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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS

CONTRACT 1 Department: Childrens Services Division: Contracts Management Vendor: Tri-Med Pharmacy, LLC BACKGROUND INFORMATION: The original five-year contract was for the provision of pharmacy services to students in the Departments custody and residing in Youth Development Centers (YDC), department staff, and direct service volunteers of the YDCs as well as inservice training for clinical staff. The pharmacy services for staff and volunteers include: Human Immunodeficiency Virus (HIV) post exposure prophylaxis medications; post exposure Infectious Necrotic Hepatitis (INH) and Hepatitis B vaccine; medications administered in the event of injury obtained due to an assault or accident; and over-the counter medications. The contract has a term beginning July 1, 2012, and ending June 30, 2017, with a maximum liability of $72,780. AMENDMENT FOR REVIEW: The proposed amendment increases the maximum liability by $2,427,220 to $2,500,000. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY: 13
$14,556

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 14
$14,556

FY: 15
$14,556

FY: 16
$14,556

FY: 17
$14,556

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 13
$24,268

FY: 14
$

FY: 15
$

FY: 16
$

FY: 17
$

1. The Department has provided detailed anticipated expenditures per fiscal year. COMMENTS: 1. The Department has approximately $48,512 remaining in the maximum liability.

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


2. The amendment request is late and will require a two-thirds vote. The request was received on September 21, 2012, with an effective date of August 20, 2012. 3. The RFP for this service was issued on May 31, 2012. According to the Department, the competitive component of the services was for the handling fees associated with the distribution of the medication as well as in-service training for YDC staff. The actual cost of the medication was pre-determined through the Maximum Allowable Cost established by TennCare as indicated on the Cost Proposal and was inadvertently excluded when establishing the maximum liability of the contract. 4. Tri-Med had the previous contract for these services with a cost of $2,987,000. 5. The contract does contain the Prohibition of Illegal Immigrants language. 6. Funding: 100 percent State. QUESTION: 1. Why did the vendor sign off on a five-year contract with a maximum liability of $72,780 when the amount should have been $2.5 million?

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 2 Department: Childrens Services Division: Contracts Management Vendor: Compuware Corporation BACKGROUND INFORMATION: The original eight-month contract was for the provision of technical consulting services relative to the Departments Tennessee Family and Child Tracking System (TFACTS) and the resolution of functional deficiencies cited by the Comptroller of the Treasury in its March 2012 report. The contract has a term beginning May 1, 2012, and ending December 31, 2012, with a maximum liability of $240,000. AMENDMENT FOR REVIEW: The proposed amendment revises the scope of services to provide additional personnel for the vendors Technical Team and requires the Team to participate in the development of well-defined requirements for the remediation of the overall fiscal functionality of TFACTS. The proposed amendment extends the current contract an additional six months through June 30, 2012; adds term extension language; increases the maximum liability by $610,000 for a total of $850,000; revises the payment methodology to reflect the hourly rates of the additional personnel; and adds the Health Information Technology for Economic and Clinical Health Act (HITECH) language. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY: 12
$120,000

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 13
$120,000

FY:

FY:

FY:

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 12
$0

FY: 13
$189,563

FY:

FY:

FY:

1. The Department has provided detailed expenditures per fiscal year. 2. The proposed amendment changes the scope of services and terms of payment. The Department did not provide any anticipated savings or the cost of obtaining these services through another provider. 3

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


COMMENTS: 1. The Department has approximately $50,437 remaining in the maximum liability. 2. The contract contains the Prohibition of Illegal Immigrants and the Federal Funding Accountability and Transparency Act language. 3. A copy of the approved OIR Pre-Approval Endorsement Request has been provided by the Department. 4. Funding: 49 percent Federal; 49 percent State; 2 percent Interdepartmental. QUESTIONS: 1. Why did the Department decide to enter into a non-competitive contract with Compuware for this service? Are there other vendors who could have provided this service? 2. Are there skill sets needed to correct TFACTS that the Department does not have in-house? [If so] What happens in June 2013? Will the Department be able to maintain and support TFACTS in-house at that time? 3. Is the vendor on-track to have the problems with TFACTS corrected by the end of this contract extension?

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 3 Department: Health Division: Office of Policy, Planning and Assessment Vendor: Tennessee Opportunity Programs, Inc. (TOPS) BACKGROUND INFORMATION: The original five-year contract was for the provision of personnel to conduct statewide health-related telephone surveys as requested by the Department. The original contract has a term beginning July 1, 2008, and ending June 30, 2013, with a maximum liability of $900,000. Amendment 1: increased the maximum liability by $130,000 for a total of $1,030,000 and incorporated the Federal Economic Stimulus Funding language for the use of American Recovery and Reinvestment Act (ARRA) funds. AMENDMENT FOR REVIEW: The proposed amendment increases the maximum liability by $90,000 for a total of $1,120,000. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY: 09
$180,000

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 10
$180,000

FY: 11
$245,000

FY: 12
$180,000

FY: 13
$245,000

FY:
$

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 09
$159,671

FY: 10
$171,785

FY:11
$218,579

FY: 12
$221,900

FY: 13
$

FY:

1. The Department has provided a detailed breakdown of actual expenditures per fiscal year. 2. The proposed amendment does not change the scope of services or the terms of payment. Anticipated savings or the cost of obtaining these services through another provider is not applicable.

COMMENTS: 5

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


1. The Department has approximately $204,001 remaining in the maximum liability. 2. The contract does contain the Prohibition of Illegal Immigrants and the Federal Economic Stimulus Funding language. 3. Funding: 100 percent Federal. NO QUESTIONS.

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 4 Department: Correction Division: Contracts Administration Vendor: Corizon, Inc. formerly Correctional Medical Services, Inc. BACKGROUND INFORMATION: The original three-year contract was for the provision of medical services to offenders in the 11 state institutions. These services include primary, specialty, dental, pharmaceutical, and emergency care as well as hospitalization, staffing, and support services at all 11 state institutions. The contract has a term beginning January 1, 2010, and ending December 31, 2012, with a maximum liability of $181,404,800. AMENDMENT FOR REVIEW: The proposed amendment extends the current contract an additional six months through June 30, 2013, increases the maximum liability by $37,651,000 for a total of $219,055,800, and reflects a name change from Correctional Medical Services, Inc. to Corizon, Inc. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY: 10
$28,168,100

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 11
$58,518,900

FY: 12
$62,284,900

FY:13
$32,432,900

FY:

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 10

FY: 11

FY: 12
$65,043,135

FY: 13
$5,405,324

FY:

$27,261,964 $58,710,734

1. The Department has provided detailed anticipated expenditures per fiscal year. 2. The proposed amendment does not change the scope of services or the terms of payment. Anticipated savings or the cost of obtaining these services through another provider is not applicable.

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


COMMENTS: 1. The Department has approximately $24,983,644 remaining in the maximum liability (this reflects payments through July 2012). 2. The contract does contain the Prohibition of Illegal Immigrants language. 3. Funding: 100 percent State. QUESTIONS: 1. The Department has issued an RFP on September 27, 2012, and expects the new contract in place by January 1, 2013. If the new contract is awarded as anticipated, will this amendment be necessary? 2. How is the new healthcare delivery system different from the Departments current structure? 3. Does the Department anticipate a higher cost as a result of the new contract that will require the vendor to assume comprehensive health services responsibility and management of all health services at all institutions except the Lois M. DeBerry Special Needs Facility?

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 5 Department: General Services Division: Office of Services Contracting Vendor: Murray Guard, Inc. BACKGROUND INFORMATION: The original five-year contract was for the provision of security services at the Knoxville State Office Building, Middlebrook State Plaza Building, and East Tennessee Regional Health Center. These services include surveillance and control of building entrances and exits, checking in visitors, and assisting law enforcement. The contract had a term beginning October 1, 2007, and ending September 30, 2012, with a maximum liability of $5,097,976. Amendment 1: extended the contract term two months through November 30, 2012. AMENDMENT FOR REVIEW: The proposed amendment extends the current contract an additional month through December 31, 2012. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 08
$758,983

FY: 09
$1,019,119

FY: 10

FY: 11

FY: 12

FY: 13
$255,374

$1,021,500 $1,021,500 $1,021,500

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 08
$524,426

FY: 09
$595,881

FY: 10
$720,773

FY: 11
$717,392

FY: 12
$724,660

FY: 13 $181,970

1. The Department has provided detailed anticipated expenditures per fiscal year. 2. The proposed amendment does not change the scope of services or terms of payment. Anticipated savings and the cost of obtaining this service through another provider are not applicable. COMMENTS: 9

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


1. The Department has approximately $1,632,876 remaining in the maximum liability. 2. The amendment request is late and will require a two-thirds vote. The request was received on October 25, 2012, with an effective date of December 1, 2012. 3. The Department issued an RFP on June 20, 2012, for these services. Walden Security filed a protest of the award to another vendor. The Department contacted Committee Staff on September 26, 2012, regarding a noncompetitive amendment to extend the existing contract an additional two months through November 30, 2012, in order to resolve the RFP protest (memo attached). The initial decision of the Chief Procurement Officer regarding the protest has been appealed to the Protest Committee and has further delayed the award of the new contract. 4. The Department provided an approved Rule Exception Request for a contract term longer than five years. 5. The contract does contain the Prohibition of Illegal Immigrants language. 6. Funding: 100 percent Interdepartmental. QUESTION: 1. With approximately $1.6 million remaining in the maximum liability, does the Department anticipate needing the full amount or does it need to be reduced?

