Texas Health and Human Texas Health and Human Services Commission (HHSCServices Commission (HHSC))

Medicaid/CHIP Claims Processing and Medicaid/CHIP Claims Processing and Rebate Rebate

Administration Financial AuditsAdministration Financial AuditsRequest for Proposals # 529-10-0007Request for Proposals # 529-10-0007Vendor Conference: December 9, 2009 Vendor Conference: December 9, 2009

(8:30 – 11:30 AM) (8:30 – 11:30 AM)

IntroductionsIntroductions

• Steve BaileySteve Bailey,, Enterprise Contract and Procurement Services Enterprise Contract and Procurement Services (ECPS)(ECPS)

• Peggie J. LaserPeggie J. Laser, ECPS Procurement, ECPS Procurement

• Andy VasquezAndy Vasquez, Medicaid/CHIP Division – Vendor Drug , Medicaid/CHIP Division – Vendor Drug ProgramProgram

• Billy MillweeBilly Millwee, Medicaid/CHIP Division – Claims Administrator , Medicaid/CHIP Division – Claims Administrator OperationsOperations

• Kent HardinKent Hardin, Office of General Counsel, Office of General Counsel

• Carlos BalderasCarlos Balderas, HUB Program, HUB Program

Housekeeping ItemsHousekeeping Items

WelcomeWelcome

HHSC ProcurementHHSC Procurement RolesRoles

ECPSECPS - Responsible for procurement activity. - Responsible for procurement activity.

ProgramProgram (Claims Administrator Operations & Vendor Drug (Claims Administrator Operations & Vendor Drug Program) - Responsible for project scope, requirements, Program) - Responsible for project scope, requirements, performance, results, evaluation, and monitoring.performance, results, evaluation, and monitoring.

HUBHUB Program – Responsible for monitoring HUB activity. Program – Responsible for monitoring HUB activity.

LegalLegal - Questions/Answers re: Legal issues. - Questions/Answers re: Legal issues.

Vendor ConferenceVendor Conference OverviewOverview

1. Procurement Activities1. Procurement Activities2. RFP Overview2. RFP Overview3. HUB Items3. HUB Items4. Question Submittal4. Question Submittal====================================== Break Break ======================================5. Preliminary Responses to Questions5. Preliminary Responses to Questions6. Closing Comments6. Closing Comments

• Source for questions & answers Source for questions & answers

• Provides Provides sole HHSC contactsole HHSC contact: : Peggie J. LaserPeggie J. Laser Send Peggie any questions (after today), and your Send Peggie any questions (after today), and your

completed RFP responses.completed RFP responses.

• ECPS handles / coordinatesECPS handles / coordinates:: Procurement schedule Procurement schedule Solicitation access (Solicitation access (copy of RFPcopy of RFP, etc.) at, etc.) at

www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunitiewww.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunities.asps.asp

Submission requirementsSubmission requirements Solicitation changesSolicitation changes Oversees screening & evaluationOversees screening & evaluation Award informationAward information

ECPS Procurement ActivitiesECPS Procurement Activities

Procurement ScheduleProcurement Schedule• RFP Release DateRFP Release Date Nov. 25, 2009 Nov. 25, 2009• Vendor ConferenceVendor Conference Dec. 9, 2009 Dec. 9, 2009• Vendor Questions DueVendor Questions Due Dec. 10, 2009 Dec. 10, 2009• HHSC Posts Responses HHSC Posts Responses Dec. 15, 2009Dec. 15, 2009• Proposals Due Proposals Due (by 3pm (by 3pm CTCT) ) Jan. 7, 2010 Jan. 7, 2010 • Tentative Award AnnouncementTentative Award Announcement Feb. 19, Feb. 19,

20102010• Anticipated Contract Start DateAnticipated Contract Start Date Mar. 1, Mar. 1,

20102010• Start Date – 1Start Date – 1stst Audits (SFY 10) Audits (SFY 10) Mar., 2010 Mar., 2010• 11stst Key Due Date: Completion of Key Due Date: Completion of SFY 10 Audits Mar. 1, 2011SFY 10 Audits Mar. 1, 2011

