Evaluation of Healthcare Services to MHS Beneficiaries

JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND OPEN COMPETITION EXTENSION OF PERIOD OF PERFORMANCE CONTRACT NUMBER H94002-04-D-0001 1. Contracting Agency: Office of the Assistant Secretary of Defense, Health Affairs, TRICARE Management Activity (TMA), Contract Management Division (CMD), Aurora, Colorado 2. Description of Action: The Agency seeks approval to negotiate and execute a sole source one year contract performance period extension for continuation of services under the existing National Quality Monitoring Contract (NQMC) H94002-04-D-0001 with MAXIMUS Federal Services, Inc. The estimated cost of this extension is $5.2 million. Description of Services: The TRICARE health care benefit is a regionally managed health care program for active duty and retired members of the uniformed services, their family members, and survivors. TRICARE brings together the health care resources of the Army, Navy, and Air Force medical services and supplements them with networks of civilian health care professionals to provide better access, high quality healthcare, and customer service while maintaining the capability to support military operations. This is accomplished by means of Managed Care Support (MSC) and Designated Provider (DP) Contracts. These contracts provide healthcare and customer services to Military Health System (MHS) beneficiaries. The NQMC assists TMA, the TRICARE Regional Offices, and the Services by providing an independent, impartial evaluation of the health care provided to MHS beneficiaries and monitors the quality of care provided to ensure health care delivery quality standards are met and the care provided is medically necessary. The NQMC is an indefinite delivery/indefinite quantity contract awarded as a fixed-unit-priced contract to MAXMIUS Federal Services, Inc. The contract contains a base performance period from award date November 1, 2003 through April 30, 2004 and five (5) one (1) year option periods commencing on May 1, 2004 and continuing through April 30, 2009. The current contract allows a six month extension option that has been exercised and funded extending quality monitoring services under the current contract through October 31, 2009. The purpose of this one year extension and the inclusion of up to an additional 6 month option under the Option to Extend Services, clause reference FAR subpart 52.217-8, to assist TMA and the Services by providing an uninterrupted, independent, impartial evaluation of the healthcare provided to the MHS beneficiaries. The current contract requires the contractor to validate utilization management decisions; monitor the quality of health care provided to ensure quality standards are met and health care delivered to beneficiaries is medically necessary; provide an external second level appeal of denials made by Military Treatment Facilities (MTF), Designated Providers (DP), and the MCS contractors; provide an external, independent review of paid MTF malpractice cases; conduct facility certification activities for Residential Treatment Centers, Psychiatric Partial Hospitalization Programs, and Substance Use Disorder Rehabilitation Facilities; and provide peer review for TMA when a beneficiary and/or provider appeals a health care delivery contractor's (MCS' or DP's) decision to deny coverage. The NQMC is an integral part of the TRICARE (CHAMPUS) Quality and Utilization Review Peer Review Organization Program. The unique provisions for this tri-benefit program, designed to assure the quality and appropriateness of health care services under the TRICARE (CHAMPUS) Program, are established in 32 CFR 199.15. As part of the TRICARE (CHAMPUS) Quality and Utilization Review Peer Review Organization Program, the NQMC is subject to the regulatory provisions established by 32 CFR 199.15. The Quality and Utilization Review Peer Review Organization Program uses criteria developed on both national and local levels, to determine the adequacy and appropriateness of health care provided to MHS beneficiaries and is specific to the TRICARE population. The criteria, though revised over time, continue to be specific and unique to the TRICARE population and benefit. 3. Authority Cited: FAR 6.302-1(a)(2)(iii)(B) that provides: When the services required by the agency are available from only one responsible source and no other type of services will satisfy agency requirements, full-and-open competition need not be provided for. Particularly, under sub-paragraph (iii)(B), "For DoD..., services may be deemed to be available only from the original source in the case of follow-on contracts for the continued provision of highly specialized services when it is likely that award to any other source would result in unacceptable delays in fulfilling the agency's requirements." 4. Reason for Authority Cited: The agency has a continuing undisrupted need for the highly specialized services provided under the NQMC. The unique TRICARE requirements make this contract a highly specialized service and there are statutory and regulatory provisions that must be considered. The unique requirements include specific criteria for utilization management, quality of care screens that are based on the TRICARE benefit, which is mandated by 32 CFR 199.4, and specific documentation requirements, which are found in 32 CFR 199.7. In addition, the TRICARE Program has a unique appeal process addressing qualifications required for reconsideration reviewers, levels of appeal, timing of appeals, content of appeal determinations, a Department of Defense specific process for Military Treatment Facilities' malpractice reviews, and detailed facility certification requirements mandated by 32 CFR 199.6. All of these specific, unique requirements lead to substantial training requirements and programming time for the management information system during the contract phase-in period. At this time, MAXIMUS Federal Services is the only organization which can provide timely and mission essential undisturbed peer review services required to support the MCS and DP contract oversight provisions, provide an external second level appeal of denials made by Military Treatment Facilities (MTF), Designated Providers (DP), and the MCS contractors; provide an external, independent review of paid MTF malpractice cases; continue to conduct facility certification activities for Residential Treatment Centers, Psychiatric Partial Hospitalization Programs, and Substance Use Disorder Rehabilitation Facilities; and continue to provide peer review for TMA when a beneficiary and/or provider appeals a health care delivery contractor's (MCS' or DP's) decision to deny coverage without incurring additional costs for the training requirements and management information system changes. For any other contractor, there would be significant phase-in costs related to the required staff training and establishment of IT systems programming time. The current contract will expire on October 31, 2009. TMA initiated the Concept Phase planning for a follow-on contract in January 2007 to develop a request for proposal (RFP), which was