CMS-10339 State Solicitation

SOLICITATION FOR STATE PROPOSALS TO OPERATE
QUALIFIED HIGH RISK POOLS

PRA Disclosure Statement
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid
OMB control number. The valid OMB control number for this information collection is 0938-1085. The time required to complete this
information collection is estimated to average ( 684 hours) per response, including the time to review instructions, search existing data resources,
gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time
estimate(s) or suggestions for improving this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail
Stop C4-26-05, Baltimore, Maryland 21244-1850.

1

SOLICITATION FOR STATE PROPOSALS TO OPERATE QUALIFIED HIGH RISK POOLS
SECTION A – STATEMENT OF WORK
A.1

PURPOSE AND BACKGROUND

The Department of Health and Human Services (HHS), as provided by Section 1101 of the
Patient Protection and Affordable Care Act (“Affordable Care Act,” Public Law 111-148) seeks
contracts with States to establish and operate temporary high risk health insurance pool
programs to provide coverage for eligible individuals beginning in 2010 and ending on
December 31, 2013. This solicitation seeks proposals from States that wish to enter into noncompetitive contracts with HHS to establish and administer these high risk pools.
The contracts awarded through this solicitation will include a start-up period of performance that
will run until December 31, 2010, and three additional one-year periods of performance that will
run until December 31, 2013. There will be a final closeout period that will run from January 1,
2014 through March 31, 2014.

A.2

DEFINITIONS

Administrative costs refers to reasonable costs incurred by the Contractor to administer
the pool.
Creditable coverage has the meaning given such term under both section 2701(c)(1) of
the Public Health Service Act before enactment of the Affordable Care Act and 45 CFR
146.113(a)(1).
Enrollee refers to an individual receiving coverage from a qualified high risk pool
established under this section.
Nonprofit entity refers to a nonprofit insurer or other organization capable of operating a
qualified high risk pool.
Qualified high risk pool or Pool refers to a program which provides coverage in
accordance with the requirements of section 1101 of the Affordable Care Act of 2010,
as determined by HHS.
Pre-existing condition exclusion has the meaning given such term in 45 CFR 144.103.
Resident means an individual who is legally domiciled in a State.
Service Area refers to the geographic area encompassing an entire State or States in
which a qualified high risk pool furnishes benefits.
State refers to any one of the 50 States or the District of Columbia.

2

A.3

BACKGROUND

On March 23, 2010, the President signed into law H.R. 3590, the Patient Protection and
Affordable Care Act (Public Law 111-148), hereafter referred to as the Affordable Care
Act. Section 1101 of the Affordable Care Act establishes a “temporary high risk health
insurance pool program” to provide health insurance coverage to currently uninsured
individuals with pre-existing conditions. The Affordable Care Act authorizes HHS to
carry out the program directly or through contracts with States or private, nonprofit
entities.
This is a non-competitive solicitation for States to establish and administer temporary
high risk health insurance pool programs to provide coverage for eligible individuals
beginning in 2010 and ending on December 31, 2013. On April 2, 2010, HHS issued a
letter to governors and state insurance commissioners asking each State to indicate its
interest in participating in this temporary high risk pool program. This solicitation is
being sent to the designated contacts for all states who indicated a willingness to
participate in establishing this program. In response to this solicitation, States are
asked to submit proposals to establish and administer those qualified high risk pools
under contracts to be issued by HHS.
As a result of this solicitation process, HHS intends to award the proposing States a
negotiated contract for the administration of the high risk insurance pool. HHS will also
establish an account through which each state can draw down their respective benefit
claims.
As stated in the April 2, 2010 letter, HHS will carry out the coverage program in States
that do not submit proposals to operate qualified high risk pools. HHS may pursue a
separate acquisition process to acquire any services it may find necessary to operate
high risk health insurance pools in those States.
HHS’s goal is to grant the flexibility needed to permit successful and expeditious
implementation of the program by States. HHS encourages States to take advantage of
that flexibility in developing proposals, including consideration of the following options:
•

Operate a new high risk pool alongside a current State high risk pool;

•

Establish a new high risk pool (in a State that does not currently have a high risk
pool);

•

Build upon other existing coverage programs designed to cover high risk
individuals;

•

Sub-contract with a current HIPAA insurance carrier of last resort or other
insurance carrier, to provide subsidized coverage for the eligible population.