• Background

• Procurement Mission

• Objectives

• Contract Terms

• Vendor Experience Sought

• Scope of Work

• Performance Measures

RFP Overview

BackgroundBackground Medicaid/CHIP Claims/PCCM Administrator and Pharmacy Medicaid/CHIP Claims/PCCM Administrator and Pharmacy

Rebate Administration Financial AuditsRebate Administration Financial Audits

Medical benefitsMedical benefits under this Contract are rendered by enrolled under this Contract are rendered by enrolled providers under the Traditional Fee-For-Service (FFS) program providers under the Traditional Fee-For-Service (FFS) program in some areas and by a Primary Care Case Management (PCCM) in some areas and by a Primary Care Case Management (PCCM) model (a non-capitated form of managed care) in other areas.model (a non-capitated form of managed care) in other areas.

Pharmacy benefitsPharmacy benefits are provided through an extensive are provided through an extensive statewide Vendor Drug Program involving thousands of statewide Vendor Drug Program involving thousands of pharmacies. Additionally, the federal rebate program requires pharmacies. Additionally, the federal rebate program requires pharmaceutical manufacturers to pay Texas an amount based pharmaceutical manufacturers to pay Texas an amount based on volume sales.on volume sales.

Substantial engagementSubstantial engagement: This procurement covers auditing the : This procurement covers auditing the Claims/PCCM Administrator and the Pharmacy Claims and Claims/PCCM Administrator and the Pharmacy Claims and Rebate Administrator contracts. The resulting Contracts will Rebate Administrator contracts. The resulting Contracts will cover 3+ years.cover 3+ years.

Types of auditsTypes of audits will primarily involve SAS-70 Level II, will primarily involve SAS-70 Level II, Retrospective Cost Settlement, and Performance audits. Retrospective Cost Settlement, and Performance audits. Performance audits will be based on risk assessments Performance audits will be based on risk assessments performed by the Vendor.performed by the Vendor.

OpportunityOpportunity for a knowledgeable audit firm to add/build for a knowledgeable audit firm to add/build Medicaid expertise.Medicaid expertise.

Procurement MissionProcurement Mission

Obtain professional services that will,

in a timely manner, help ensure

accurate and relevant cost and profit reporting

by external contractors

who provide Medicaid/CHIP services for HHSC

Medicaid/CHIP programs.

ObjectivesObjectives Enforce regulatory and contract provisions for Medicaid and CHIP Enforce regulatory and contract provisions for Medicaid and CHIP

program claims administrator External Entities, as well as, the VDP program claims administrator External Entities, as well as, the VDP Rebate program; Rebate program;

Strengthen HHSC’s oversight of Medicaid and CHIP program Strengthen HHSC’s oversight of Medicaid and CHIP program components provided by External Entities by performing various components provided by External Entities by performing various audits of high risk areas as well as External Entities reporting to audits of high risk areas as well as External Entities reporting to HHSC;HHSC;

Ensure External Entities’ costs passed on to HHSC include only Ensure External Entities’ costs passed on to HHSC include only program and contract allowable costs; program and contract allowable costs;

Ensure accurate reporting of the administrative components of Ensure accurate reporting of the administrative components of contracted Medicaid and CHIP program components to enhance contracted Medicaid and CHIP program components to enhance effective and efficient management by External Entities, as well as, effective and efficient management by External Entities, as well as, HHSC oversight staff and leadership; andHHSC oversight staff and leadership; and

Ensure accurate reporting of the medical benefit components of Ensure accurate reporting of the medical benefit components of contracted programs to enhance effective and efficient contracted programs to enhance effective and efficient management by External Entities, as well as, HHSC oversight staff management by External Entities, as well as, HHSC oversight staff and leadership.and leadership.

