurement.
Requests should be directed to the HHSC Point of Contact identified in Section 1.2.
This Section 3.4 does not preclude business communications necessary for a vendor to develop
a proposal, or required reporting to shareholders or governmental authorities.
3.5 Incomplete Proposals
HHSC may reject without further consideration a proposal that does not include a complete,
comprehensive, or total solution as requested by the RFP.
3.6 State Use of Ideas
HHSC reserves the right to use any and all ideas presented in a proposal unless the respondent
presents a valid legal claim that such ideas are trade secret or confidential information, and
identifies the information as such in its proposal (see Section 3.13). A respondent may not
object to the use of ideas that are not the respondent’s intellectual property and so designated
in the proposal that: (1) were known to HHSC before the submission of the proposal, (2) were
in the public domain through no fault of HHSC, or (3) became properly known to HHSC after
proposal submission through other sources or through acceptance of the proposal.
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3.7 Property of the State
Except as otherwise provided in this RFP or the resulting contract, all products produced by a
respondent, including without limitations the proposal, all plans, designs, software, and other
contract deliverables, become the sole property of the State. Any products produced by
selected vendor may be made available to another Texas state agency.
3.8 Copyright Restriction
HHSC will not consider any proposal that bears a copyright.
3.9 Additional Information
By submitting a proposal, the respondent grants HHSC the right to obtain information from any
lawful source regarding the respondent’s and its directors’, officers’, and employees’: (1) past
business history, practices, and conduct, (2) ability to supply the goods and services, and (3)
ability to comply with contract requirements. By submitting a proposal, a respondent generally
releases from liability and waives all claims against any party providing HHSC information about
the respondent. HHSC may take such information into consideration in evaluating proposals.
3.10 Multiple Responses
A respondent may only submit one proposal as a prime contractor. If a respondent submits
more than one proposal, HHSC may reject one or more of the submissions. This requirement
does not limit a subcontractor’s ability to collaborate with one or more respondents submitting
proposals.
3.11 No Joint Proposals
HHSC will not consider joint or collaborative proposals that require it to contract with more than
one respondent.
3.12 Use of Subcontractors
Subcontractors providing services under the contract will meet the same requirements and level
of experience as required of the respondent. No subcontract under the contract will relieve the
respondent of the responsibility for ensuring the requested services are provided. Respondents
planning to subcontract all or a portion of the work to be performed will identify the proposed
subcontractors.
3.13 Texas Public Information Act
3.13.1 General Requirement for the Release of Proposals
Proposals will be subject to the Texas Public Information Act (the Act), located in Chapter 552 of
the Texas Government Code, and may be disclosed to the public upon request. Subject to the
Act, respondents may protect trade secret and confidential information from public release. If
the respondent asserts that information provided in the proposal is trade secrets or other
confidential information, it must be clearly marked such information in boldface type and include
the words “confidential” or “trade secret” at top of the page. Furthermore, the respondent must
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identify trade secret or confidential information, and provide an explanation of why the
information is excepted from public disclosure, on the respondent Information and Disclosures
form.
HHSC will process any request from a member of the public in accordance with the procedures
outlined in the Act. Respondents should consult the Texas Attorney General’s website
(www.oag.state.tx.us) for information concerning the Act’s application to proposals and potential
exceptions to disclosure.
3.13.2 Publication of Major Contracts
Texas Government Code §322.020 requires HHSC to provide copies of “major contracts” to the
Legislative Budget Board (LBB). If the contract resulting from this procurement falls within the
§322.020 definition of a “major contract,” the LBB will provide the public with access to all
contract documents. This includes the proposal, unless the respondent can demonstrate that all
or part of the proposal is excepted from disclosure under the Texas Public Information Act. In
such cases, the respondent will be responsible for preparing, for HHSC’s approval, an appendix
that describes the exempt information contained in the proposal without disclosing its content,
as required by Texas Government Code §322.020 (d).
3.14 Instructions for Submitting Proposals
3.14.1 Number of Copies
Submit one (1) original and twelve (12) copies of the proposal. An authorized representative
must sign the original in ink. In addition, submit one electronic copy of the proposal on a
portable media, such as a compact disk, compatible with Microsoft Office 2000. HHSC will not
accept telephone and facsimile proposals. Any disparities between the contents of the original
printed proposal and the electronic proposal will be interpreted in favor of HHSC.
3.14.2 Submission
Submit all copies of the proposal to HHSC’s Enterprise Contract and Procurement Services
(ECPS) Division no later than 3:00 p.m. on July 9, 2012. All submissions will be date and time
stamped when received by ECPS. The clock in the ECPS office is the official timepiece for
determining compliance with the deadlines in this procurement. HHSC reserves the right to
reject late submissions. It is the respondent’s responsibility to appropriately mark and deliver the
proposal to HHSC by the specified date.
Physical Address for hand delivery and overnight and commercial mail:
HHSC Enterprise Contract and Procurement Services (ECPS) Division
Attn: Richard Blincoe
4405 North Lamar Boulevard, Building 1
Austin, Texas 78756
All proposals become the property of HHSC after submission.
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3.14.3 Additional Requirements
All proposals must be:
clearly legible;
no more than 200 pages;
sequentially page-numbered and include the respondent’s name at the top of each page;
organized in the sequence outlined in Section 3.15;
bound in a notebook or cover;
correctly identified with the RFP number and submittal deadline;
responsive to all RFP requirements;
typed on 8½ by 11” paper;
in Arial or Times New Roman font, size 12 for normal text, no less than size 10 for
tables, graphs and appendices; and
Proposals may not include materials or pamphlets not specifically requested in this RFP.
3.14.4 Transmittal Letter
The respondent must submit a transmittal letter printed on official company letterhead. The
letter must be signed in ink by an individual authorized to legally bind the respondent.
The transmittal letter must include:
The name and title of the person who will sign the contract;
The name and title of the respondent’s contact person who can answer questions
regarding the organization’s proposal, along with the telephone number, facsimile
number, and e-mail address for the contact person;
A statement that no attempt has been made or will be made by the Bidder to induce
any other company or individual to submit or not submit a proposal for the purpose of
restricting competition;
Acknowledgement of all addenda or amendments to this RFP, if any; and
A statement that the respondent accepts the RFP terms and conditions applicable to
the General Terms and Conditions, unless otherwise noted.
The respondent must provide a complete list of all exceptions or additional provisions that it
wishes HHSC to consider, if any. The respondent may not propose exceptions or additional
provisions that are in conflict with federal or state laws or requirements. HHSC reserves the
right to reject any or all respondent proposed exceptions or additional provisions to the
terms and conditions and other requirements without comment.
3.15 Format and Content
The proposal must consist of the following parts:
Part I – Business Proposal
Part II – Cost Proposal
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3.15.1 Part I – Business Proposal
The Business Proposal must include the following sections:
Section 1 – Executive Summary
Section 2 – Corporate Background and Experience
Section 3 – Response to Scope of Work Requirements
Section 4 – Value-added Benefits
Section 5 – Assumptions
Section 6 – Appendices
Section 7 – HUB Subcontracting Plan, if applicable
Section 8 – Certifications and Other Required Forms
3.15.2 Section 1 – Executive Summary
In this section, condense and highlight the content of the Business Proposal to provide HHSC
with a broad understanding of the respondent’s approach to meeting the RFP’s business
requirements. The summary must demonstrate an understanding of HHSC’s goals and
objectives for this procurement.