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GENERAL ASSEMBLY OF THE STATE OF TENNESSEE FISCAL REVIEW COMMITTEE


320 Sixth Avenue, North 8th Floor
NASHVILLE, TENNESSEE 37243-0057 615-741-2564 Sen. Bill Ketron, Chairman Senators Douglas Henry Reginald Tate Brian Kelsey Ken Yager Eric Stewart Randy McNally, ex officio Lt. Governor Ron Ramsey, ex officio Rep. Curtis Johnson, Vice-Chairman Representatives Tommie Brown David Shepard Jim Coley Tony Shipley Charles Curtiss Curry Todd Johnny Shaw Mark White Charles Sargent, ex officio Speaker Beth Harwell, ex officio

MEMORANDUM
TO: FROM: DATE: RE: Members of the Fiscal Review Committee Senator Bill Ketron, Chairman Representative Curtis Johnson, Vice-Chairman October 1, 2012 Extension of the Department of General Services (DGS) contract with Murray Guard, Inc. for security services in the Knoxville area

The Department has contacted Committee Staff regarding the extension of the above referenced contract for the provision of security services in the Knoxville area. It is our understanding that the Department issued an RFP on June 20, 2012, for these services. Walden Security, a vendor that bid on the RFP, filed a timely protest of the award to another vendor. The current contract expires September 30, 2012. This contract meets the criteria for review and comment by Fiscal Review Committee (FRC). DGS submitted a Rule Exception Request to the Central Procurement Office for a contract term over five years and a Non-Competitive Amendment Request to extend the existing contract an additional two months, through November 30, 2012, in order to have time to resolve the RFP protest. The Rule Exception Request and the Non-Competitive Amendment Request were signed by the Commissioner on September 6, 2012. On September 26, 2012, the Department received a denial from the Comptrollers Office because the extension request was not approved by this Committee. The Department contacted FRC staff on September 26, 2012. The Committee does not meet again until October 15, 2012. However, we understand that, absent such an extension to provide security services, the safety of state

employees is at risk. The Committee is greatly concerned for the safety of all state employees. But as you are aware, we are also concerned about recent actions by departments seeking Committee approval less than 60 days prior to the effective date of the contract or an amendment. In light of the Chief Procurement Offices role in procurement reform, the Committee looks to General Services to set the example of interdepartmental cooperation, transparency and open communication for other departments. Given the current circumstances, we are agreeable to a contract extension until November 30, 2012, with the stipulation that the Department presents the resolution of this matter to the full Committee in November. Please let us know if you have any questions or need additional information on these issues. cc: Steven Cates, Commissioner, Department of General Services Justin Wilson, Comptroller Jessica Robertson, Chief Procurement Officer

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 6 Department: Tennessee Board of Regents (TBR) Division: Regents Online Campus Collaborative Vendor: iParadigms, LLC CONTRACT FOR REVIEW: The proposed three-year contract provides for a plagiarism prevention and detection software service known as TurnItIn. TBR institutions will use the software to determine if students are writing and submitting original work for the Regents Online Degree Program (RODP). The proposed contract has a term beginning January 1, 2013, and ending December 31, 2015, with a maximum liability of $771,179. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *PROPOSED Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 13
$161,615

FY: 14
$287,687

FY: 15
$322,417

1. The Board has provided detailed anticipated expenditures per fiscal year. COMMENTS: 1. The proposed contract does not contain the Prohibition of Illegal Immigrants language. According to the Board, the vendor has agreed to add this language. 2. According to the Board, this product must be compatible with its existing Desire2Learn Learning Management System and no other vendor has this capability or access to this product. 3. Funding: 100 percent State. NO QUESTIONS:

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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 7 Department: Tennessee Board of Regents (TBR) Division: Human Resources Vendor: PeopleAdmin CONTRACT FOR REVIEW: The proposed contract provides for software licensing, hosting, and maintenance services for Human Resource Products such as recruiting, position management, performance management, and reporting. The proposed contract has an initial term beginning January 1, 2013, and ending December 31, 2013, with automatic one-year renewals for total of five years with a maximum liability of $2,297,743. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *PROPOSED Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 13
$455,555

FY: 14
$433,977

FY: 15
$451,217

FY: 16
$469,167

FY: 17
$487,827

1. The Board has provided detailed anticipated expenditures per fiscal year. COMMENTS: 1. The proposed contract does contain the Prohibition of Illegal Immigrants language. 2. Historically, the Board utilized PeopleAdmin via its SunGard/Ellucian competitive agreement but that venue is no longer available. 3. Funding: 100 percent State. NO QUESTIONS.

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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 8 Department: Tennessee Board of Regents (TBR) Division: Information Technology Vendor: Ellucian Company, L.P., formerly SunGard Higher Education BACKGROUND INFORMATION: BACKGROUND INFORMATION: The original master agreement and addendum one was for the provision of an enterprise resource planning (ERP) system for all TBR institutions with a term beginning on December 16, 2004, and ending on December 31, 2009, with a budgetary estimate for services of $62,690,788. The vendor is responsible for the maintenance, updates, service, and training for the ERP system. Addendum 2: extended the contract an additional four years through December 31, 2013; increased the budgetary estimate by $40,374,886 for a total of $103,065,674; reduced the maintenance fees for the remainder of the current contract (through December 2009) and for the extension years; and provided the pricing structure for the Satellite Maintenance Organization (SMO) Services through the extension term as well as the hourly information services price. Addendum 3: included the Prohibition of Illegal Immigrants, the Voluntary Buyout Program, and the Federal Economic Stimulus Funding language. Addendum 4: extended the contract two additional years through December 31, 2015; reduced the maintenance fees for the remainder of the current contract (through December 2013) and for the extension years for the second time; for the remaining years of the contract, the budgetary estimate was reduced by $8,723,779 with an addition of $13,510,343 in fees in the extension years for a net increase to the budgetary estimate of $4,786,564, for a total of $107,852,239. Addendum 5: added Course Signals software to the contract (student early alert system added as a result of a separate RFP process). Addendum 6: extended the subscription term for both the Windstar (tax reporting) and PeopleAdmin (human resources) Component Systems through December 31, 2012.

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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


ADDENDUM FOR REVIEW: The proposed addendum extends the current contract an additional two years though December 31, 2017, and increases the budgetary estimate by $10,927,700 for a total of $118,779,938. COMMENTS: 1. The Boards Central Office has made total payments of $62,989,600 through September 30, 2012. These payments have been less than previous budgetary estimates totaling $107,852,238. For budgetary estimates, the Board anticipates expenditures of $10,927,700 for the next five years. 2. Due to the nature of this contract, a maximum liability provision is not included. Under this and prior addenda TBR obtains two basic services: maintenance services including regulatory updates, security patches, functional upgrades, and help desk services for its Banner ERP system (a fixed cost); and hourly consulting services to address non-maintenance Banner issues (a variable cost). In lieu of a maximum liability provision for the Master Agreement, the following controls exist on payments under the contract. Maintenance. Payments for maintenance are controlled against the annual maintenance amounts specified within the addendum and are a fixed cost for each year of the contract. This acts as an annual maximum liability provision for maintenance and limits the payments made for maintenance to the amount within the addendum. The annual maintenance amount is paid by the TBR Central Office. This cost is budgeted at the institutional level based on the annual contract amount as applied to a distribution formula that takes into account factors such as institutional enrollment and budget size. Consulting. Rates for hourly consulting services are fixed within the addendum; however, the amount expended varies based on the need for these services. Any institution within the system (including the Central Office) can request consulting services by originating an Order Form with Ellucian. Among other things, the order form includes a statement of work, hours required to accomplish the task, references the standard terms and conditions of the Master Agreement, and a maximum payment liability for that Order Form. Payments by the institution requesting services are budgeted, funded and accounted for by the requesting institution, with the total liability for payments controlled by the individual Order Form maximum. This 14

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


process is similar to the purchase order process used to obtain goods or services through a statewide contract. 3. The contract contains the Prohibition of Illegal Immigrants, the Voluntary Buyout Program, and the Federal Economic Stimulus Funding language. QUESTION: 1. Does the Board plan to issue an RFP for these services in the future?

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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 9 Department: State Division: Library & Archives Vendor: Gale Group, Inc. CONTRACT FOR REVIEW: The proposed five-year contract provides for the continuation of hosting and maintenance fees for the Literature Resource Center. Literature Resource Center is an electronic database product that covers more than 120,000 literary sources published by Gale Group. The proposed contract has a term beginning January 1, 2013, and ending December 31, 2017, with a maximum liability of $665,000. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *PROPOSED Contract Allocation by Calendar Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 13
$66,500

FY: 14
$133,000

FY: 15
$133,000

FY: 16
$133,000

FY: 17
$133,000

FY: 18
$66,500

1. The Department has provided detailed anticipated expenditures per fiscal year. COMMENTS: 1. Gale Group is the sole provider of the Literature Resource Center. 2. The proposed contract contains the Prohibition of Illegal Immigrants language. 3. Funding: 100 percent Federal. NO QUESTIONS.

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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 10 Department: Finance and Administration Division: Health Care Finance and Administration/Bureau of TennCare Vendor: Volunteer State Health Plan, Inc. (TennCare Select) BACKGROUND INFORMATION: The original contract was for TennCare-covered services for children in state custody and high-risk individuals, as well as serving as the safety net for other TennCare MCOs statewide. The original contract had a term beginning July 1, 2001, and ending January 31, 2002, with a maximum liability of $18,599,868. Amendment 1: made definition changes; authorized expansion of covered drugs within the nursing home formulary; changed all references of the Health Care Finance Administration to the Centers for Medicare and Medicaid Services; required educating providers on the proper coding system; required adherence to the plan approved by the court for children in state custody; included community health clinic services, deleted newborn services (circumcisions), and expanded dental services within the covered benefits section; distinguished benefits between TennCare Medicaid and TennCare Standard enrollees; amended dental services responsibilities; granted MCOs authority to provide some behavioral health services; included pharmacy cost sharing; required all organ transplant services to meet Medicare and EPSDT requirements; included necessary EPSDT coverage; established immediate eligibility for children in DCS custody; required the vendor to implement policies and procedures to identify, monitor, and restrict services to individuals identified as Abusive Utilizers of Pharmacy Services; established HIPAA requirements; made changes to the member handbook, quarterly newsletter, provider directories, prior approval, interpretation and translation services, and appeals; required the vendor to meet as requested instead of quarterly; required the employment of care and claims coordinators; amended performance indicators and established credentialing requirements; made changes to reporting requirements; established LEP and HIPAA subcontractor requirements; established TennCare Standard enrollee cost share responsibilities; revised requirements for children in state custody; revised enrollment and disenrollment procedures, administrative fee schedules, and service fee schedules. Amendment 2: established supplemental pool payments to Meharry Medical Services Foundation and/or Meharry Medical Dental Clinic representing unreimbursed TennCare costs of the Meharry Medical College clinics.