Contract TermsContract Terms

Initial contract period: Initial contract period will be for Initial contract period: Initial contract period will be for three (3) years. The three (3) years. The anticipatedanticipated Contract start date is Contract start date is March 1, 2010March 1, 2010

HHSC HHSC may extendmay extend the term of the contract: the term of the contract: for one additional yearfor one additional year, or as necessary to complete the , or as necessary to complete the

mission of the procurementmission of the procurement subject to negotiation between the parties.subject to negotiation between the parties.

The contract will be on a The contract will be on a fixed-fee basis:fixed-fee basis: fees tied to specific deliverables (e.g., completion of fees tied to specific deliverables (e.g., completion of

audits and issuance of final audit reports)audits and issuance of final audit reports) fixed fees will include all costs (fixed fees will include all costs (no per-item no per-item

reimbursements, with the exception of HHSC pre-reimbursements, with the exception of HHSC pre-approved travel expensesapproved travel expenses).).

Vendor Experience SoughtVendor Experience Sought Experience with performing audits of corporations or operating units Experience with performing audits of corporations or operating units

with revenues in excess of with revenues in excess of $100 million$100 million per year. per year.

Experience with auditing Experience with auditing government contractsgovernment contracts..

Experience with the Federal Acquisition Regulations (Experience with the Federal Acquisition Regulations (FARFAR), ), Generally Accepted Government Auditing Standards (GAGAS), Generally Accepted Government Auditing Standards (GAGAS), Generally Accepted Accounting Principles, and other appropriate Generally Accepted Accounting Principles, and other appropriate professional standards.professional standards.

Knowledge of Medicaid/CHIP legal requirements including federal Knowledge of Medicaid/CHIP legal requirements including federal privacy laws.privacy laws.

Experience with auditing related parties, affiliate or External Entity Experience with auditing related parties, affiliate or External Entity transactions.transactions.

Other related experience.Other related experience.

Experience Sought Experience Sought (con’t.)(con’t.)

The experience listed above should be manifested in the The experience listed above should be manifested in the backgrounds and resumes of the Key Day-to-Day Staff that backgrounds and resumes of the Key Day-to-Day Staff that

will handle the majority of the work on the engagement.will handle the majority of the work on the engagement.

• Experience gained by others in the firm, including senior Experience gained by others in the firm, including senior members who will not be primarily engaged in the hands-on members who will not be primarily engaged in the hands-on day-to-day work of this engagement, will be given less day-to-day work of this engagement, will be given less emphasis in the RFP evaluation than that of the day-to-day emphasis in the RFP evaluation than that of the day-to-day staff.staff.

++ Additionally, Vendor firm experience auditing publicly-Additionally, Vendor firm experience auditing publicly-traded corporations, as well as non-profit firms, would be traded corporations, as well as non-profit firms, would be helpful.helpful.

Other Vendor AttributesOther Vendor Attributes

Vendor should have a track record of, and be strongly Vendor should have a track record of, and be strongly committed to: committed to: a a high level ofhigh level of responsiveness and availabilityresponsiveness and availability (by the (by the

audit manager and key senior day-to-day contributors) audit manager and key senior day-to-day contributors) to HHSC’s MCD analysts and hands-on staff; and to to HHSC’s MCD analysts and hands-on staff; and to

limiting turnoverlimiting turnover of Key Day-to-Day Staff. of Key Day-to-Day Staff.

The Vendor should be The Vendor should be flexibleflexible, and ready to take on , and ready to take on ad hocad hoc assignments, in a reasonably assignments, in a reasonably promptprompt time frame, and at a time frame, and at a reasonable cost.reasonable cost.

Scope of WorkScope of Work Perform various audits of Medicaid and CHIP program Perform various audits of Medicaid and CHIP program

components as part of HHSC oversight and program components as part of HHSC oversight and program accountability requirements. The program components accountability requirements. The program components include, but are not limited to, Medicaid and CHIP claims include, but are not limited to, Medicaid and CHIP claims administration for medical and pharmacy services as well as administration for medical and pharmacy services as well as External Entity management of the VDP Rebate programs.External Entity management of the VDP Rebate programs.