3.15.3 Section 2 -- Corporate Background and Experience
This section details the respondent’s corporate background and experience. If the respondent
proposes to use subcontractor(s), it must describe any existing or ongoing relationships with the
subcontractor(s), including project descriptions. The section should include the following
information:
1. Corporate Background and Experience
Describe the respondent's corporate background as it relates to projects similar in scope and
complexity to the project described in this RFP.
Describe how the respondent’s experience is specifically relevant to helping HHSC meet its
Mission Objectives as stated in Section 1.5.
The selected vendor and its key day-to-day personnel must demonstrate knowledge and
experience in Texas Medicaid and CHIP programs, private insurance, and public health
programs.
The selected vendor and its key day-to-day personnel must demonstrate expertise in all aspects
of project management.
The selected vendor and its key day-to-day personnel must demonstrate experience in policy,
program and financial analysis, and project implementation planning and execution for large,
complex projects.
All respondents must answer the following questions regarding respondents’ background and
processes:
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How long has respondent company been performing improper payment review and
recovery audit services, and fraud-related audit services?
How many reviewers does respondent firm currently employ? What is the average
experience of reviewers performing similar recovery audit(s) and fraud-related audit
services, in years? If a Contract is awarded for provision of the recovery audit(s) and
fraud-related audit services, how many individuals will respondent dedicate to the
project?
What types of payments did respondent investigate during past payment review and
recovery audit(s), and fraud-related audit services engagements?
What experience does respondent’s staff have at identifying control weaknesses?
Please describe in detail.
What experience does respondent’s staff have in writing audit reports? Please describe
in detail.
What experience does respondent’s staff have at reviewing medical services to
determine medical necessity, adherence to the CMS Correct Coding Initiative, and
compliance with industry coding standards and best practices? Please describe in
detail.
Describe how respondent will verify the improper payments and what resources and
documentation will be required to verify that the improper payments exist.
Describe how respondent will identify fraud, waste or abuse and what resources and
documentation may be needed to verify the fraud, waste or abuse exists.
All respondents must also provide the following in their proposals:
Describe respondent’s experience working with mainframe and client server extracted
data.
Describe respondent’s ability to accept different types of data formats and list preferred
data formats.
Describe respondent’s ability to accept a high volume of data.
Describe the system/software you will use to perform improper payment, or fraud-related
detection reviews and provide details of its functionality.
All respondents must disclose any potential or actual conflict of interest under this
contract as outlined in Section 1.8.2, and include proposed mitigation and management
strategies for any conflicts of interests identified.
Description and at least three (3) references from projects performed within the last five (5)
years that demonstrate the respondent’s ability to perform the Scope of Work described in the
RFP. Include contract dates and contact information (customer points of contact, address,
telephone number and email address). The respondent must explain whether it performed the
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work as a prime contractor or subcontractor. If respondent performed the work as a
subcontractor, the respondent must describe the scope of subcontracted activities.
If the proposal includes the use of subcontractors, include a similar description of each
subcontractor’s corporate background and experience.
2. Résumés
Identify and describe the respondent’s and its subcontractor’s proposed labor skill set and
provide résumés of all proposed key personnel (as defined by the respondent). Résumés must
demonstrate experience germane to the position proposed. Résumés should include work on
projects cited under the respondent’s corporate experience, and the specific functions
performed on such projects. Each résumé should include at least three (3) references from
recent projects. References may not be the respondent’s or subcontractor’s employees.
3. Financial Capacity
A respondent must supply evidence of financial capacity sufficient to demonstrate reasonable
stability and solvency appropriate to the requirements of this procurement. Respondents must
submit a current financial statement plus two (2) years of audited financial reports including all
supplements, management discussion and analysis, and actuarial opinions. At a minimum, such
financial statements and reports will include: balance sheet; statement of income and expense;
statement of changes in financial position; cash flows; and capital expenditures. If the
respondent is a corporation that is required to report to the Securities and Exchange
Commission, it must submit its two most recent SEC Forms 10K, Annual Reports. If any change
in ownership is anticipated during the twelve (12) months following the proposal due date, the
respondent must describe the circumstances of such change and indicate when the change is
likely to occur. A respondent must include responses to this Financial Capacity requirement with
the respondent’s Cost Proposal as described in Section 3.15.10.
4. Corporate Guarantee
If the respondent is substantially owned or controlled, in whole or in part, by one or more other
legal entities, the respondent must submit the information required under the “Financial
Capacity” section above for each such entity, including the most recent financial statement for
each such entity. The respondent must also include a statement that the entity or entities will
unconditionally guarantee performance by the respondent of each and every obligation,
warranty, covenant, term and condition of the contract. If HHSC determines that an entity does
not have sufficient financial resources to guarantee the respondent’s performance, HHSC may
require the respondent to obtain another acceptable financial instrument or resource from such
entity, or to obtain an acceptable guarantee from another entity with sufficient financial
resources to guarantee performance. A respondent must include responses to this Corporate
Guarantee requirement with the respondent’s Cost Proposal as described in Section 3.15.10.
5. Bonding
HHSC reserves the right to require the respondent to procure one or more performance, fidelity,
payment or other bond, if during the term of the contract; HHSC in its sole discretion determines
that there is a business need for such requirement.
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3.15.4 Section 3 - Response to Scope of Work Requirements
The response to the Scope of Work Requirements and Deliverables must include the following
sections:
Section 1 – Summary of Approach and Understanding of Work Effort
Section 2 – Proposed Approach for Meeting General Requirements
Section 3 – Proposed Approach for Identification of Specific Providers for Audit
(Provider Based Approach)
Section 4 – Proposed Approach for Identification of Specific Claims for Audit (Claims
Based Approach)
Section 5 – Proposed Approach for Provider Communication and Support - Claims
Based Approach
Section 6 – Proposed Approach for Provider Communication and Support – Provider
Based Approach
Section 7 - Proposed Approach for Data Sharing and Security including Development
of Web-Based Application
Section 8 – Proposed Approach for Recoupment and Appeals Process
Section 9 – Proposed Approach for Reporting – Claims Based Approach
Section 10 – Value-Added Benefits
Section 11 – Assumptions for Scope of Work
3.15.4.1 Section 1 – Summary of Approach and Understanding of Work Effort
The respondent must provide a summary description to their approach to assist HHSC in
meeting the objectives of the scope of work, internal quality control processes, and project
communications methods to be implemented with HHSC over the length of the contract.
3.15.4.2 Section 2 – Proposed Approach for Meeting General Requirements
The respondent must describe how it will meet the General Requirements detailed in Section
2.3.1.
3.15.4.3 Section 3 – Proposed Approach for Identification of Specific
Providers for Audit (Provider Based Approach)
The respondent must describe how it will meet the requirements for the identification of specific
providers for audit (provider based approach) detailed in Section 2.3.2.