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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


Amendment 3: changed appeal procedure to reflect TennCare rule changes; included EPSDT standards within the definition of medically necessary; redefined post-stabilization care services and enrollees with special health care needs; revised the vendors data collection and maintenance; revised pharmacy services and benefits; authorized the refusal of non-covered services except for those required by EPSDT, TennCare directive, or an administrative law judge; updated CFR references; established responsibility for required Social Security Act services; required enrollee access to second opinion providers and specialists; revised out of plan emergency medical services standards; revised provider network and fraud and abuse prevention and detection requirements; prohibited TennCare reimbursement for facility improvement or construction outside of administrative fees; required nonfederally qualified MCOs to make additional financial disclosures; revised network maintenance requirements; established coordination between the Department of Health, the local health departments, and DCS for EPDST screenings; revised pharmacy rebates and subrogation recovery standards; and included lobbying standards. Amendment 4: established Critical Access Hospital payments. Amendment 5: established supplemental payments to Meharry Medical Services Foundation and/or Meharry Dental Clinic for FY03-04. Amendment 6: redefined Emergency Medical Services and PostStabilization Care Services; revised Physician Outpatient Services/Community Health Clinic Services/Other Clinic Services benefits; revised coding of behavioral health services; authorized the transfer of an enrollee to a provider for services being provided by an out-of-network provider; established prohibited marketing and communication activities; expanded the use of interpretation and translation services; required the vendor to monitor a subcontractors performance at least annually; prohibited provider agreements if the provider was excluded from S-CHIP participation; extended the term of the contract to December 31, 2004; and revised enrollment, disenrollment, and eligibility verification. Amendment 7: redefined administrative cost and defined Dental Benefits Manager; established HEDIS reporting requirements; required the sterilization consent form and the statement of receipt of information concerning hysterectomy form to be provided in English and Spanish; revised references to TennCare cost sharing and required the use of TENNderCare; authorized the use of supplemental handbook updates; established coordination with the Department of Education to assist LEAs with federal reimbursement for medically necessary services included in a 18

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


students Individual Education Plan (IEP); revised prior approval standards; revised non-discrimination compliance requirements; prohibited an enrollee from also being enrolled in PACE; and revised performance standards and copayments. Amendment 8: established supplemental payments to Meharry Medical Services Foundation and/or Meharry Dental Clinic for FY04-05. Amendment 9: extended the term of the contract for an additional year through December 31, 2005, and increased the maximum liability by $126,851,420. Amendment 10: increased supplemental payments to Meharry Medical Services Foundation and/or Meharry Dental Clinic for FY04-05; and increased the maximum liability by $5,343,886. Amendment 11: revised language to include CMS-approved TennCare reforms; required NCQA accreditation; revised conflict of interest disclosure requirements; revised MCO financial requirements; implemented a provideraccessed website for access to enrollee patient information; established supplemental payments to Meharry Medical Services Foundation and/or Meharry Dental Clinic, Critical Access Hospital payments, and Essential Hospital payments for FY05-06. Amendment 12: included necessary references to the Office of Inspector General and the TBI Medicaid Fraud Unit; revised covered benefits; amended references to January 1, 2006, to July 1, 2006; made TennCare Reform changes as necessary; included supplemental administrative fee payments for disease management; extended the term of the contract through December 31, 2006; and increased the maximum liability by $118,686,841. Amendment 13: increased the Critical Access Hospital payments and Essential Hospital payments for FY05-06; revised pharmacy benefits to prohibit coverage of services under Medicare Part D; and increased the maximum liability by $56,420,102. Amendment 14: increased supplemental payments to Meharry Medical Services Foundation and/or Meharry Dental Clinic for FY05-06 and increased the maximum liability by $3,061,226. Amendment 15: redefined administrative cost, medical expenses, and medically necessary; revised covered benefits, established soft limits/service thresholds for certain physical health services; revised language for 19

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


compliance with TennCare program changes; and increased the maximum liability by $45,336,897. Amendment 16: included Conflict of Interest language; revised Hospice Care language to meet CMS requirements; included Prohibition of Illegal Immigrants language; extended the term of the contract for an additional year through December 31, 2007; and increased the maximum liability by $72,151,878. Amendment 17: revised National Provider ID (NPI) for consistency with CMS requirements; revised Department of Education language for consistency with current practices; revised reporting requirements; revised NCQA language requirements; extended the contract for six months through June 30, 2008; and increased the maximum liability by $200,000,000. Amendment 18: revised Non-Emergency Transportation language; modified language to meet CMS standards; revised reporting and NCQA performance benchmarks; opened the medically needy spend down program; extended the term of the contract for an additional year through June 30, 2009; and increased the maximum liability by $200,000,000. Amendment 19: added shared-risk components including EPSDT compliance increases, medical services budget targets, and performance bonuses under the shared-risk initiative. Amendment 20: extended the current contract for an additional year through June 30, 2010; included behavioral health coverage to begin September 1, 2009; and increased the maximum liability by $383,130,000 for a total of $1,365,307,306. Amendment 21: added the Arlington Mental Retardation (MR) class enrollees to TennCare Select. The integration of behavioral health services into the contract did not increase costs related to providing behavioral health services for the enrollee population. The Arlington MR class received similar services as those previously integrated. This change permitted the State to draw federal matching dollars and serve a larger population such as those individuals in other MR waivers and those in private ICF-MR facilities. Increased the maximum liability by $17,376,600 for a total of $1,382,683,906. Amendment 22: included provisions necessary for the implementation of the Long-Term Care Community Choices Act of 2008; updated Title VI requirements to meet current reporting standards; added performance standards to the nurse toll-free phone line for TennCare-approved handling 20

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


of calls by CHOICES members; extended the current contract for an additional year through June 30, 2011; and increased the maximum liability by $448,306,600 for a total of $1,830,990,506. Amendment 23: eliminated the requirement that the contractor ensure a member had been evaluated by a crisis team prior to involuntary commitment to a psychiatric inpatient hospital; specified that the contractor utilize the regional mental health institutes (RMHIs) only when there is no other option available for new admissions; added language to comply with the Annual Coverage Assessment Act of 2010; required the contractor to submit an annual risk assessment report, a quarterly program integrity exception list, and a monthly involuntary termination report; created a new method for adjusting the long-term care component of the base capitation rate; included liquidated damages of $500 per day for not providing continuity of care, $500 per day for failure to complete a comprehensive assessment, develop a plan of care, and initiate the long-term care services specified in the plan, and $500 per deficient plan of care; reduced from 80 percent to a minimum of 51 percent the number of mental health case management services that must take place outside of the case managers office at the most appropriate setting. Amendment 24: revised definitions, behavioral health assessment language, and reporting requirements and modified program integrity and risk adjustment language. Amendment 25: provided language clarifications and changes to CHOICES requirements and credentialing; clarified Disease Management and NCQA requirements; made behavioral health monitoring report adjustments; required the Managed Care Organization to institute a policy addressing fuel price adjustments; extended the contract term by one year to June 30, 2012; and increased the maximum liability by $443,906,600 for a total of $2,274,897,106. Amendment 26: provided language to implement the Money Follows the Person Rebalancing Demonstration grant awarded to TennCare by the Centers for Medicare and Medicaid Services (CMS). The grant purpose is to assist the State in identifying and assisting individuals in institutions to transition to more cost-effective care in the community. The amendment also includes language to provide the MCO guidance regarding crisis services and other behavioral health services, including clarifications permitting licensed RNs to provide behavioral health case management. The amendment also required the vendor to assist TennCare in meeting the five annual benchmarks established for the MFP Rebalancing Demonstration; to submit, 21

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


upon notification from the Bureau, a quarterly MFP Participants Report, and to identify MFP participants separately for each data element described in the CHOICES Utilization Report and the CHOICES Nursing Facility to Community Transition Report. Updated the liquidated damages to include penalties ($500 per occurrence) if the vendor fails to correctly process a transition referral, to ensure home and community based services (HCBS) or Early Periodic Screening, Diagnosis and Treatment (EPSDT) benefits are in place immediately upon such transition, or to complete in a timely manner the minimum care coordination contacts required for persons transitioning from a nursing facility. The maximum liability remained the same. Amendment 27: provided program language updates required by the Center for Medicare and Medicaid Services (CMS); required the vendor to establish an on-going training program for care coordinators; updated the Health Insurance Portability and Accountability Act of 1996 and the Health Information Technology for Economic and Clinical Health Act (HIPAA/HITECH)regulations; added suggested Care Manager Ratios to the CHOICES program; changed the vendor contact person; reduced, from 80 to 51 percent, the portion of mental health case management services required to take place outside the case managers office; updated the form for reporting fraud and abuse; increased the liquidated damages when the vendor fails to comply with the caseload and staffing recommendation from $500 to $1000 per occurrence; added quality clarifications for the use of Hybrid methodology for Healthcare Effectiveness Data and Information Set (HEDIS) and Outreach Activity planning and reporting; and updated capitation rates. Extended the current contract for an additional year through June 30, 2013, and increased the maximum liability by $443,906,600 for a total of $2,718,803,706. Amendment 28: added requirements for the vendor regarding the implementation and operation of CHOICES Group 3, the portion of the CHOICES program that extends limited Home and Community Based Services (HCBS) benefits to individuals at risk of nursing facility placement in order to be in compliance with the Maintenance of Effort (MOE) requirements until they expire on January 1, 2014; added language to clarify that Quality Management/Quality Improvement reporting must be specific to TennCare and not combined with other state or commercial programs; adds Program Integrity (PI) language to clarify PI investigators be designated by plan; added Social Security Administration (SSA) Data Security language in accordance with the Bureaus agreement with SSA; and added subcontract requirements to provide an MCO with an avenue to discontinue an agreement with a company when it is not in the best interest of TennCare and its enrollees. 22