Types of AuditsTypes of Audits Statement on Auditing Standards (SAS) 70, Level II – Annually Statement on Auditing Standards (SAS) 70, Level II – Annually

for each external entityfor each external entity Retrospective Cost Settlement - Annually for each external Retrospective Cost Settlement - Annually for each external

entityentity Performance AuditPerformance Audit

Performance Risk AssessmentPerformance Risk Assessment - every other year beginning year - every other year beginning year oneone

Performance Audit – every other year, based on recommendations Performance Audit – every other year, based on recommendations from Risk Assessment from Risk Assessment

Accounts Receivable (External Entity and HHSC)– no later than Accounts Receivable (External Entity and HHSC)– no later than June 1, 2010 [Claims/PCCM Administrator only]June 1, 2010 [Claims/PCCM Administrator only]

Pharmacy Rebate Administration – Annually [Pharmacy only]Pharmacy Rebate Administration – Annually [Pharmacy only] Other Types of Audits – HHSC may request compliance exams, Other Types of Audits – HHSC may request compliance exams,

agreed upon procedures, and other related work.agreed upon procedures, and other related work.

Scope of WorkScope of Work Additional HHSC Audits/RequestsAdditional HHSC Audits/Requests

Upon request, Contractor should provide additional financial Upon request, Contractor should provide additional financial consulting or auditing services (i.e. review of accounting consulting or auditing services (i.e. review of accounting system, banking statements and other related work) of any system, banking statements and other related work) of any External Entities providing services to HHSC, and/or the External Entities providing services to HHSC, and/or the Medicaid or CHIP programsMedicaid or CHIP programs

This item does not require a bid in the cost proposal and will This item does not require a bid in the cost proposal and will be resolved through mutual agreement, as needed. HHSC and be resolved through mutual agreement, as needed. HHSC and the auditor will negotiate applicable fees.the auditor will negotiate applicable fees.

Key Audit DocumentsKey Audit Documents External Entities may report financial results to HHSC through External Entities may report financial results to HHSC through

Financial Statements (including bank statements), when Financial Statements (including bank statements), when applicable and depending on the audit type.applicable and depending on the audit type.

Auditor must provide a written opinion that financial reporting Auditor must provide a written opinion that financial reporting byby the External Entities are/are not adhering to the terms of the External Entities are/are not adhering to the terms of the relevant Contract and Federal Acquisition Regulations.the relevant Contract and Federal Acquisition Regulations.

Auditor must describe specific audit findings and the dollar Auditor must describe specific audit findings and the dollar impact of the findings.impact of the findings.

Scope of WorkScope of Work Audit Plan Development for Every AuditAudit Plan Development for Every Audit

Perform Risk Assessment (Desk Assessment)Perform Risk Assessment (Desk Assessment) Develop Audit PlanDevelop Audit Plan

Vendor proposes audit methodology for each audit, Vendor proposes audit methodology for each audit, including sample size, confidence level, and error rateincluding sample size, confidence level, and error rate

Each audit must meet a minimum of 90% confidence levelEach audit must meet a minimum of 90% confidence level Address the estimated population and standard deviation Address the estimated population and standard deviation

proposed for use in substantive testing and/or validation and proposed for use in substantive testing and/or validation and estimation of transaction volume and/or amount.estimation of transaction volume and/or amount.

HHSC approves planHHSC approves plan DeliverablesDeliverables

Submit according to schedule in approved planSubmit according to schedule in approved plan Obtain written approval from HHSCObtain written approval from HHSC Revise deliverables, if requested by HHSCRevise deliverables, if requested by HHSC

Scope of WorkScope of Work Audit PricingAudit Pricing

Fixed-dollar bases, with all expenses includedFixed-dollar bases, with all expenses included Tied to specific deliverablesTied to specific deliverables Comparative vendor pricing will be judged by HHSC’s Comparative vendor pricing will be judged by HHSC’s

interpretation of the extended aggregate amount for interpretation of the extended aggregate amount for each vendor.each vendor.