3.15.4.4 Section 4 – Proposed Approach for Identification of Specific Claims
for Audit (Claims Based Approach)
The respondent must describe how it will meet the requirements for the identification of specific
claims for audit (claims based approach) detailed in Section 2.3.3.
3.15.4.5 Section 5 – Proposed Approach for Provider Communication and
Support - Claims Based Approach
The respondent must describe how it will meet the requirements for provider communication
and support (claims based approach) detailed in Section 2.3.4.
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3.15.4.6 Section 6 – Proposed Approach for Provider Communication and
Support - Provider Based Approach
The respondent must describe how it will meet the requirements for provider communication
and support (provider based approach) detailed in Section 2.3.5.
3.15.4.7 Section 7 – Proposed Approach for Data Sharing and Security
including Development of Web-Based Application
The respondent must describe how it will meet the requirements for data sharing and security
including the implementation, maintenance and operation of a web-based application detailed in
Section 2.3.6. and Section 2.3.5(c), respectively. The respondent must describe whether the
proposed web-based application would be a system the respondent currently utilizes in other
similar recovery audit contracts or whether the proposed web-based application would need to
be developed specifically for this contract. If the proposed web-based application is currently
utilized in other similar recovery audit contracts, the respondent must provide a listing of those
other contracts and also provide a comparison of the projected usage for this contract with the
usage for those other current contracts.
3.15.4.8 Section 8 – Proposed Approach for Recoupment and Appeals
Process
The respondent must describe how it will meet the requirements for recoupment and appeals
process detailed in Section 2.3.7.
3.15.4.9 Section 9 – Proposed Approach for Reporting – Claims Based
Approach
The respondent must describe how it will meet the requirements for reporting process detailed
in Section 2.3.9.
3.15.5 Section 4 - Value-Added Benefits
The respondent is requested to provide details on the features, functions, or other
considerations exclusive of the specified requirements that may provide a distinct value to
HHSC. In the event it is determined that such features, functions, or other considerations
provide a distinct benefit, the state reserves the right to give the respondent additional
considerations. HHSC will make the sole assessment of the relative merits of each added value
proposal to the agency.
3.15.6 Section 5 – Assumptions
The respondent must state any business, economic, legal, programmatic, or practical
assumptions that underlie the respondent’s response to the Business Proposal. HHSC reserves
the right to accept or reject any assumptions. All assumptions not expressly identified and
incorporated into the contract resulting from this RFP are deemed rejected by HHSC.
3.15.7 Section 6 – Appendices
The respondent must provide an organization chart of the respondent’s organization. The
respondent must include the name and title of respondent staff having corporate responsibility
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of the contract. The organization chart must depict the internal contract engagement team
organization and reporting structure proposed by the respondent. Include the name and title of
all proposed Key Day-to-Day Personnel identified.
3.15.8 Section 7 – HUB Subcontracting Plan
The respondent must attach the respondent’s Historically Underutilized Business (HUB)
Subcontracting Plan. Instructions for completing this section are in Article 4 of the RFP.
3.15.9 Section 8 – Certifications and Other Required Forms
The respondent must submit the following required forms with its proposal:
Child Support Certification;
Debarment, Suspension, Ineligibility, and Voluntary Exclusion of Covered Contracts;
Federal Lobbying Certification;
Nondisclosure Statement;
Required Certifications; and
Respondent Information and Disclosures.
The required forms are located on HHSC’s website, under the “Business Opportunities” link.
HHSC encourages respondents to carefully review all of these forms and submit questions
regarding their completion prior to the deadline for submitting questions (see Section 1.3).
3.15.10 Part II – Cost Proposal
The respondent’s Cost Proposal shall strictly conform to the provisions of this RFP and must
satisfy all financial requirements contained in the RFP. The Cost Proposal must include the
following:
(1) Cover Letter;
(2) Cost Proposal Assumptions;
(3) Proposed Compensation Tables and Proposed Fixed Fee Rates Schedule (Attachment A);
(4)Financial Statements and Financial Solvency (Financial Capacity); and
(5)Corporate Guarantee;
3.15.20. Cost Proposal Submission Requirements
The respondent’s Cost Proposal, Proposed Compensation Tables and Proposed Fixed Fee
Rates Schedule must be placed in a separate sealed package, clearly marked with the
respondent’s name, the RFP number, “original” or “copy”, and the RFP submission date.
Respondents must submit one (1) original and seven (7) copies of the Cost Proposal. An
authorized representative must sign the original in ink. In addition, respondents must submit
three (3) electronic copies of the Cost Proposal on a portable media, such as a USB drive or
CD, compatible with Microsoft Office 2003. HHSC will not accept telephone and facsimile
proposals. Any disparities between the contents of the original printed Cost Proposal and the
electronic cost proposal will be interpreted in favor of HHSC.
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Respondents must base their Cost Proposals on the Scope of Work described in the RFP and
must complete, sign, and date the Cost Proposal verifying that the enclosed information is valid
for 180 days from date of submission. The signature must be that of an authorized
representative of the respondent.
The Cost Proposal should include any business, economic, legal, programmatic, or practical
assumptions that underlie the Cost Proposal. HHSC reserves the right to accept or reject any
assumptions. All assumptions not expressly identified and incorporated into the applicable
Contract resulting from this RFP are deemed rejected by HHSC.
A cover letter referencing the Cost Proposal, Proposed Compensation Tables and Proposed
Fixed Fee Rates Schedule must be included in the respondent’s separate, sealed package, and
must be signed by an individual authorized to legally bind the respondent for the Cost Proposal,
Proposed Compensation Tables and Proposed Fixed Fee Rates Schedule submitted.
The RAC’s compensation for overpayments will be based on the actual amount recovered by
HHSC from the improper payment recovery review process and the RAC will be paid a
contingency fee percentage of the amount recovered. The amount will be considered recovered
only after HHSC receives the payments from its providers. The RAC will not be paid by HHSC
unless HHSC secures payment from the applicable provider and any appeals are resolved. Any
payments made to the RAC that are later refunded by HHSC to the provider as a result of an
overturned appeal will be refunded to HHSC within a reasonable timeframe as prescribed by
HHSC or offset against future payments to the RAC. .
The RAC’s compensation for underpayments will be based on the amount of the actual
underpayment amounts paid to providers identified from the improper payment recovery review
process and the RAC will be paid either a contingency fee percentage of the underpayments
actually paid to providers or a fixed fee.
The RAC’s compensation for other audit services related to fraud investigations will be based on
Fixed Fees mutually agreed upon by HHSC and the RAC. The Fixed Fees will be based on
individual Fixed Fee Rates included in the Contract and the level of effort to perform a specific
audit, audit services related to fraud investigations or any other service provided by the RAC
that would not be appropriate to utilize a contingency fee to compensate the RAC for those
specific services rendered. The respondent should include the proposed individual Fixed Fee
Rates that would be utilized during the initial 12 month operational period. The respondent
should also provide examples of fixed fee rates received for fraud-related audit services
performed under other similar contracts.