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


Amendment 29: added language regarding the administration and maintenance of a federally required community health record, Enterprise Master Person Index that will provide a central repository for enrollees personal data and facilitate the integrity of a single person record. AMENDMENT FOR REVIEW: The proposed amendment (1) replaces Disease Management requirements with Population Health requirements; (2) clarifies the implementation of CHOICES 3 requirements; (3) clarifies language as requested by CMS regarding third party liability (TPL) and post-eligibility treatment of income (PETI); (4) includes requirement to support CMS-required primary care provider (PCP) rate increase for 2013/2014; (5) adds requirement to participate in and implement initiatives to capture pre-natal and post-natal visit data; (6) adds coordination requirements for MCOs regarding dual special needs plans (DSNPs); (7) updates the transportation requirements to reflect current reporting needs and support audit efforts; (8) updates capitation rates; (9) extends current contract an additional 18 months through December 31, 2014; and (10) increases the maximum liability by $443,906,600 for a total of $3,162,710,306. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY:02
$18,599,868 FY:08 $200,000,000

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY:03
$33,079,942 FY:09 $200,000,000

FY:04
$63,490,156 FY:10 $404,906,600

FY:05
$116,014,894 FY:11 $443,906,600

FY:06
$175,496,222 FY:12 $443,906,600

FY:07
$175,496,222 FY:13 $443,906,600

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 02
$290,556,541

FY: 03
$413,769,656

FY:04
$811,750,972

FY:05
$990,250,680

FY:06
$904,108,515

FY:07
$929,733,207

FY:08
$367,161,737

FY:09
$382,499,549

FY:10
$384,317,147

FY:11
$376,871,962

FY:12
$385,566,958

FY:13 $98,085,011

1. The Bureau has provided detailed expenditures per fiscal year. 2. The proposed amendments change the scope of services and terms of payment. The Bureau did not provide anticipated savings or the cost of obtaining this service through another provider.

23

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS

COMMENTS: 1. The Bureau has spent approximately $3,615,868,229 more than the current maximum liability. As the safety net for other MCOs, this contract was used to cover enrollees in previous years when other MCOs failed. The maximum liability reflects the costs to cover the enrollees covered through the TennCare Select contract. 2. The contract does contain the Prohibition of Illegal Immigrants language. 3. Funding: Expenditures for FY12-13 will be 33.814 percent State and 66.186 percent Federal. The match rate is based on the per capita income of the State and changes on the federal fiscal year. NO QUESTIONS.

24

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACTS 11 & 12 Department: Finance and Administration Division: Bureau of TennCare Vendor: AMERIGROUP Tennessee, Inc., and UnitedHealthCare Plan of the River Valley, Inc. - AmeriChoice (Middle Tennessee Region) BACKGROUND INFORMATION: The original contracts were for physical and behavioral health services to TennCare enrollees in the Middle Tennessee region. The contracts had a term beginning August 15, 2006, and ending June 30, 2010, with a maximum liability of $874,354,462. Amendments 1: included additional reporting requirements; added Prohibition of Illegal Immigrants language; and revised fraud and abuse language, conflict of interest language, and the Deficit Reduction Act. Amendments 2: revised reporting requirements and added language for consistency with the National Provider Identification and NCQA requirements. Amendments 3: added requirements for non-emergency medical transportation, cost-effective alternative services, pay for performance incentives, and prenatal notification; clarified reporting requirements; revised performance benchmarks; clarified types of performance benchmarks required for NCQA; updated risk targets; established rates; and increased the maximum liability by $699,483,574 for a total of $1,573,838,036. Amendments 4: incorporated language to comply with the federal Mental Health Parity and Addiction Equity Act of 2008; required additional outreach activities to identify and assist children enrolled in the TENNderCare Program with accessing and utilizing benefits; revised various reporting time frame requirements; required providers to screen employees and contractors to determine any exclusions from participating in Medicare, Medicaid, SCHIP, or any other federal health care programs; required the contractor to reimburse contracted local health departments at the contract rates; incorporated Voluntary Buyout Program and Federal Economic Stimulus Funding language; included provisions necessary for the implementation of the Long-Term Care Community Choices Act of 2008; and increased the maximum liability by $748,157,611 for a total of $2,321,995,647 for AMERIGROUP and by $782,905,835 for a total of $2,356,743,871 for Americhoice Middle. 25

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


Amendments 5: consolidated reporting requirements; defined consumer direction requirements; made revisions to better align with the West and East Tennessee MCO contracts; updated Title VI requirements to meet current reporting standards; added performance standards to the nurse tollfree phone line for TennCare-approved handling of calls by CHOICES members; extended the current contract for an additional year through June 30, 2011; and increased the maximum liability by $954,457,611 for a total of $3,276,453, 258 for AMERIGROUP and by $989,205,835 for a total of $3,345,949,706 for AmeriChoice Middle. Amendments 6: changed references of MR and mental retardation to intellectual disabilities; eliminated the requirement that the contractor ensure a member has been evaluated by a crisis team prior to involuntary commitment to a psychiatric inpatient hospital; specified that the contractor utilize the regional mental health institutes (RMHIs) only when there is no other option available for new admissions; added language to comply with the Annual Coverage Assessment Act of 2010; required the contractor to submit an annual risk assessment report, a quarterly program integrity exception list, and a monthly involuntary termination report; created a new method for adjusting the long-term care component of the base capitation rate and included liquidated damages of $500 per day for not providing continuity of care, $500 per day for failure to complete a comprehensive assessment, develop a plan of care, and initiate the long-term care services specified in the plan, and $500 per each deficient plan of care; reduced from 80 percent to a minimum of 51 percent the number of mental health case management services that must take place outside of the case managers office at the most appropriate setting. Amendments 7: revised definitions, behavioral health assessment language, and reporting requirements and modified program integrity and risk adjustment language. Amendments 8: provided language clarifications and changes to CHOICES requirements and credentialing; clarified Disease Management and NCQA requirements; made behavioral health monitoring report adjustments; required the MCOs to institute a policy addressing fuel price adjustments; and extended the contract terms by three and one half years to December 31, 2014. The maximum liability increased by $954,457,611 for a total of $4,230,910,869 for AMERIGROUP and by $989,205,835 for a total of $4,335,155,541 for AmeriChoice Middle. Amendments 9: provided language to implement the Money Follows the Person (MFP) Rebalancing Demonstration grant awarded to TennCare by the 26

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


Centers for Medicare and Medicaid Services (CMS). The grant enables the State to identify and assist individuals in institutions to transition to more cost-effective care in the community. Adds language to provide the MCO guidance regarding crisis services and other behavioral health services, including clarifications permitting licensed RNs to provide behavioral health case management. The amendments also required the vendor to assist TennCare in meeting the five annual benchmarks established for the MFP Rebalancing Demonstration; to submit, upon notification from the Bureau, a quarterly MFP Participants Report, and to identify MFP participants separately for each data element described in the CHOICES Utilization Report and the CHOICES Nursing Facility to Community Transition Report. Updated the liquidated damages to include penalties ($500 per occurrence) if the vendors fail to correctly process a transition referral, to ensure home and community based services (HCBS) or Early Periodic Screening, Diagnosis and Treatment (EPSDT) benefits are in place immediately upon such transition, to complete in a timely manner the minimum care coordination contacts required for persons transitioning from a nursing facility, to submit complete and accurate data into TENNCARE PreAdmission Evaluation System (TPAES) pertaining to the MFP, or to comply with all data collection processes and timelines established by TennCare. The maximum liabilities remained the same. Amendments 10: provided program language updates required by the Center for Medicare and Medicaid Services (CMS); required the vendor to establish an on-going training program for care coordinators; updated the Health Insurance Portability and Accountability Act of 1996 and the Health Information Technology for Economic and Clinical Health Act (HIPAA/HITECH) regulations; added suggested Care Manager Ratios to the CHOICES program; changed the vendor contact person; reduced, from 80 to 51 percent, the portion of mental health case management services required to take place outside the case managers office; updated the form for reporting fraud and abuse; increased the liquidated damages when the vendor fails to comply with the caseload and staffing recommendation from $500 to $1000 per occurrence; added quality clarifications for the use of Hybrid methodology for Healthcare Effectiveness Data and Information Set (HEDIS) and Outreach Activity planning and reporting; and updated capitation rates. Increased the maximum liability by $954,457,611 for a total of $5,185,368,480 for AMERIGROUP, and by $989,205,835 for a total of $5,324,361,376 for AmeriChoice Middle.