20% hold-back for audits in the last fiscal year, payable 20% hold-back for audits in the last fiscal year, payable upon HHSC acceptance of all deliverablesupon HHSC acceptance of all deliverables

Audit PaymentAudit Payment Deliverables may be invoiced upon completionDeliverables may be invoiced upon completion To complete audits, Vendor must use contractual To complete audits, Vendor must use contractual

elements in the appropriate External Entity contract, elements in the appropriate External Entity contract, including contractually-referenced requirementsincluding contractually-referenced requirements

Audits unable to be performed in their entirety (not due Audits unable to be performed in their entirety (not due to vendor) are subject to non-payment or pro rata to vendor) are subject to non-payment or pro rata payment, as deemed by HHSC.payment, as deemed by HHSC.

Scope of WorkScope of Work Audit IssuesAudit Issues::

The potential over-statement of costs (and The potential over-statement of costs (and resultant understatement of profitability) in resultant understatement of profitability) in Retrospective Cost Settlement reports submitted Retrospective Cost Settlement reports submitted to HHSC can lead to the avoidance or reduction to HHSC can lead to the avoidance or reduction of a profit rebate payment back to the state.of a profit rebate payment back to the state.

Contractual affiliate relationships can lead to Contractual affiliate relationships can lead to complex audit issues concerning cost reporting. complex audit issues concerning cost reporting. These relationships may involve substantial These relationships may involve substantial dollars and can include various administrative dollars and can include various administrative services provided by a corporate parent.services provided by a corporate parent.

Performance MeasuresPerformance Measures

Performance monitored by HHSC.Performance monitored by HHSC.

All services and deliverables under the contract shall be All services and deliverables under the contract shall be provided at an acceptable quality level, and in a manner provided at an acceptable quality level, and in a manner consistent with acceptable industry standard, custom, and consistent with acceptable industry standard, custom, and practice.practice.

See Attachment B: Key Performance Measures and See Attachment B: Key Performance Measures and Liquidated Damages.Liquidated Damages.

HUB Subcontracting PlanHUB Subcontracting Plan(HSP) Requirements(HSP) Requirements

Agenda TopicsAgenda Topics

• RFP Section 4.0 Historically Underutilized Business RFP Section 4.0 Historically Underutilized Business

Participation RequirementsParticipation Requirements

• HUB Subcontracting Plan for the RFP is requiredHUB Subcontracting Plan for the RFP is required

• Self Performance HSP Self Performance HSP

• HSP Prime Contractor Progress Assessment ReportHSP Prime Contractor Progress Assessment Report

• HUB Participation GoalsHUB Participation Goals

• Potential Subcontracting OpportunitiesPotential Subcontracting Opportunities

• Vendor Intends to Subcontract Vendor Intends to Subcontract

• Minority or Women Trade Organizations Minority or Women Trade Organizations

• Self PerformanceSelf Performance

• HSP Changes After Contract AwardHSP Changes After Contract Award

• Reporting and Compliance with the HSPReporting and Compliance with the HSP

RFP Section 4.0 - Historically Underutilized RFP Section 4.0 - Historically Underutilized

Business Participation RequirementsBusiness Participation Requirements

If HSP is inadequate, response will be rejected

HSP Information Page

HSP Information Page

HUB GOALS

Special reminders and instructions

Company Information

If more than 20 subcontracting

opportunities, click the link provided to

continue adding

HSP Information Page

Enter subcontracting opportunities

Subcontracting

Declaration

One page for each area

subcontracted(listed on page

1)

HSP Information Page

List Line # and Subcontracting Opportunity

HSP Information Page

Protégé performing the

work

HSP Information Page

Skip to Sections

8 and 10

Professional Services Category

HSP Information Page

Good Faith Efforts to

find/include Texas Certified HUB Vendors

HSP Information Page

Contact HUB Trade

Organization

HSP Information Page

Written Notification

Requirements

HSP Information Page

List 3 HUBs Contacted

for this Subcontractin

g Opportunity

HSP Information Page

List Subs Selected (HUBs & Non-HUBs)

for this Subcontracting

Opportunity

HSP Information Page

Reason why HUB was not selected

for this Subcontracting

Opportunity

HSP Information Page

Self Performanc

e Explanation

HSP Information Page

Signature Affirms that

True and Correct

Information is Provided

• Required with ALL Pay Requests

• List ALL Sub payments (HUBs & Non-HUBs)