Respondents are to complete the Proposed Compensation Tables and Proposed Fixed Fee
Rates Schedule, Attachment A, according to these instructions. The contingency percentage
rate(s) and/or fixed fee rate offered in the Respondent’s Cost Proposal will be the compensatory
percentage rate(s) based only on overpayment amounts collected and underpayments identified
and paid to the providers pursuant to the RFP throughout the contract period as described in
this RFP. Respondents are to use the format(s) in Attachment A to submit their firm, fixed, allinclusive
compensatory percentage rate(s) that covers all SFYs (i.e, 13, 14, 15 16 17 and 18)
and the Fixed Fee Rates for the initial operational period (SFY 2013). At the Respondent’s
discretion, additional documentation may also be included with the completed Attachment A as
explanatory information, but when making the RAC selections and when executing the contract,
HHSC will consider only the proposed percentage rate(s) and the proposed fixed fee rates
37

displayed on the Proposed Compensation Tables and Proposed Fixed Fee Rates Schedule
submitted as Attachment A.
The selected RAC will be compensated as described in Section 6 of the RFP and at the final
accepted percentage rate(s) included in the contract which shall not exceed the lower of 12.5%
(or the highest rate paid to Medicare RACs, as published in the Federal Register). Respondents
who submit cost proposals which exceed the maximum contingency fee percentage of 12.5%
(or the highest rate paid to Medicare RACs, as published in the Federal Register) shall be
disqualified from further consideration of any resulting contract. In its separate sealed Cost
Proposal, the bidder should propose a percentage rate(s) (which must not exceed the lower
of 12.5%, or the highest rate paid to Medicare RACs, as published in the Federal
Register) using the pricing matrix provided with this RFP for the contingency fee of
overpayments collected, and underpayments identified based on the three payment
methodologies listed.
The first payment methodology listed in the pricing matrix (Attachment A) takes into
consideration the audit result (overpayment or underpayment) and the level of difficulty
of the review (automated or complex). A review will be considered automated if the
RAC did not need to examine medical documentation to determine the existence of an
improper payment, and it will be considered complex if the RAC did examine medical
documentation to determine the existence of an improper payment.
Based on the audit result and level of difficulty, the appropriate contingency percentage
will be located on the fee table provided by the RAC. This percentage will be applied to
the overpayments recovered or the underpayments discovered and paid to determine
the contingency fee payable by HHSC to the RAC for that specific improper payment
audit.
The second payment methodology listed, “Blended Rate”, is defined as a single
contingency percentage that will be applied to all reviews regardless of the audit result
(overpayment or underpayment) or the level of difficulty of the review (automated or
complex). This percentage will be applied to the total overpayments recovered and the
underpayments discovered and paid to determine the contingency fee payable by HHSC
to the RAC for all applicable improper payment audits.
The third payment methodology, “Tiered”, provides numerous possible contingency
percentages that each take into consideration a specific audit result (overpayment or
underpayment), level of difficulty of the review (automated or complex), and the dollar
value of the recovery audit under review. Based on these three variables, the
appropriate contingency percentage will be located on the fee table provided by the
RAC. This percentage will be applied to the overpayments recovered or the
underpayments discovered and paid to determine the contingency fee payable by HHSC
to the RAC for that specific improper payment audit.
Respondents are to use their business expertise in pricing the work described in this RFP,
taking into consideration any intervening steps or activities that must be performed in order to
complete the work, and offer their rates accordingly, even if HHSC does not explicitly identify
those intervening costs in this RFP. No separate travel expenses or any other type of expenses
will be paid under the contract to result from this RFP.
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3.15.30 Proposed Compensation Tables and Proposed Fixed Fee Rates Schedule
(Attachment A)
The Proposed Compensation Tables and Proposed Fixed Fee Rates Schedule are included in
Appendix A. Instructions for completing each Compensation Table and the Proposed Fixed Fee
Rates Schedule are given in the following sections.
3.15.31 Proposed Compensation Table 1
Proposed Compensation Table 1 depicts the first proposed payment methodology with the
Respondent taking into consideration the audit result (overpayment or underpayment) and the
level of difficulty of the review (automated or complex). A review will be considered automated
if the RAC did not need to examine medical documentation to determine the existence of an
improper payment, and it will be considered complex if the RAC did examine medical
documentation to determine the existence of an improper payment.
3.15.32 Proposed Compensation Table 2
Proposed Compensation Table 2 depicts the second proposed payment methodology with the
Respondent taking into consideration the “Blended Rate” methodology, which is defined as a
single contingency percentage that will be applied to all reviews regardless of the audit result
(overpayment or underpayment) or the level of difficulty of the review (automated or complex).
This percentage will be applied to the total overpayments recovered and the underpayments
discovered and paid to determine the contingency fee payable by HHSC to the RAC for all
applicable improper payment audits.
3.15.33 Proposed Compensation Table 3
Proposed Compensation Table 3 depicts the third proposed payment methodology with the
Respondent taking into consideration the “Tiered” methodology, which provides numerous
possible contingency percentages that each take into consideration a specific audit result
(overpayment or underpayment), level of difficulty of the review (automated or complex), and
the dollar value of the recovery audit under review. Based on these three variables, the
appropriate contingency percentage will be located on the fee table provided by the RAC. This
percentage will be applied to the overpayments recovered or the underpayments discovered
and paid to determine the contingency fee payable by HHSC to the RAC for that specific
improper payment audit.
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3.15.34 Proposed Fixed Fee Rates - Schedule 4
Proposed Fixed Fee Rates - Schedule 4 shows the All-Inclusive Hourly Labor Rate(s) /
individual Fixed Fee Rates proposed for the first 12 month Operational period (SFY 13) of a
resulting contract. The RAC’s compensation for other audit services related to fraud
investigations, other specific audits and any other service provided by the RAC that would not
be appropriate to utilize a contingency fee to compensate the RAC for those specific services
rendered will be based on Fixed Fees. The Fixed Fees will be based on individual Fixed Fee
Rates included in the Contract and the level of effort to perform a specific audit not paid on a
contingency basis, audit services related to fraud investigations or any other service provided by
the RAC that would not be appropriate to utilize a contingency fee to compensate the RAC for
those specific services rendered. The Fixed Fees for these services will be based on the
explicit fixed hourly rates proposed by the respondent and the projected number of hours to be
worked on the specific audit or specific project by the respondent’s staff or the staff of the
respondent’s subcontractor. Respondents must specify All-Inclusive Hourly Labor Rates for the
different types of staff that would be potentially working on audit services related to fraud
investigations or any other audit or other services that would be paid on a fixed fee basis. For
subsequent contract years (12 month Operational periods) and any applicable Operational
period less than 12 months, the Fixed Fees will be determined by the application of a fixed
annual inflator/deflator proposed by the respondent and subject to approval and acceptance by
HHSC. Please reference Section 6.3.3 of the RFP for additional information related to Fixed Fee
Rates.