27

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


Amendments 11: provided language consistent with TennCares budget proposal to the Governor; added language clarifying that each MCO will receive full risk capitation payments for up to 12 months prior to the members enrollment in the plan for members who are determined to receive retro eligibility.; beyond the 12-month period, rather than the full capitation rate, the MCO will invoice TennCare for actual expenditures. Amendments 12: added requirements for the vendor regarding the implementation and operation of CHOICES Group 3, the portion of the CHOICES program that extends limited Home and Community Based Services (HCBS) benefits to individuals at risk of nursing facility placement in order to be in compliance with the Maintenance of Effort (MOE) requirements until they expire on January 1, 2014; added language to clarify that Quality Management/Quality Improvement reporting must be specific to TennCare and not combined with other state or commercial programs; added Program Integrity (PI) language to clarify PI investigators be designated by plan; added Social Security Administration (SSA) Data Security language in accordance with the Bureaus agreement with SSA; and added subcontract requirements to provide an MCO with an avenue to discontinue an agreement with a company when it is not in the best interest of TennCare and its enrollees. AMENDMENTS FOR REVIEW: The proposed amendments (1) replace Disease Management requirements with Population Health requirements; (2) clarify the implementation of CHOICES 3 requirements; (3) clarify language as requested by CMS regarding third party liability (TPL) and post-eligibility treatment of income (PETI); (4) include requirements to support CMS-required PCP rate increase for 2013/2014; (5) add requirement to participate in and implement initiatives to capture pre-natal and post-natal visit data; (6) add coordination requirements for MCOs regarding dual special needs plans (DSNPs); (7) update the transportation requirements to reflect current reporting needs and support audit efforts; (8) update capitation rates; (9) increase the maximum liability by $954,457,611 for a total of $6,139,826,091 for AMERIGROUP; and by $989,205,835 for a total of $6,313,567,211 for AmeriChoice Middle. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: AMERIGROUP *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY:07
$174,870,888

FY:08
$699,483,574

FY:09
$699,483,574

FY:10
$748,157,611

FY:11
$954,457,611

FY:12
$954,457,611

28

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


FY:13 $954,457,611

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 07
$114,581,857 FY:13 $222,586,848

FY: 08
$521,147,382

FY:09
$558,472,096

FY:10
$764,940,450

FY:11
$991,344,357

FY:12
$804,319,052

FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: AmeriChoice Middle *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 07
$174,870,888 FY: 13 $989,205,835

FY: 08
$699,483,574

FY: 09
$699,483,574

FY:10
$782,905,835

FY:11
$989,205,835

FY:12
$989,205,835

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 07
$108,816,203 FY:13 $234,939,468

FY: 08
$526,120,392

FY:09
$573,634,106

FY:10
$729,187,454

FY:11
$1,051,885,932

FY:12
$848,507,848

1. The Bureau has provided detailed expenditures per fiscal year. 2. The proposed amendments change the scope of services and terms of payment. The Bureau did not provide anticipated savings or the cost of obtaining this service through another provider. COMMENTS: 1. The Bureau has approximately $1,207,976,439 remaining in the maximum liability of the AMERIGROUP contract and $1,251,269,973 in the AmeriChoice Middle contract. 2. The contracts do contain the Prohibition of Illegal Immigrants language. 3. Funding: Expenditures for FY12-13 will be 33.814 percent State and 66.186 percent Federal. The match rate is based on the per capita income of the state and changes on the federal fiscal year. NO QUESTIONS. 29

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS

CONTRACTS 13 and 14 Department: Finance and Administration Division: Health Care Finance and Administration/Bureau of TennCare Vendor: UnitedHealthCare Plan of River Valley, Inc. and Volunteer State Health Plan VSHP (West Tennessee Region) BACKGROUND INFORMATION: The original contracts were for medical and behavioral health services for TennCare enrollees in West Tennessee. The contracts had a term beginning May 19, 2008, and ending on June 30, 2012, with a maximum liability of $818,833,000. Amendments 1: incorporated language to comply with the federal Mental Health Parity and Addiction Equity Act of 2008; required additional outreach activities to identify and assist children enrolled in the TENNderCare Program with accessing and utilizing benefits; revised various reporting time frame requirements; required the providers to screen employees and contractors to determine any exclusions from participating in Medicare, Medicaid, SCHIP, or any other federal health care programs; required the contractor to reimburse contracted local health departments at the rates established in the contract; and incorporated the Voluntary Buyout Program and Federal Economic Stimulus Funding language. Amendments 2: added provisions necessary for the implementation of the Long-Term Care Community Choices Act of; updated Title VI requirements to meet current reporting standards; added performance standards to the nurse toll-free phone line for TennCare-approved handling of calls by CHOICES members; and increased the maximum liability by $672,699,800 for a total of $1,491,532,800 for AmeriChoice West and by $672,699,800 for a total of $1,491,532,800 for VSHP West. Amendments 3: changed references of MR and mental retardation to intellectual disabilities; eliminated the requirement that the contractor ensure a member has been evaluated by a crisis team prior to involuntary commitment to a psychiatric inpatient hospital and specified that the contractor utilize the regional mental health institutes (RMHIs) only when there is no other option available for new admissions; added language to comply with the Annual Coverage Assessment Act of 2010; required the contractor to submit an annual risk assessment report, a quarterly program integrity exception list, and a monthly involuntary termination report; 30

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


created a new method for adjusting the long-term care component of the base capitation rate; included liquidated damages of $500 per day for not providing continuity of care, $500 per day for failure to complete a comprehensive assessment, develop a plan of care, and initiate the long-term care services specified in the plan, and $500 per each deficient plan of care; and reduced from 80 percent to a minimum of 51 percent the number of mental health case management services that must take place outside of the case managers office at the most appropriate setting. Amendments 4: revised definitions, behavioral health assessment language, and reporting requirements and modified program integrity and risk adjustment language. Amendments 5: provided language clarifications and changes to CHOICES requirements and credentialing; clarified Disease Management and NCQA requirements; made behavioral health monitoring report adjustments; and added a provision to require the Managed Care Organization to institute a policy addressing fuel price adjustments. The maximum liability increased by $667,299,800 for a total of $2,153,432,600 for AmeriChoice West and by $672,699,800 for a total of $2,164,232,600 for VSHP West. Amendments 6: provided language to implement the Money Follows the Person (MFP) Rebalancing Demonstration grant awarded to TennCare by the Centers for Medicare and Medicaid Services (CMS). The grant enables the State to identify and assist individuals in institutions to transition to more cost-effective care in the community. The amendments also included language to provide the MCO guidance regarding crisis services and other behavioral health services, including clarifications permitting licensed RNs to provide behavioral health case management. The amendments also required the vendor to assist TennCare in meeting the five annual benchmarks established for the MFP Rebalancing Demonstration; to submit, upon notification from the Bureau, a quarterly MFP Participants Report, and to identify MFP participants separately for each data element described in the CHOICES Utilization Report and the CHOICES Nursing Facility to Community Transition Report. Updated the liquidated damages to include penalties ($500 per occurrence) if the vendors fail to correctly process a transition referral, to ensure home and community based services (HCBS) or Early Periodic Screening, Diagnosis and Treatment (EPSDT) benefits are in place immediately upon such transition, to complete in a timely manner the minimum care coordination contacts required for persons transitioning from a nursing facility, to submit complete and accurate data into TENNCARE PreAdmission Evaluation System (TPAES) 31

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


pertaining to the MFP, or to comply with all data collection processes and timelines established by TennCare. The maximum liabilities remain the same. Amendments 7: provided program language updates required by the Center for Medicare and Medicaid Services (CMS); required the vendor to establish an on-going training program for care coordinators; updated the Health Insurance Portability and Accountability Act of 1996 and the Health Information Technology for Economic and Clinical Health Act (HIPAA/HITECH) regulations; added suggested Care Manager Ratios to the CHOICES program; changed the vendor contact person; reduced, from 80 to 51 percent, the portion of mental health case management services required to take place outside the case managers office; updated the form for reporting fraud and abuse; increased the liquidated damages when the vendor fails to comply with the caseload and staffing recommendation from $500 to $1000 per occurrence; added quality clarifications for the use of Hybrid methodology for Healthcare Effectiveness Data and Information Set (HEDIS) and Outreach Activity planning and reporting; and updated capitation rates. The amendments extended each contract for an additional year through June 30, 2013, and added term extension language to both contracts to permit additional one-year extensions for a total term of no more than eight years. Increased the maximum liability by $952,502,900 for a total of $3,105,935,500 for AmeriChoice West and by $989,429,200 for a total of $3,150,661,800 for VSHP West. Amendments 8: provided language consistent with TennCares budget proposal to the Governor; added language clarifying that each MCO will receive full risk capitation payments for up to 12 months prior to the members enrollment in the plan for members who are determined to receive retro eligibility; beyond the 12-month period, rather than the full capitation rate, the MCO will invoice TennCare for actual expenditures. Amendments 9: added requirements for the vendor regarding the implementation and operation of CHOICES Group 3, the portion of the CHOICES program that extends limited Home and Community Based Services (HCBS) benefits to individuals at risk of nursing facility placement in order to be in compliance with the Maintenance of Effort (MOE) requirements until they expire on January 1, 2014; added language to clarify that Quality Management/Quality Improvement reporting must be specific to TennCare and not combined with other state or commercial programs; added Program Integrity (PI) language to clarify PI investigators be designated by plan; added Social Security Administration (SSA) Data Security language in 32

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


accordance with the Bureaus agreement with SSA; and added subcontract requirements to provide an MCO with an avenue to discontinue an agreement with a company when it is not in the best interest of TennCare and its enrollees. AMENDMENTS FOR REVIEW: The proposed amendments (1) replace Disease Management requirements with Population Health requirements; (2) clarify the implementation of CHOICES 3 requirements; (3) clarify language as requested by CMS regarding third party liability (TPL) and post-eligibility treatment of income (PETI); (4) include requirements to support CMS-required PCP rate increase for 2013/2014; (5) add requirement to participate in and implement initiatives to capture pre-natal and post-natal visit data; (6) add coordination requirements for MCOs regarding dual special needs plans (DSNPs); (7) update the transportation requirements to reflect current reporting needs and support audit efforts; (8) update capitation rates; (9) increase the maximum liability by $821,870,000 for a total of $3,927,805,500 for UnitedHealthCare and by $841,824,000 for a total of $3,992,485,800 for VSHP; and (11) extend the current contracts an additional year through June 30, 2014. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: UnitedHealthCare *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 08 FY: 09
$0 $327,533,200

FY: 10
$491,299,800

FY:11
$667,299,800

FY: 12
$797,932,700

FY: 13
$821,870,000

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 08 FY: 09
$0 $267,572,091

FY: 10
$452,411,636

FY:11
$774,691,991

FY: 12
$680,383,602

FY: 13 $191,411,617

FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: VSHP *Current Contract Allocation by Fiscal Year: FY: 08 FY: 09
$0 $327,533,200

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 10
$491,299,800

FY: 11
$672,699,800

FY: 12
$817,305,000

FY:13
$841,824,000

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 08 FY: 09
$0 $322,213,683

FY: 10
$504,563,104

FY: 11
$793,493,211

FY: 12
$721,926,808

FY:13 $197,368,091

1. The Bureau has provided detailed expenditures per fiscal year. 33

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


2. The proposed amendments change the scope of services and terms of payment. The Bureau did not provide anticipated savings or the cost of obtaining this service through another provider. COMMENTS: 1. The Bureau has approximately $739,464,563 remaining in the maximum liability of the UnitedHealthCare contract, and $661,096,904 in the VSHP contract. 2. The contracts do contain the Prohibition of Illegal Immigrants language. 3. Funding: Expenditures for FY13 will be 33.814 percent State and 66.186 percent Federal. The match rate is based on the per capita income of the State and changes on the federal fiscal year NO QUESTIONS.