HSP Prime Contractor Progress Assessment Report

ATTACHMENT “E”

HSP ASSISTANCE FROM TPASS

HUB Subcontracting Plan (HSP) Forms

Step-by-step instructions and an audio on “How to Complete an HSP ” is located on the Comptroller of Public Accounts (CPA) Texas Procurement and Support Services (TPASS) website at:

http://www.cpa.state.tx.us/procurement/prog/hub/hub-forms/

HUB Subcontracting Plan Instructional Video

Play Windows Media Version (7.7 MB download)

Play Quicktime (mp4) version (24 MB download)

Play Macromedia Flash version (10.8 MB download)

Read Video Transcript (.rtf file) (160 K download)

Administrative Services Administrative Services Development HUB Program Development HUB Program

OfficeOffice Robert L. Hall, C.P.M.Robert L. Hall, C.P.M. Director of Administrative Services DevelopmentDirector of Administrative Services Development

- (512) 424-6596- (512) 424-6596- - robert.hall@hhsc.state.tx.usrobert.hall@hhsc.state.tx.us

Carlos A. BalderasCarlos A. Balderas ASD HUB AdministratorASD HUB Administrator

- (512) 424-6896- (512) 424-6896- - carlos.balderas@hhsc.state.tx.uscarlos.balderas@hhsc.state.tx.us

Sherice Williams-PattySherice Williams-Patty ASD HUB AdministratorASD HUB Administrator

- (512) 424-6903- (512) 424-6903- - sherice.williams-patty@hhsc.state.tx.ussherice.williams-patty@hhsc.state.tx.us

Sharon AddisonSharon AddisonHUB Program/Procurement Services Team LeadHUB Program/Procurement Services Team Lead- (512) 487-3404- (512) 487-3404- - sharon.addison@hhsc.state.tx.ussharon.addison@hhsc.state.tx.us

Texas Health and Human Texas Health and Human Services Commission (HHSCServices Commission (HHSC))

Question SubmittalQuestion SubmittalFollowed by BreakFollowed by Break

Tentative Responses toTentative Responses to Vendor Questions Vendor Questions

Non-binding verbal answers to vendor questions may be provided Non-binding verbal answers to vendor questions may be provided here today.here today.

Reminder:Reminder: After today, any additional questions, requests for After today, any additional questions, requests for clarification, etc., are clarification, etc., are duedue to HHSC, in writing, by December 10, 2009. to HHSC, in writing, by December 10, 2009. (Send to Peggie Laser; see below.)(Send to Peggie Laser; see below.)

Vendor Questions/HHSC Responses Vendor Questions/HHSC Responses shouldshould be posted by December be posted by December 15, 2009, on the HHSC Contract Opportunities website at the URL 15, 2009, on the HHSC Contract Opportunities website at the URL below:below: http://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunities.asphttp://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunities.asp

Sole point of contactSole point of contact for further inquiries concerning this RFP is: for further inquiries concerning this RFP is:

Peggie J. LaserPeggie J. Laser, Contract Administrator, Contract AdministratorEnterprise Contract and Procurement ServicesEnterprise Contract and Procurement ServicesTexas Health and Human Services CommissionTexas Health and Human Services Commission

4405 North Lamar Blvd.4405 North Lamar Blvd.Austin, Texas 78756Austin, Texas 78756

Phone (512) 206-5278; fax (512) 206-5475 Phone (512) 206-5278; fax (512) 206-5475 Email Email peggie.laser@hhsc.state.tx.uspeggie.laser@hhsc.state.tx.us

Closing CommentsClosing Comments