Respondents are to propose their compensation rates using the Cost Proposal provided as
Attachment A to this RFP. All proposals for compensation must be presented in the format and
categories as prescribed in that attachment. No other categories of costs will be considered by
HHSC. No additional fees or costs of any sort will be paid under this contract.
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4. Historically Underutilized Business Participation
In accordance with Texas Government Code §2161.252, a proposal that does not contain
a HUB Subcontracting Plan (HSP) is non-responsive and will be rejected without further
evaluation. In addition, if HHSC determines that the HSP was not developed in good
faith, it will reject the proposal for failing to comply with material RFP specifications.
4.1 Introduction
HHSC is committed to promoting full and equal business opportunities for businesses in state
contracting in accordance with the goals specified in the State of Texas Disparity Study. HHSC
encourages the use of Historically Underutilized Businesses (HUBs) through race, ethnic and
gender-neutral means. HHSC has adopted administrative rules relating to HUBs, and a Policy
on the Utilization of HUBs, which is located on HHSC’s website.
Pursuant to Texas Government Code §2161.181 and §2161.182, and HHSC’s HUB policy and
rules, HHSC is required to make a good faith effort to increase HUB participation in its
contracts. HHSC may accomplish the goal of increased HUB participation by contracting
directly with HUBs or indirectly through subcontracting opportunities.
4.2 HHSC’s Administrative Rules
HHSC has adopted the CPA’s HUB rules as its own. HHSC’s rules are located in Title 1, Part
15, Chapter 392, Subchapter J of the Texas Administrative Code, and the CPA rules are located
in Title 34, Part 1, Chapter 20, Subchapter B. If there are any discrepancies between HHSC’s
administrative rules and this RFP, the rules shall take priority.
4.3 Statewide Annual HUB Utilization Goal
The CPA has established statewide annual HUB utilization goals for different categories of
contracts in 34 T.A.C. §20.13 of the HUB Rules. In order to meet or exceed the statewide
annual HUB utilization goals, HHSC encourages outreach to certified HUBs. Contractors
shall make a good faith effort to include certified HUBs in the procurement process.
This contract is classified as an all other services contract under the CPA rule, and therefore
has a statewide annual HUB utilization goal of 24.6 % per fiscal year.
4.4 Required HUB Subcontracting Plan
In accordance with Government Code, Chapter 2161, Subchapter F, each state agency that
considers entering into a contract with an expected value of $100,000 or more over the life of
the contract (including any renewals) shall, before the agency solicits bids, proposals, offers, or
other applicable expressions of interest, determine whether subcontracting opportunities are
probable under the contract.
In accordance with 34 T.A.C. §20.14(a) (1) (C) of the HUB Rules, State agencies may
determine that subcontracting is probable for only a subset of the work expected to be
performed or the funds to be expended under the contract. If an agency determines that
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subcontracting is probable on only a portion of a contract, it shall document its reasons in writing
for the procurement file.
HHSC has determined that subcontracting opportunities are probable for this RFP. As a result,
the respondent must submit an HSP with its proposal. The HSP is required whether a
respondent intends to subcontract or not.
In the HSP, a respondent must indicate whether it is a Texas certified HUB. Being a certified
HUB does not exempt a respondent from completing the HSP requirement.
HHSC shall review the documentation submitted by the respondent to determine if a good faith
effort has been made in accordance with solicitation and HSP requirements. During the good
faith effort evaluation, HHSC may, at its discretion allow revisions necessary to clarify and
enhance information submitted in the original HSP.
If HHSC determines that the respondent’s HSP was not developed in good faith, the HSP will be
considered non-responsive and will be rejected as a material failure to comply with advertised
specifications. The reasons for rejection shall be recorded in the procurement file.
4.5 CPA Centralized Master Bidders List
Respondents may search for HUB subcontractors in the CPA’s Centralized Master Bidders List
(CMBL) HUB Directory, which is located on the CPA’s website at
http://www2.cpa.state.tx.us/cmbl/cmblhub.html. For this procurement, HHSC has identified the
following NIGP class and item codes for potential subcontracting opportunities:
946-20 Auditing
948-07 Administration Services, Health
952-59 Human Services (Not Otherwise Classified)
Respondents are not required to use, nor limited to using, the class and item codes identified
above, and may identify other areas for subcontracting.
HHSC does not endorse, recommend nor attest to the capabilities of any company or individual
listed on the CPA’s CMBL. The list of certified HUBs is subject to change, so respondents are
encouraged to refer to the CMBL often to find the most current listing of HUBs.
4.6 HUB Subcontracting Procedures – If a Respondent Intends to Subcontract
An HSP must demonstrate that the respondent made a good faith effort to comply with
HHSC’s HUB policies and procedures. The following subparts outline the items that
HHSC will review in determining whether an HSP meets the good faith effort standard.
A respondent that intends to subcontract must complete the HSP to document its good
faith efforts.
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4.6.1 Identify Subcontracting Areas and Divide Them into Reasonable Lots
A respondent should first identify each area of the contract work it intends to subcontract. Then,
to maximize HUB participation, it should divide the contract work into reasonable lots or
portions, to the extent consistent with prudent industry practices.
4.6.2 Notify Potential HUB Subcontractors
The HSP must demonstrate that the respondent made a good faith effort to subcontract with
HUBs. The respondent’s good faith efforts shall be shown through utilization of all methods in
conformance with the development and submission of the HSP and by complying with the
following steps:
4.6.2.1. Divide the contract work into reasonable lots or portions to the extent
consistent with prudent industry practices. The respondent must determine
which portions of work, including goods and services, will be subcontracted.
4.6.2.2. Use the appropriate method(s) to demonstrate good faith effort. The
respondent can use either method(s) 1, 2, 3, or 4:
4.6.3 Method 1: Respondent Intends to Subcontract with only HUBs:
The respondent must identify in the HSP the HUBs that will be utilized and submit written
documentation that confirms 100% of all available subcontracting opportunities will be
performed by one or more HUBs; or,
4.6.4 Method 2: Respondent Intends to Subcontract with HUB Protégé(s):
The respondent must identify in the HSP the HUB protégé(s) that will be utilized and
should:
Include a fully executed copy of the Mentor Protégé Agreement, which must be
registered with the CPA prior to submission to HHSC, and
Identify areas of the HSP that will be performed by the protégé.
HHSC will accept a Mentor Protégé Agreement that has been entered into by a
respondent (mentor) and a certified HUB (protégé) in accordance with Texas Government
Code §2161.065. When a respondent proposes to subcontract with a protégé(s), it does
not need to provide notice to three (3) HUB vendors for that subcontracted area.
Participation in the Mentor Protégé Program, along with the submission of a protégé as a
subcontractor in an HSP, constitutes a good faith effort for the particular area
subcontracted to the protégé; or,
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4.6.5 Method 3: Respondent Intends to Subcontract with HUBs and Non-HUBs
(Meet or Exceed the Goal):
The respondent must identify in the HSP and submit written documentation that one or
more HUB subcontractors will be utilized; and that the aggregate expected percentage of
subcontracts with HUBs will meet or exceed the goal specified in this solicitation. When
utilizing this method, only HUB subcontractors that has existing contracts with the
respondent for five years or less may be used to comply with the good faith effort
requirements.