34

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACTS 15 and 16 Department: Finance and Administration Division: Health Care Finance and Administration/Bureau of TennCare Vendor: UnitedHealthCare Plan of the River Valley, Inc. and Volunteer State Health Plan VSHP (East Tennessee Region) BACKGROUND INFORMATION: The original contracts were for medical and behavioral health services to TennCare enrollees in East Tennessee. The contracts had a term beginning May 19, 2008, and ending on June 30, 2012, with a maximum liability of $885,708,000. Amendments 1: incorporated language to comply with the federal Mental Health Parity and Addiction Equity Act of 2008; required additional outreach activities to identify and assist children enrolled in the TENNderCare Program with accessing and utilizing benefits; revised various reporting time frame requirements; required the providers to screen employees and contractors to determine any exclusions from participating in Medicare, Medicaid, SCHIP, or any other federal health care programs; required the contractor to reimburse contracted local health departments at the rates established in the contract; and incorporated the Voluntary Buyout Program and Federal Economic Stimulus Funding language. Amendments 2: added provisions necessary for the implementation of the Long-Term Care Community Choices Act of; updated Title VI requirements to meet current reporting standards; added performance standards to the nurse toll-free phone line for TennCare-approved handling of calls by CHOICES members; and increased the maximum liability by $787,372,000 for a total of $1,673,080,000 for UnitedHealthCare East and by $885,772,000 for a total of $1,771,480,000 for VSHP East. Amendments 3: changed references of MR and mental retardation to intellectual disabilities; eliminated the requirement that the contractor ensure a member has been evaluated by a crisis team prior to involuntary commitment to a psychiatric inpatient hospital and specified that the contractor utilize the regional mental health institutes (RMHIs) only when there is no other option available for new admissions; added language to comply with the Annual Coverage Assessment Act of 2010; required the contractor to submit an annual risk assessment report, a quarterly program integrity exception list, and a monthly involuntary termination report; created a new method for adjusting the long-term care component of the base capitation rate and include liquidated damages of $500 per day for not providing continuity of care, $500 per day for failure to complete a 35

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


comprehensive assessment, develop a plan of care, and initiate the long-term care services specified in the plan, and $500 per each deficient plan of care; and reduced from 80 percent to a minimum of 51 percent the number of mental health case management services that must take place outside of the case managers office. Amendments 4: revised definitions, behavioral health assessment language, and reporting requirements to more accurately coincide with the CHOICES program; modified program integrity and risk adjustment language to meet state and federal regulations. Amendments 5: provided language clarifications and changes to CHOICES requirements and credentialing; clarified Disease Management and NCQA requirements; made behavioral health monitoring report adjustments; and added a provision to require the Managed Care Organization to institute a policy addressing fuel price adjustments. The maximum liability increased by $787,372,000 for a total of $2,460,452,000 for UnitedHealthCare East and by 885,772,000 for a total of $2,657,252,000 for VSHP East. Amendments 6: provided language to implement the Money Follows the Person (MFP) Rebalancing Demonstration grant awarded to TennCare by the Centers for Medicare and Medicaid Services (CMS). The grant enables the State to identify and assist individuals in institutions to transition to more cost-effective care in the community. The amendments also included language to provide the MCO guidance regarding crisis services and other behavioral health services, including clarifications permitting licensed RNs to provide behavioral health case management. The amendments also required the vendor to assist TennCare in meeting the five annual benchmarks established for the MFP Rebalancing Demonstration; to submit, upon notification from the Bureau, a quarterly MFP Participants Report, and to identify MFP participants separately for each data element described in the CHOICES Utilization Report and the CHOICES Nursing Facility to Community Transition Report. Updated the liquidated damages to include penalties ($500 per occurrence) if the vendors fail to correctly process a transition referral, to ensure home and community based services (HCBS) or Early Periodic Screening, Diagnosis and Treatment (EPSDT) benefits are in place immediately upon such transition, to complete in a timely manner the minimum care coordination contacts required for persons transitioning from a nursing facility, to submit complete and accurate data into TENNCARE PreAdmission Evaluation System (TPAES) pertaining to the MFP, or to comply with all data collection processes and timelines established by TennCare. 36

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


Amendments 7: provided program language updates required by the Center for Medicare and Medicaid Services (CMS); required the vendor to establish an ongoing training program for care coordinators; updated the Health Insurance Portability and Accountability Act of 1996 and the Health Information Technology for Economic and Clinical Health Act (HIPAA/HITECH) regulations; added suggested Care Manager Ratios to the CHOICES program; changed the vendor contact person; reduced, from 80 to 51 percent, the portion of mental health case management services required to take place outside the case managers office; updated the form for reporting fraud and abuse; increased the liquidated damages when the vendor fails to comply with the caseload and staffing recommendation from $500 to $1000 per occurrence; added quality clarifications for the use of Hybrid methodology for Healthcare Effectiveness Data and Information Set (HEDIS) and Outreach Activity planning and reporting; and updated capitation rates. The amendments extended each contract for an addition year through June 30, 2013, and added term extension language to both contracts to permit additional one-year extensions for a total term of no more than eight years. Increased the maximum liability by $996,973,800 for a total of $3,457,425,800 for UnitedHealthCare East and by $1,107,047,875 for a total of $3,764,299,875 for VSHP East. Amendments 8: provided language consistent with TennCares budget proposal to the Governor; added language clarifying that each MCO will receive full risk capitation payments for up to 12 months prior to the members enrollment in the plan for members who are determined to receive retro eligibility; beyond the 12-month period, rather than the full capitation rate, the MCO will invoice TennCare for actual expenditures. Maximum liability remains the same. Amendments 9: added requirements for the vendor regarding the implementation and operation of CHOICES Group 3, the portion of the CHOICES program that extends limited Home and Community Based Services (HCBS) benefits to individuals at risk of nursing facility placement in order to be in compliance with the Maintenance of Effort (MOE) requirements until they expire on January 1, 2014; added language to clarify that Quality Management/Quality Improvement reporting must be specific to TennCare and not combined with other state or commercial programs; added Program Integrity (PI) language to clarify PI investigators be designated by plan; added Social Security Administration (SSA) Data Security language in accordance with the Bureaus agreement with SSA; and added subcontract requirements to provide an MCO with an avenue to discontinue an 37

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


agreement with a company when it is not in the best interest of TennCare and its enrollees. AMENDMENTS FOR REVIEW: The proposed amendments (1) replace Disease Management requirements with Population Health requirements; (2) clarify the implementation of CHOICES 3 requirements; (3) clarify language as requested by CMS regarding third party liability (TPL) and post-eligibility treatment of income (PETI); (4) include requirements to support CMS-required PCP rate increase for 2013/2014; (5) add requirement to participate in and implement initiatives to capture pre-natal and post-natal visit data; (6) add coordination requirements for MCOs regarding dual special needs plans (DSNPs); (7) update the transportation requirements to reflect current reporting needs and support audit efforts; (8) update capitation rates; (9) increase the maximum liability by $956,096,600 for a total of $4,413,522,400 for UnitedHealthCare and by $1,011,135,000 for a total of $4,775,434,075 for VSHP; and (11) extend the current contracts an additional year through June 30, 2014. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: UnitedHealthCare *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 09
$295,236,000

FY: 10
$590,472,000

FY: 11
$787,372,000

FY: 12
$828,249,200

FY: 13
$956,096,600

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 09
$208,089,186

FY: 10
$485,747,586

FY: 11
$901,212,824

FY: 12
$804,764,212

FY: 13
$223,233,538

FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: VSHP *Current Contract Allocation by Fiscal Year: FY: 09
$295,236,000

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 10
$590,472,000

FY: 11
$885,772,000

FY: 12
$981,684,075

FY: 13
$1,011,135,000

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 09
$328,230,257

FY: 10
$712,601,467

FY: 11
$953,091,919

FY: 12
$907,675,408

FY:13
$238,341,972

1. The Bureau has provided detailed expenditures per fiscal year.

38

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


2. The proposed amendments change the scope of services and terms of payment. The Bureau did not provide anticipated savings or the cost of obtaining this service through another provider. COMMENTS: 1. The Bureau has approximately $834,378,456 remaining in the maximum liability for the UnitedHealthCare contract and approximately $624,358,053 in the VSHP contract. 2. The contracts do contain the Prohibition of Illegal Immigrants language. 3. Funding: Expenditures for FY13 will be 33.814 percent State and 66.186 percent Federal. The match rate is based on the per capita income of the state and changes on the federal fiscal year NO QUESTIONS.

39

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 17 Department: Finance and Administration Division: Health Care Finance and Administration/Bureau of TennCare Vendor: QSource Center for HealthCare Quality BACKGROUND INFORMATION: The original three-year contract provided for external quality review (EQR) of the TennCare Managed Care Contractors (MCCs) including the Managed Care Organizations (MCOs) and the Dental Benefits Manager (DBM). The contract has a term beginning October 1, 2010, and ending September 30, 2013, with the option to extend in one-year increments up to five years. The maximum liability is $6,004,764. AMENDMENT FOR REVIEW: The proposed amendment revises the scope of services to require the vendor to perform an annual evaluation of customer satisfaction with the TennCare CHOICES program; extends the current contract an additional two years through September 30, 2015; increases the maximum liability by $4,491,168 for a total of $10,495,932; and adds the payment rate for the additional service. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY: 11
$1,501,191

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 12
$2,001,588

FY: 13
$2,001,588

FY: 14
$500,397

FY:

FY:

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 11
$1,501,191

FY: 12
$2,001,588

FY: 13
$333,598

FY:

FY:

FY:

1. The Department has provided anticipated detailed expenditures per fiscal year. 2. The proposed amendment changes the scope of services. The Department did not provide any anticipated savings or the cost of obtaining these services through another provider.