released on February 12, 2008. The RFP was cancelled on October 21, 2008, as a result of TMA leadership re-defining the Military Health System's clinical quality program to include the TRICARE Overseas Program, Dental Program, and Pharmacy Programs. This action required major changes to the scope of the follow-on acquisition, now the TRICARE Quality Monitoring Contract (TQMC) RFP and has resulted in a major re-write of the requirements. Re-writing the TQMC RFP will require an additional 10 months. This, added to the need to provide adequate time for potential offerors to submit proposals, appropriate time to review and make a selection, and a minimum of an nine month phase-in transition period, requires the use of a one year extension of the current contract. To ensure that appropriate coverage is available in the event the follow-on TQMC full and open competition requires a period longer than one year, this extension will include FAR clause 52.217-8, Option To Extend Services. If the TRICARE Management Activity is not able to extend the current contract, there will be a period of twelve months without the services provided by NQMC. Although the lack of MCSC and DP contract oversight for that period of time may not cause serious injury to the government, the government will lose all of the protection a quality monitoring oversight contract provides. The government would have no way to provide the second level appeal process for medical necessity denials which may cause harm to the beneficiaries and subject the TRICARE Program to legal challenges for lack of a required appeal process. In addition, MTF providers may be referred to the National Practitioner Data Bank unnecessarily because in the absence of the NQMC, the government does not have another mechanism to conduct the required external review of malpractice cases the Surgeons General use for final determination that a malpractice payment was not caused by the failure of any provider to meet the standard of care. Beneficiaries who appeal denials to TMA would also be injured because their appeal requests would not be processed. The NQMC provides the medical review necessary for most of the cases appealed to TMA. The NQMC is also responsible for provider certification, on-site surveys and on-going monitoring for Residential Treatment Facilities, Partial Psychiatric Hospitalization Programs, and Substance Use Disorder Rehabilitation Facilities. In the absence of the NQMC, TMA has no mechanism to provide on-going oversight of these facilities, certify or recommend de-certification, or conduct on-site surveys. Serious injury to TRICARE beneficiaries could occur without the NQMC's facility certification activities. 5. Efforts to Obtain Competition: The Government did not seek competition for this extension. This extension is to allow the Government sufficient time to complete a competitive acquisition to obtain health care quality monitoring services as a follow-on TQMC to the current NQMC. Although the Government previously planned to award a follow-on contract without requiring an extension, the Government determined that the scope of the NQMC requirements needed to be broadened to encompass dental, pharmacy and overseas healthcare services. As a result, the Government is going to issue a new, expanded TQMC solicitation for quality monitoring services, necessitating the non-competitive extension to the current NQMC. Due to the time required to develop, solicit and award a contract, a non-competitive extension to the current NQMC is the most viable course of action available to the Government. 6. Determination of Fair and Reasonable Price: The agency intends to ensure fair and reasonable pricing by entering into negotiations with the incumbent contractor utilizing general cost inflation of the existing fixed-prices on the contract. 7. Market Research: No market research, as defined in FAR Part 10, was conducted for this action because, even if qualified sources were identified, there are no contractors who can meet the agency's required delivery schedule due to the minimum nine month transition period required by 10 U.S.C. Section 1095c (a) (3) (b). However, the follow-on TQMC acquisition action shall be conducted under full-and-open competition. 8. Other Factors Supporting the Use of Other Than Full and Open Competition: Negotiating and executing a contract extension with the incumbent is in the government's best interest. The incumbent has five years experience in successfully managing and delivering the complex requirements of the TRICARE (CHAMPUS) Quality and Utilization Review Peer Review Organization Program. The incumbent possesses the unique qualifications and experience, and in place capabilities to sustain performance in providing and the now needed quality oversight, facility certification, and second level review of medical necessity reviews. These unique qualifications are provided in support of the TRICARE beneficiaries, the Services' Medical Departments, and in quality oversight of the healthcare services contracts. This extension will allow for a competitive procurement to proceed without disrupting the TRICARE (CHAMPUS) Quality and Utilization Review Peer Review Organization Program. Failure to extend the current contract will create a significant gap in the provision of quality oversight of the healthcare delivery contracts and will result in the loss of protection for the government which an oversight contract provides. In addition, there would be a gap in the agency's ability to certify and oversee the quality of behavioral health facilities, creating significant behavioral health quality issues. In summary, extending the current contract will ensure the agency meets its mission to maintain a TRICARE (CHAMPUS) Quality and Utilization Review Peer Review Organization Program and maintain quality oversight of the healthcare delivery contracts. Therefore, it is in the best interest of the government to extend non-competitively at this time the existing contract. 9. Listing of Interested Sources: The agency will not publish a notice of intent to extend the current contract until approval for this action is received. However, since it would be technically impossible for another contractor to fulfill the significant gap in performance of the unique and stringent program requirements, without the advantage of a nine month phase-in transition period, there are no other viable sources at this time. 10. Statement of Actions to Remove Barriers to Competition: The agency has analyzed the current schedule for follow-on procurement; seeking other alternatives to sole-source extension of the existing contract, and has not found any viable alternatives without this requested extension. Any other attempted competitive approach would leave the agency without an oversight mechanism which could have a significant impact on the quality of healthcare delivered. It was determined that the agency's best approach is to seek the shortest possible sole-source extension while continuing its progress on a competitive follow-on procurement. This is deemed the most viable approach to ensuring competition.