When the aggregate expected percentage of subcontracts with HUBs meets or exceeds
the goal specified in this solicitation, respondents may also use non-HUB subcontractors;
or,
4.6.6 Method 4: Respondent Intends to Subcontract with HUBs and Non-HUBs
(Does Not Meet or Exceed the Goal):
The respondent must identify in the HSP and submit documentation regarding both of the
following requirements:
written notification to minority or women trade organizations or development
centers to assist in identifying potential HUBs of the subcontracting opportunities the
respondent intends to subcontract.
Respondents must give minority or women trade organizations or development centers
at least seven (7) working days prior to submission of the respondent's response for
dissemination of the subcontracting opportunities to their members. A list of minority
and women trade organizations is located on HHSC’s website under the Minority and
Women Organization link.
written notification to at least three (3) HUB businesses of the subcontracting
opportunities that the respondent intends to subcontract. The written notice must be
sent to potential HUB subcontractors prior to submitting proposals and must include:
a description of the scope of work to be subcontracted;
information regarding the location to review project plans or specifications;
information about bonding and insurance requirements;
required qualifications and other contract requirements; and
a description of how the subcontractor can contact the respondent.
Respondents must give potential HUB subcontractors a reasonable amount of time to
respond to the notice, at least seven (7) working days prior to submission of the
respondent's response unless circumstances require a different time period, which is
determined by the agency and documented in the contract file;
Respondents must also use the CMBL, the HUB Directory, and Internet resources
when searching for HUB subcontractors. Respondents may rely on the services of
contractor groups; local, state and federal business assistance offices; and other
organizations that provide assistance in identifying qualified applicants for the HUB
program.
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4.6.7 Written Justification of the Selection Process
HHSC will make a determination if a good faith effort was made by the respondent in the
development of the required HSP. One or more of the methods identified in the previous
sections may be applicable to the respondent’s good faith efforts in developing and
submission of the HSP. HHSC may require the respondent to submit additional
documentation explaining how the respondent made a good faith effort in accordance with
the solicitation.
A respondent must provide written justification of its selection process if it chooses a non-
HUB subcontractor. The justification should demonstrate that the respondent negotiated
in good faith with qualified HUB bidders, and did not reject qualified HUBs who were the
best value responsive bidders.
4.7 Method 5: Respondent Does Not Intend to Subcontract
When the respondent plans to complete all contract requirements with its own
equipment, supplies, materials and/or employees, it is still required to complete an
HSP.
The respondent must complete the “Self Performance Justification” portion of the HSP,
and attest that it does not intend to subcontract for any goods or services, including the
class and item codes identified in Section 4.5. In addition, the respondent must
identify the sections of the proposal that describe how it will complete the Scope of
Work using its own resources or provide a statement explaining how it will complete
the Scope of Work using its own resources. The respondent must agree to comply
with the following if requested by HHSC:
provide evidence of sufficient respondent staffing to meet the RFP requirements;
provide monthly payroll records showing the respondent staff fully dedicated to the
contract;
allow HHSC to conduct an on site review of company headquarters or work site
where services are to be performed and,
provide documentation proving employment of qualified personnel holding the
necessary licenses and certificates required to perform the Scope of Work.
4.8 Post-award HSP Requirements
The HSP shall be reviewed and evaluated prior to contract award and, if accepted, the
finalized HSP will become part of the contract with the successful respondent(s).
After contract award, HHSC will coordinate a post-award meeting with the successful
respondent to discuss HSP reporting requirements. The contractor must maintain
business records documenting compliance with the HSP, and must submit monthly
subcontract reports to HHSC by completing the HUB “Prime Contractor Progress
Assessment Report.” This monthly report is required as a condition for payment to
report to the agency the identity and the amount paid to all subcontractors.
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As a condition of award the Contractor is required to send notification to all selected
subcontractors as identified in the accepted/approved HSP. In addition, a copy of the
notification must be provided to the agency’s Contract Manager and/or HUB Program
Office within 10 days of the contract award.
During the term of the contract, if the parties in the contract amend the contract to
include a change to the scope of work or add additional funding, HHSC will evaluate to
determine the probability of additional subcontracting opportunities. When applicable,
the Contractor must submit an HSP change request for HHSC review. The
requirements for an HSP change request will be covered in the post-award meeting.
When making a change to an HSP, the Contractor will obtain prior written approval
from HHSC before making any changes to the HSP. Proposed changes must comply
with the HUB Program good faith effort requirements relating to the development and
submission of a HSP.
If the contractor decides to subcontract any part of the contract after the award, it must
follow the good faith effort procedures outlined in Section 4.6 of this RFP (e.g., divide
work into reasonable lots, notify at least three (3) vendors per subcontracted area,
provide written justification of the selection process, or participate in the Mentor
Protégé Program).
For this reason, HHSC encourages respondents to identify, as part of their HSP,
multiple subcontractors who are able to perform the work in each area the respondent
plans to subcontract. Selecting additional subcontractors may help the selected
contractor make changes to its original HSP, when needed, and will allow HHSC to
approve any necessary changes expeditiously.
Failure to meet the HSP and post-award requirements will constitute a breach of
contract, and will be subject to remedial actions. HHSC may also report
noncompliance to the CPA in accordance with the provisions of the Vendor
Performance and Debarment Program.
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5. Proposal Evaluation
HHSC will use a formal evaluation process to select the successful respondent. HHSC will
consider capabilities or advantages that are clearly described in the proposal, which may be
confirmed by oral presentations, site visits, demonstrations, and references contacted by HHSC.
HHSC reserves the right to contact individuals, entities, or organizations that have had dealings
with the respondent or proposed staff, whether or not identified in the proposal.
HHSC will more favorably evaluate proposals that offer no or few exceptions, reservations, or
limitations to the terms and conditions of the RFP, including HHSC’s UTCs.
5.1 Evaluation Criteria
HHSC will evaluate proposals for demonstrated competence and experience in the design,
project management and implementation of major health and insurance reform initiatives at the
federal and state level, knowledge and qualifications, considering the reasonableness of the
proposed fee for the services.
HHSC will evaluate proposals based on the following best value criteria, listed in order of
importance:
(1) The extent to which the services meet the agency's needs; as clearly demonstrated
in the proponent’s Project Work Plan in response to the Scope of Work described in RFP
Section 2 and 3.15.
(2) The proponents demonstrated competence, knowledge and qualifications and the
quality and reliability of the vendor's services;
(3) Indicators of probable vendor performance under the contract such as experience,
past vendor performance and financial resources needed to perform, and
(4) The reasonableness and fairness of the total fee as it relates to the quality and
reliability of acquiring the vendor's services.
5.2 Initial Compliance Screening
HHSC will perform an initial screening of all proposals received. Unsigned proposals and
proposals that do not include all required forms and sections are subject to rejection without
further evaluation.
In accordance with Section 3.3, HHSC reserves the right to waive minor informalities in a
proposal and award contracts that are in the best interest of the State of Texas.