40

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


COMMENTS: 1. The Department has approximately $2,168,387 remaining in the maximum liability. 2. The contract does contain the Prohibition of Illegal Immigrants and the Voluntary Buyout Program language. 3. A copy of the $2,000,000 performance bond has been provided by the Bureau. 4. According to TennCare, the two year extension is necessary due to the new Long Term Care CHOICES survey that is added to the contract. The ongoing survey requires timelines that go beyond the current end date for collection of survey information and reporting requirements. The two year extension will allow the survey and reporting to be completed without interruption. 5. Funding: 25 percent State; 75 percent Federal. NO QUESTIONS.

41

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 18 Department: Finance and Administration Division: Health Care Finance and Administration/Bureau of TennCare Vendor: Ascend Management Innovations, LLC BACKGROUND INFORMATION: The original one-year contract provided for face-to-face evaluations of individuals who are denied medical eligibility for TennCare-reimbursed Long-Term Care services and for whom an appeal has been timely requested to determine whether the individual meets the definition of Level of Care. The contract had a term beginning August 1, 2011, and ending July 31, 2012, with a maximum liability of $50,000. Amendment 1: extended the contract an additional year through July 31, 2013; added language allowing for one-year term extensions up to five years; and increased the maximum liability by $60,000 for a total of $110,000. Amendment 2: increased the maximum liability by $120,000 for a total of $230,000. AMENDMENT FOR REVIEW: The proposed amendment increases the maximum liability by $300,000 for a total of $530,000. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY: 12
$62,000

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 13
$168,000

FY: 14
$

FY:

FY:

FY:

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 12
$60,101

FY: 13
$94,492

FY: 14
$

FY:

FY:

FY:

1. The Bureau has provided detailed expenditures per fiscal year. 2. Anticipated savings and the cost of obtaining this service through another provider are not applicable.

42

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


COMMENTS: 1. The Bureau has approximately $75,407 remaining in the maximum liability. 2. A copy of the approved Rule Exception Request to extend the contract beyond five years was provided by the Department. 3. The contract does contain the Prohibition of Illegal Immigrants and the Federal Funding Accountability and Transparency Act language. 4. Funding: 50 percent State; 50 percent Federal. QUESTION: 1. What are the significant changes in appeals operations that have brought about the significant increase in the volume of appeals?

43

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 19 Department: Finance and Administration Division: Health Care Finance and Administration/Cover Tennessee Program Vendor: Policy Studies, Inc. BACKGROUND INFORMATION: The original contract was eligibility determination, application processing, and beneficiary services for the CoverKids program. It had a term beginning February 20, 2007, and ending December 31, 2009, with the option to extend in oneyear increments up to five years. Maximum liability was $10,600,000. Amendment 1: added the procurement of print/production and mass mailing services of applications. Maximum liability remained the same. Amendment 2: established a minimum monthly compensation of $125,000 for September through December of 2007, and $100,000 per month for January through June of 2008. Maximum liability remained the same. Amendment 3: added the development and maintenance of a web-based, online application for the CoverKids program. Maximum liability remained the same. Amendment 4: added a $2,457 one-time Call Center set-up fee, and increased the enrollment fee by an average of thirty-four cents ($0.34) for years two and three of the contract. Maximum liability remained the same. Amendment 5: required the vendor to submit a transition plan by January 10, 2010, should the services be awarded to another vendor; established a predictive dialer to attempt to contact a beneficiary three times within a 50day period prior to the end of the eligibility period and to establish a renewal process between a family and a customer service representative, established rate for CY10 at the same level as CY09. Extended the contract for an additional year through December 31, 2010, and increased the maximum liability by $4,450,000 for a total of $15,050,000. Amendment 6: authorized the sharing of electronic information with the Social Security Administration and the Opt-Out Program that was effective September 1, 2010. Extended the contract for an additional year through December 31, 2011, and increased the maximum liability by $4,200,000 for a total of $19,250,000.

44

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


Amendment 7: changed all references of Benefits Administration Division to Division of Health Care Finance and Administration; required the vendor to assist the State in fraud identification and investigations for the recovery of fraudulent overpayments and to notify all appropriate officials of any unusual transaction that merits further investigation; added rates for CY 12; changed the name of the State contact person; added the Federal Funding Accountability and Transparency Act language; extended the contract an additional two years through December 31, 2013; and increased the maximum liability by $9,337,500 for a total of $28,587,500. The Committee recommended approval of the amendment with the stipulation that the contract be extended one year through December 31, 2012, and that the increase in maximum liability be reduced to $4,712,500 for a total of $23,962,500. AMENDMENT FOR REVIEW: The proposed amendment extends the current contract an additional year through December 31, 2013; increases the maximum liability by $4,712,500 for a total of $28,675,000; and adds payment rates for CY13. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY: 07
$1,500,000 FY: 13 $2,312,500

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 08
$3,700,000

FY: 09

FY: 10

FY: 11

FY: 12
$4,625,000

$3,700,000 $3,925,000 $4,200,000

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 07
$159,788 FY: 13 $786,380

FY: 08
$4,367,427

FY: 09

FY: 10

FY: 11

FY: 12
$4,374,754

$3,640,306 $3,892,976 $4,430,314

1. The Department has provided detailed expenditures per fiscal year. 2. The proposed amendment does not change the scope of services or terms of payment. Anticipated savings and the cost of obtaining this service through another provider are not applicable.

45

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


COMMENTS: 1. The Department has approximately $2,310,555 remaining in the maximum liability. 2. A copy of the approved Rule Exception Request to extend the contract beyond five years was provided by the Department. 3. The contract does contain the Prohibition of Illegal Immigrants and the Federal Funding Accountability and Transparency Act language. 4. Funding: 24 percent State; 76 percent Federal. Funding for this contract is currently 24 percent state and 76 percent federal. Previously, funds were considered interdepartmental because the funds were in the CoverKids fund which included a state appropriation for the CoverKids Program that drew down approximately 75 percent match from the federal government for services of which a portion could be spent on administration. Since FY11-12, allocated funds for this contract have been noted purely as state and federal. NO QUESTIONS.

46

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 20 Department: Finance and Administration Division: Health Care Finance and Administration/Cover Tennessee Program Vendor: National Guardian Life Insurance Company BACKGROUND INFORMATION: The original contract was for dental services for the CoverKids program. The contract had a term beginning March 20, 2008, and ending December 31, 2010, with the option to extend in one-year increments up to five years. Maximum liability was $20,000,000. Amendment 1: extended the contract term for an additional two years through December 31, 2012 and increased the maximum liability by $36,000,000 for a total of $56,000,000. Amendment 2: replaced all references to Benefits Administration Division with Division of Health Care Finance and Administration; required the vendor to assist the State in fraud identification and investigations for the recovery of fraudulent overpayments; required the vendor to provide all documentation, records, etc. to the Tennessee Office of Inspector General, including possible actions necessary to locate and investigate cases of potential, suspected, or known fraud and abuse; required vendor to inform the Division, the TennCare Bureau, Division of State Audit, and the Office of Inspector General of any unusual transactions; changed the contract contact person; added Non-Discrimination Compliance and Federal Funding Accountability and Transparency Act language; and required the vendor to submit annual Non-Discrimination Compliance reports to the State. AMENDMENT FOR REVIEW: The proposed amendment extends the current contract an additional year through December 31, 2013; increases the maximum liability by $20,000,000 for a total of $76,000,000; and adds the payment rates for CY13.

47

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 08
$2,000,000

FY: 09
$7,000,000

FY: 10
$7,000,000

FY: 11
$10,000,000

FY: 12
$20,000,000

FY: 13
$10,000,000

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 08
$801,927

FY: 09
$5,485,644

FY: 10
$8,925,605

FY: 11
$9,846,905

FY: 12
$16,455,985

FY: 13
$4,209,231

1. The Department has provided anticipated detailed expenditures per fiscal year. 2. The proposed amendment does not change the scope of services or terms of payment. Anticipated savings and the cost of obtaining this service through another provider are not applicable. COMMENTS: 1. The Department has approximately $10,274,703 remaining in the maximum liability. 2. The contract does contain the Prohibition of Illegal Immigrants and Federal Funding Accountability and Transparency Act language. 3. Contract Funding: 24 percent State; 76 percent Federal. NO QUESTIONS.

48

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 21 Department: Finance and Administration Division: Health Care Finance and Administration/Cover Tennessee Program Vendor: BlueCross BlueShield of Tennessee, Inc. BACKGROUND INFORMATION: The original two-year contract was for delivery of the CoverTN, AccessTN, and CoverKids (collectively known as Cover Tennessee) self-funded health plan services. These services include administrative services, provider network development and maintenance, eligibility and enrollment, premium equivalent billing and collection, utilization, case and care management, disease management, medical and pharmacy benefits, behavioral health benefits customer service, claims adjudication and adjustment, appeals services, and financial and program reporting. The contract has a term beginning January 1, 2012, and ending December 31, 2013, with the option to extend in one-year increments up to three years. Maximum liability was $557,121,400. The Committee recommended approval of the contract with the stipulation that the term of the contract is one year with an option to extend for an additional year, and the maximum liability is reduced to reflect funding for one year resulting in a total of $269,249,370. AMENDMENT FOR REVIEW: The proposed amendment revises the scope of services to require the vendor to meet a benchmark of at least 90 percent regarding the accuracy of provider data validation and to provide a Summary of Benefits and Coverage for all CoverTN members as required under the Patient Protection and Affordable Care Act of 2010; changes the vendor reporting requirements for claims payment and the reconciliation process; and reduces, from 60 to 30 days, the period of time duplicate payment records for disaster recovery must be retained. The proposed amendment also extends the current contract an additional year through December 31, 2013; increases the maximum liability by $256,579,366 for a total of $525,828,736; reduces, from $28 to $27.50, the per member per month payment rates; revises the contract contact information; adds required language regarding HIPAA/HITECH compliance; and adds additional performance guarantees regarding quality review validation and HIPAA/HITECH compliance.