5.3 Competitive Field Determinations
HHSC may determine that certain proposals are within the field of competition for admission to
discussions. The field of competition consists of the proposals that receive the highest or most
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satisfactory evaluations. HHSC may, in the interest of administrative efficiency, place
reasonable limits on the number of proposals admitted to the field of competition.
5.4 Oral Presentations and Site Visits
HHSC may, at its sole discretion, request oral presentations, site visits, and/or demonstrations
from one or more respondents admitted to the field of competition. HHSC will notify selected
respondents of the time and location for these activities, and may supply agendas or topics for
discussion. HHSC reserves the right to ask additional questions during oral presentations, site
visits, and or demonstrations to clarify the scope and content of the written proposal.
The respondent’s oral presentation, site visit, and/or demonstration must substantially represent
material included in the written proposal, and should not introduce new concepts or offers
unless specifically requested by HHSC.
5.5 Best and Final Offers
HHSC may, but is not required to, permit respondents to prepare one or more revised offers.
For this reason, Respondents are encouraged to treat their original proposals, and any revised
offers requested by HHSC, as best and final offers.
5.6 Discussions with Respondents
HHSC may, but is not required to, conduct discussions with all, some, or none of the
respondents admitted to the field of competition for the purpose of obtaining the best value for
HHSC. It may conduct discussions for the purpose of:
obtaining clarification of proposal ambiguities;
requesting modifications to a proposal; and/or
obtaining a best and final offer.
HHSC may make an award prior to the completion of discussions with all respondents admitted
to the field of competition if HHSC determines that the award represents best value to the State
of Texas.
6. Financial Approach - Business Terms
6.1 Overview of Financial Approach
The financial approach described below documents the various responsibilities required of
HHSC and the successful respondent under this RFP. HHSC is seeking a qualified Recovery
Audit Contractor (RAC) to conduct improper payment recovery audit services for payments
made by the State of Texas to its Medicaid-enrolled providers for services provided under the
Medicaid State Plan or a waiver of the Medicaid State Plan, and other audit services related to
fraud investigations and program integrity efforts as determined by the State.
Compensation for improper payments will be based on the actual amount recovered as a result
of the improper payment recovery audit process. The amount will be considered recovered only
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after HHSC receives payment from the provider. It is the RAC’s responsibility to work with
Medicaid providers to identify the improper payments that are owed by them as a result of the
review conducted by the RAC. (Medicaid providers are required to maintain and provide
requested medical records at no cost when requested by HHSC or a designee of HHSC.) The
RAC will not be paid by HHSC unless HHSC secures payment from the applicable provider and
any appeals are resolved. Any payments made to the RAC that are later refunded by HHSC to
the provider as a result of an overturned appeal will be refunded to HHSC within a reasonable
timeframe as prescribed by HHSC or offset against future payments to the RAC.
The RAC’s compensation for underpayments will be based on the amount of the actual
underpayment amounts paid to providers identified from the improper payment recovery review
process. The RAC will be paid either a contingency fee percentage of the underpayments
actually paid to providers or a fixed fee.
The RAC’s compensation for other audit services related to fraud investigations and program
integrity efforts will be based on fixed fees as assigned by HHSC and mutually agreed upon by
HHSC and the RAC.
6.2 Business Objective
The objective of the Financial Approach is to describe the financial components that will enable
HHSC to achieve the Mission Objectives described in Section 1.5 of the RFP. This approach
will also ensure that all services required of the successful respondent are provided as
efficiently and effectively as possible, and assist HHSC in its responsibility for efficient and
effective administration of federal awards through the application of sound management and
recovery audit practices.
6.3 Financial Payment Structure
The financial payment structure for the Recovery Audit Contractor (RAC) Contract will be based
on contingency fees and/or fixed fees. The fixed fees will be based on individual fixed fee rates
included in the Contract and the level of effort to perform a specific audit, audit services related
to fraud investigations or program integrity efforts, or any other service provided by the RAC that
would not be appropriate to utilize a contingency fee to compensate the RAC for those specific
services rendered.
The RAC shall submit an invoice by the fifteenth (15th) of each month to HHSC for activity in the
previous calendar month. The invoice shall include:
a. Overpayments Collected by HHSC - Identification of each case for which recovery of an
overpayment has been obtained for the previous calendar month, the amount of the
claim, the amount of the recovery, and the amount of the contingency fee.
Overpayment amounts shall only be on this report if the amount has been
collected from the Medicaid provider (in summary and detail);
b. Underpayments Identified and Paid to the Provider by HHSC - Identification of each
case for which an underpayment was determined in the previous calendar month, the
amount of the underpayment, and the amount of the contingency or fixed fee.
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Underpayment amounts shall only be on this report if the identified
underpayments have been paid to the provider by HHSC (in summary and detail);
c. The net recovery amount (overpayments minus underpayments) must be itemized on
each monthly bill. It was the intention of the federal government and HHSC that the
contingency fee amount not be greater than the revenue generated from such reviews;
therefore, the majority of the work shall be geared toward the identification and recovery
of overpayments;
d. Total amount of payments received by the RAC contractor from HHSC since the
previous invoice;
e. Net amount due the RAC contractor as of the date of the invoice; and,
f. The selected RAC will not receive reimbursement for overpayments identified, only on
amounts actually collected from the Medicaid providers. The collection process can be
delayed based on provider appeals. Predicated on HHSC’s past experience, the appeal
process normally takes between four to six months. HHSC’s decision on any provider
appeal is the final decision and the case will be considered closed. Additionally, there is
no further avenue for the RAC to appeal the final decision made by HHSC.
6.3.1 Contingency Fees
The RAC shall be paid a percentage of the actual overpayment recoveries by HHSC, in addition
to an underpayment contingency or fixed fee, based on amounts actually paid by HHSC to the
providers during each preceding month. Actual recoveries are the overpayment amounts
refunded to HHSC by the providers, whether by check or through a debit adjustment to their
Medicaid reimbursement. If the provider is refunding the overpayment in installments, the RAC
fee will be based on the actual amounts paid as they are received by HHSC. The RAC
payments will only be based on a contingency fee payment for overpayment amounts recovered
plus contingency or fixed fees on underpayments discovered that are paid to the providers, not
on overpayments or underpayments identified.
In its separate sealed Cost Proposal (see Section 3.15.10), the RAC should propose
percentage rate(s) (which must not exceed the lower of 12.5%, or the highest rate paid to
Medicare RACs, as published in the Federal Register) using the pricing matrix provided with
this RFP (Attachment A) for the contingency fee of overpayments collected, and underpayments
discovered that are paid to the providers based on the three payment methodologies listed
below.
The first payment methodology listed in the pricing matrix takes into consideration the
audit result (overpayment or underpayment) and the level of difficulty of the review
(automated or complex). A review will be considered automated if the RAC did not
need to examine medical documentation to determine the existence of an improper
payment, and it will be considered complex if the RAC did examine medical
documentation to determine the existence of an improper payment.
Based on the audit result and level of difficulty, the appropriate contingency percentage
will be located on the fee table provided by the RAC. This percentage will be applied to
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the overpayments recovered or the underpayments discovered and paid to determine
the contingency fee payable by HHSC to the RAC for that specific improper payment
audit.