49

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 12

FY: 13

FY: 14

FY:

FY:

FY:

$130,555,291 $138,694,079 $

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 12

FY: 13

FY: 14
$

FY:

FY:

FY:

$90,167,993 $77,510,124

1. The Department has provided anticipated detailed expenditures per fiscal year. COMMENTS: 1. The Department has approximately $101,571,253 remaining in the maximum liability. 2. The contract does contain the Prohibition of Illegal Immigrants and the Federal Funding Accountability and Transparency Act language. 3. Funding: 48 percent State; 52 percent Federal. NO QUESTIONS.

50

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 22 Department: Finance and Administration Division: Health Care Finance and Administration/Cover Tennessee Program Vendor: QSource Center for HealthCare Quality BACKGROUND INFORMATION: The original contract was for external quality review of the CoverKids program. The contract had a term beginning January 1, 2010, and ending December 31, 2011, with a maximum liability of $745,049. Amendment 1: changed the contract contact person; added payment rates to CY12 and CY 13; replaced all references to Benefits Administration Division with Division of Health Care Finance and Administration Division; extended the contract an additional two years through December 31, 2012; added language permitting contract extension in one-year increments up to five years; and increased the maximum liability by $728,898 for a total of $1,473,947. The Committee recommended approval of the amendment with the stipulation that the contract is extended for one year and the increase in maximum liability is reduced to $364,449 for a total of $1,109,498. AMENDMENT FOR REVIEW: The proposed amendment extends the current contract an additional year through December 31, 2013; increases the maximum liability by $364,449 for a total of $1,473,947; and adds payment rates for CY13. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 10
$338,220

FY: 11
$354,795

FY: 12
$380,358

FY: 13
$36,126

FY:

FY:

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 10
$115,628

FY: 11
$560,715

FY: 12
$347,769

FY: 13
$18,063

FY:

FY:

1. The Department has provided anticipated detailed expenditures per fiscal year.

51

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


2. The proposed amendment does not change the scope of services or terms of payment. Anticipated savings and the cost of obtaining this service through another provider are not applicable. COMMENTS: 1. The Department has approximately $67,324 remaining in the maximum liability. 2. The contract does contain the Prohibition of Illegal Immigrants language. 3. Contract Funding: 24 percent State; 76 percent Federal. NO QUESTIONS.

52

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 23 Department: Education Division: Assessment Logistics Vendor: NCS Pearson, Inc. BACKGROUND INFORMATION: The original five-year contract was for the provision of a K-2 assessment and the development, implementation, and scoring of criterion referenced assessments for all students in grades three through eight. The vendor must develop, implement, and maintain assessments required under Title I of the Elementary and Secondary Education Act of 1965, the Individuals with Disabilities Education Act, the No Child Left Behind Act of 2001, and specified Tennessee Code Annotated. The contract term has a term beginning March 19, 2008, and ending March 15, 2013, with a maximum liability of $59,820,440. Amendment 1: revises the contract contact information and added the Federal Economic Stimulus Funding language. AMENDMENT FOR REVIEW: The proposed amendment gives the State more control over the content standards and performance indicators for grades K-2; requires the vendor to work with the State to help develop and implement K-8 assessments in compliance with all state and federal laws, and State Board of Education rules and policies; extends the current contract three additional years through March 15, 2016; increases the maximum liability by $55,119,695 for a total of $114,940,135; and adds payment rates for the extension period. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year: FY: 08
$3,668,682

(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 09
$7,931,320

FY: 10
$15,320,706

FY: 11

FY: 12

FY:13

$11,660,172 $17,924,871 $3,314,689

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 08
$0

FY: 09
$7,226,045

FY: 10
$12,322,200

FY: 11

FY: 12

$12,648,008 $8,983,178

FY:13 $5,568,023

1. The Department has provided anticipated detailed expenditures per fiscal year. 53

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


2. The proposed amendment changes the scope of services and terms of payment. The Department did not provide any anticipated savings or the cost of obtaining these services through another provider. COMMENTS: 1. The Department has approximately $13,072,985 remaining in the maximum liability. 2. The new standardized assessments being developed by the Partnership for Assessment Readiness for College and Careers (PARCC) consortium are behind schedule but have a target completion date in 2015. 3. The contract contains the Prohibition of Illegal Immigrants and the Federal Economic Stimulus Funding language. 4. A copy of the approved Rule Exception Request to extend the contract beyond five years was provided by the Department. 5. Funding: 68 percent State, 32 percent Federal Race to the Top. NO QUESTIONS.

54

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 24 Department: Mental Health and Substance Abuse Services Division: Moccasin Bend Mental Health Institute Vendor: HIGDON Companies d.b.a Acuity Staffing (formerly ATC Healthcare Services, Inc.) BACKGROUND INFORMATION: The original contract was for nursing services at Moccasin Bend Mental Health Institute (MBMHI) with a term beginning July 1, 2010, and ending June 30, 2011, with an option to extend in one-year increments up to five years. Maximum liability was $247,400. Amendment 1: extended the contract by an additional year through June 30, 2012; deleted all contract references to Department of Mental Health and Developmental Disabilities and replaced them with Department of Mental Health; and increased the maximum liability by $247,400 for a total of $494,800. Amendment 2: extended the contract an additional year through June 30, 2013. AMENDMENT FOR REVIEW: The proposed amendment reflects a name change from ATC Healthcare Services, Inc. to HIGDON Companies d.b.a. Acuity Staffing. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *Current Contract Allocation by Fiscal Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 11
$247,400

FY: 12
$247,400

FY:

FY:

FY:

*Current Total Expenditures by Fiscal Year of Contract:


(attach backup documentation from STARS or FDAS report)

FY: 11
$85,831

FY: 12
$96,216

FY: 13
$50,629

FY:

FY:

1. The Department has provided detailed anticipated expenditures per fiscal year. 2. According to the Department, the level of services provided by the contract will remain the same. 55

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


COMMENTS: 1. The Department has approximately $262,124 remaining in the maximum liability. 2. This contract is used by MBMHI to ensure the facility maintains the required staffing ratio of licensed nurses per patient as defined by Medicare and the Joint Commission for Continued Hospital Accreditation 3. The contract does contain the Prohibition of Illegal Immigrants language. 4. Funding: Other current services revenue. According to the Department, funding for this contract is a combination of current fee revenue collected from TennCare, Medicare, and private insurance companies for accounting purposes. Payments against these contracts are not tied to the fee revenue sources and could come from state funds as well. NO QUESTIONS.

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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 25 Department: Tennessee Higher Education Commission (THEC) Vendor: CoBro Consulting, LLC CONTRACT FOR REVIEW: The proposed five-year contract is to provide CoBro Consultings Comprehensive Program Assessment System (Compass) data management tool to remain in compliance with the GEAR UP (Gaining Early Awareness and Readiness for Undergraduate Programs) TN grant, College Access Challenge Grant (CACG), and the Lumina Foundation for Educations Latino Student Success (LSS) Abriendo Puertas Grant programs data collection and reporting requirements as mandated by the U.S. Department of Education. The Compass database is a web-based management and evaluation tool that expedites data entry, organizes program data, generates reports, and conducts statistical analysis to evaluate program success. The vendor will develop a customized database for these programs and provide onsite training for new system users. The proposed contract has a term beginning January 15, 2013, and ending December 31, 2017, with a maximum liability of $466,458. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *PROPOSED Contract Allocation by Calendar Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 13
$117,000

FY: 14
$117,000

FY: 15
$97,458

FY: 16
$67,500

FY: 17
$67,500

FY:
$

1. The Commission provided detailed anticipated expenditures per fiscal year. COMMENTS: 1. The proposed contract does contain the Prohibition of Illegal Immigrants and Federal Funding Accountability and Transparency Act language. 2. According to the Commission, the Compass system is the only database currently configured for both GEAR UP and Tennessees CACG programs. 3. Funding: 96 percent Federal; 4 percent Other (LSS Grant Program). NO QUESTIONS.

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FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


CONTRACT 26 Department: Treasury Division: Investments Vendor: Tennessee County Services Association (TCSA) CONTRACT FOR REVIEW: The proposed contract is to provide marketing and advertising services of the States Deferred Compensation Programs to county governments. TSCA will provide up to five registrations for State personnel to attend and participate in all TSCA conferences; assist the State in coordinating and scheduling meetings between the State and representatives of eligible governmental entities relative to the deferred compensation plans; advertise the States deferred compensation plans on its website, newsletter, and conferences; provide a booth dedicated to marketing and advertising the deferred compensation plans; and, when requested by the State, place the States deferred compensation plan on the TCSA conference agenda so the State will have the opportunity to speak about the benefits and advantages of participation in the Plans. The proposed contract has a term beginning February 1, 2013, and ending January 30, 2014, with the option to extend in one-year increments up to five years. The maximum liability for the first year is $86,000. If extended for the five years, the maximum liability will be $430,000. FISCAL INFORMATION: CONTRACT ALLOCATIONS & EXPENDITURES: *PROPOSED Contract Allocation by Calendar Year:
(as Shown on Most Current Fully Executed Contract Summary Sheet)

FY: 13
$86,000

FY: 14
$86,000

FY: 15
$86,000

FY: 16
$86,000

FY: 17
$86,000

FY:
$

1. The Department provided detailed anticipated expenditures per fiscal year. COMMENTS: 1. The proposed contract does contain the Prohibition of Illegal Immigrants language. 2. According to the Department, the current annual participation fees will cover the cost of this contract. There is approximately $700,000 in reserve funds in the program. 3. Funding: 100 percent Other (revenue from participation fees in the deferred compensation plans). 58

FISCAL REVIEW COMMITTEE NOVEMBER 26, 2012 CONTRACT COMMENTS/QUESTIONS


QUESTIONS: 1. Why is it necessary to enter into a non-competitive contract for this service? Has the Department considered contacting the counties directly or issuing an RFP to see if other marketing vendors could provide the same level of service for a better price? 2. What are the specific costs for each item in the scope of service?

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