The second payment methodology listed, “Blended Rate”, is defined as a single
contingency percentage that will be applied to all reviews regardless of the audit result
(overpayment or underpayment) or the level of difficulty of the review (automated or
complex). This percentage will be applied to the total overpayments recovered and the
underpayments discovered and paid to determine the contingency fee payable by HHSC
to the RAC for all applicable improper payment audits.
The third payment methodology, “Tiered”, provides numerous possible contingency
percentages that each take into consideration a specific audit result (overpayment or
underpayment), level of difficulty of the review (automated or complex), and the dollar
value of the recovery audit under review. Based on these three variables, the
appropriate contingency percentage will be located on the fee table provided by the
RAC. This percentage will be applied to the overpayments recovered or the
underpayments discovered and paid to determine the contingency fee payable by HHSC
to the RAC for that specific improper payment audit.
Based on the contingency fee percentage(s) proposed by the RAC and accepted by HHSC,
HHSC will calculate the payment due the RAC and will remit to the RAC on a monthly basis.
If the provider refuses to pay, collection will be handled through the HHSC collections process,
which can include using legal means to collect the overpayment. The RAC will not be paid until
actual funds are collected.
6.3.2 Fixed Fees
The RAC’s compensation for other audit services related to fraud investigations and program
integrity efforts will be based on Fixed Fees mutually agreed upon by HHSC and the RAC. The
Fixed Fees will be based on individual Fixed Fee Rates included in the Contract and the level of
effort to perform a specific audit, other audit services related to fraud investigations or program
integrity efforts, or any other service provided by the RAC that would not be appropriate to
utilize a contingency fee to compensate the RAC for those specific services rendered.
In its separate sealed Cost Proposal (see Section 3.15.10), the respondent should include the
proposed individual Fixed Fee Rates that would be utilized during the initial 12 month
operational period of a resulting contract. For subsequent contract years (12 month Operational
periods) and any applicable Operational period less than 12 months, the Fixed Fees will be
determined by the application of a fixed annual inflator/deflator proposed by the respondent and
subject to approval and acceptance by HHSC. In its separate sealed Cost Proposal, the
respondent should also provide examples of fixed fee rates received for fraud-related audit
services performed under other similar contracts.
The respondent must submit one or more monthly invoice(s) following the month in which the
respondent provides the required services. HHSC will process and pay Fixed Fee invoices in
accordance with Chapter 2251, Texas Government Code. Invoices must be submitted by the
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espondent to HHSC in the format specified by HHSC. Each invoice will be processed and paid
separately, and Fixed Fees will be paid to the respondent retrospectively.
The respondent must supply detailed information with the invoice(s) as directed by HHSC to
justify and support the Fixed Fees invoiced. As directed by HHSC, the respondent must also
provide supporting documentation in an electronic format, subject to approval by HHSC.
HHSC, at its sole discretion, may choose to process only a portion of a Fixed Fee invoice, if only
a portion of the invoice can be verified and validated by the information submitted. If HHSC
decides to process an invoice in this manner, an adjustment will be made by HHSC and only
that portion of the fixed fee invoice that can be verified and validated will be paid.
To be paid for the Fixed Fees previously denied or not processed by HHSC, the respondent
must submit supplemental invoice(s) along with any and all necessary corrections or additional
changes requested by HHSC.
HHSC will process and pay Fixed Fees billed on supplemental invoices in accordance with
Chapter 2251, Texas Government Code. Each invoice will be processed and paid separately.
6.3.3 Fixed Fee Rates
HHSC anticipates that, during the life of the Contract, implementation of federal and state
mandates and other state initiatives will require additions to the activities not normally performed
on a regular basis. The RAC’s compensation for other audit services related to fraud
investigations or program integrity efforts, other specific audits, and any other service provided
by the RAC that would not be appropriate to utilize a contingency fee to compensate the RAC
for those specific services rendered will be based on Fixed Fees. The Fixed Fees will be based
on individual Fixed Fee Rates included in the Contract and the level of effort to perform a
specific service not paid on a contingency basis. The Fixed Fees for these services will be
based on the explicit fixed hourly rates proposed by the respondent and the projected number of
hours to be worked on the specific audit or specific project by the respondent’s staff or the staff
of the respondent’s subcontractor. The pricing associated with these services will be negotiated
between the respondent and HHSC after HHSC determines that the respondent has submitted
all of the detailed information (including detailed supporting metrics deemed appropriate by
HHSC) necessary to formulate a total fixed fee for the requested services.
Respondents must specify All-Inclusive Hourly Labor Rates for the different type of staff that
would be potentially working on audit services related to fraud investigations, program integrity
efforts, other specific audits, and any other service provided by the RAC that that would be paid
on a fixed fee basis. A representative sample of the types of staff the respondent must provide
All-Inclusive Hourly Labor Rates for is as follows:
(1) Project Director
(2) Medical Director;
(3) Audit Manager;
(4) Audit staff;
(5) Medical Review/Utilization Manager;
(6) Nursing staff;
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(7) Statistician
(8) Other Professional Recovery Audit staff (including all Key Staff); and
(9) Other Administrative Services staff.
The respondent must include All-Inclusive Hourly Labor Rates for all of the different type of staff
that would be potentially working on audit services related to fraud investigations, program
integrity efforts, other specific audits, and any other service provided by the RAC that that would
be paid on a fixed fee basis.
The successful respondent will employ the All-Inclusive Hourly Labor Rates proposed in
developing pricing proposals for the performance of a specific audit not paid on a contingency
basis, audit services related to fraud investigations or program integrity efforts, or any other
service provided by the RAC that would not be appropriate to utilize a contingency fee to
compensate the RAC for those specific services rendered. The all-inclusive hourly labor rates
will be proposed for the first 12 month Operational period of the resulting Contract. Rates for
subsequent 12 month Operational periods and for any Operational period less than 12 months
will be determined by the application of a fixed annual price inflator/deflator proposed by the
respondent and accepted by HHSC.
The All-Inclusive Hourly Labor Rates proposed by the respondent must contain all costs related
to performing the required functions, including but not limited to local travel, long-distance travel,
long distance telephone communications, computer depreciation and/or computer usage costs,
salaries, fringe benefits, indirect overhead charges, and administrative service fees. No
additional costs will be paid for any other items unless HHSC, in its sole discretion, determines
that any additional cost(s) requested by the respondent are extremely unique to the specific
project and that the respondent should not have otherwise included those additional costs as
part of the required all-inclusive hourly labor rates.
6.4 General Access to Accounting Records
The successful respondent must provide authorized representatives of HHSC full access to all
financial and accounting records related to the performance of a Contract resulting from this
RFP. The financial and accounting records shall be provided to the authorized representatives
of HHSC in an electronic format when requested.
6.5 Financial Report Requirements
6.5.1 Respondent Responsibilities
HHSC will require the successful respondent to provide financial reports to support contract
monitoring and support any HHSC, state, and federal reporting requirements.
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