3

States may designate a nonprofit entity as the proposed contractor to operate a
qualified high risk pool on behalf of the State. All proposals submitted in response to
this solicitation must include written confirmation that the submitting entity has been
approved to do so by the governor or state insurance commissioner. Only 1 (one)
proposal may be submitted per state. Two or more States may elect to join together to
establish and operate a single qualified high risk pool that covers enrollees in each
State.
The Affordable Care Act establishes standards that a qualified high risk pool must follow
to be eligible for Federal contract funding. To meet the requirements of this solicitation,
a proposal must be structured in a manner that is consistent with the terms described in
service and delivery tasks below.
A.4 SPECIFIC SERVICE AND DELIVERY TASKS OF CONTRACTED STATE HIGH
RISK POOL PROGRAMS
A.4.1 The Contractor shall have the capacity and technical capability to perform all
functions necessary to the design, implementation, and operation of a qualified high risk
pool that will provide coverage to eligible individuals, that is, currently uninsured
individuals with pre-existing conditions. If the Contractor operates another high risk
pool, the Contractor shall segregate funding and expenditures for the two programs and
track all benefits and services separately for enrollees in each program.
A.4.2 The Contractor shall design, implement, and operate a qualified high risk pool
that is compliant with the following basic design requirements of the temporary high risk
pool program.
Important Note: As of the date of this solicitation, the final regulations for the high risk
pool program have not yet been published. If there are significant changes to the
requirements below as a result of Federal regulations, HHS will amend this solicitation
and give States an opportunity to make changes in their proposals prior to the issuance
of contracts.
1)
Eligibility for Individuals to Enroll in High Risk Health Insurance Pool Programs –
The Contractor shall develop eligibility criteria for participation in a high risk pool subject
to the approval of HHS. Generally, HHS anticipates Contractors will develop criteria
that include all of the requirements included in A.4.2.1.a and A.4.2.b Subject to the
approval of HHS, the Contractor shall develop eligibility criteria meeting some or all of
the elements included in A.4.2.1.c. That is an individual:
a)
Is a citizen or national of the United States or lawfully present in the United
States;
b)
Has not been covered under creditable coverage for a continuous 6-month
period of time prior to the date on which such individual is applying for coverage in the
high risk pool program.

4

c)
Meets the pre-existing condition requirement established for a qualified high risk
pool. HHS anticipates that Contractors will use methods to define pre-existing
condition that include, but are not limited to:
i)

Evidence of denial of coverage.

ii)

Evidence that coverage is available only with an exclusionary rider.

iii)
The presence of certain medical conditions specified by the State and approved
by HHS.
2)
Benefits Requirements – The qualified high risk pool may offer one or more
benefit plans, provided that they are actuarially consistent with the statutory requirement
that the issuer’s share of the costs is not less than 65 percent of the total costs of the
benefit. Contractors may propose the benefit and coverage structure to be used by the
qualified high risk pools within the limits of their allotments.
3)
A qualified high risk pool must provide to all eligible individuals that it enrolls in a
qualified high risk pool, health coverage that does not impose any pre-existing condition
exclusions with respect to such coverage, and may not deny enrollment based on a preexisting condition.
4)
The premiums charged under the high risk pool may not exceed 100 percent of
the premium for the applicable standard risk rate that would apply to the coverage
offered in the State or States. The qualified high risk pool shall determine a standard
risk rate by considering the premium rates charged for similar benefits and cost-sharing
by other insurers offering health insurance coverage to individuals in the applicable
State or States. The standard risk rate shall be established using reasonable actuarial
techniques. A qualified high risk pool may not use other methods of determining the
standard rate, except with the approval of the Secretary. Premiums charged to
enrollees in the qualified high risk pool may vary on the basis of age, by a factor not
greater than 4 to 1.
5)
The qualified high risk pool’s average share of the total allowed costs of the
required benefits must be at least 65 percent of such costs. The out-of-pocket limit of
coverage for cost-sharing for the required benefits may not be greater than the
applicable amount described in section 223(c)(2) of the Internal Revenue Code of 1986
for the year involved.
6)
A qualified high risk pool may specify the networks of providers from whom
enrollees may obtain services. The qualified high risk pool must demonstrate to HHS
that it has a sufficient number and range of providers to ensure that all covered services
are reasonably available and accessible to its enrollees.

5

7)
A qualified high risk pool shall establish and maintain procedures for individuals
to appeal eligibility and coverage determinations. Minimally, the appeals procedures
must provide enrollees and potential enrollees the right to a timely redetermination by
the qualified high risk pool or its designee of a determination concerning eligibility or
coverage, and the right to a timely reconsideration of a coverage redetermination by an
entity independent of the qualified high risk pool or the entity designated to make that
redetermination.
A.4.3 The Contractor shall perform all eligibility determination and enrollment functions.
1)
The Contractor shall develop and utilize an eligibility determination process that
will assure that only individuals eligible for coverage (as described in A.4.2.1) receive
benefits from the program.
2)
As part of the enrollment application process, the Contractor will obtain the
name, address, date of birth and Social Security number of a person applying for
coverage.
3)
The Contractor shall implement a process to confirm that the enrollee is a citizen
or national of the United States or an alien lawfully present in the United States. The
Contractor shall submit to HHS for approval a plan for verifying citizenship in
accordance with the Affordable Care Act.
4)
The Contractor shall develop and operate an enrollment process that ensures
eligible individuals timely access to benefits under the qualified high risk pool and that
enrollment is maintained per the eligibility criteria established by the qualified high risk
pool. The Contractor shall submit a description of the enrollment process to HHS for
approval. HHS anticipates that, in general, the enrollment process proposed by the
Contractor will provide that an individual eligible for enrollment who submits a complete
enrollment request by the 15th day of a month must have coverage take effect by the 1st
day of the following month, except in exceptional circumstances that are subject to HHS
approval.
5)
The Contractor shall develop and operate a disenrollment process. The
Contractor shall submit a description of the disenrollment process to HHS for approval.
HHS anticipates that the disenrollment process will include provisions that include, but
are not limited to, policies for disenrolling an individual if the monthly premium is not
paid on a timely basis; when an individual no longer resides in the qualified high risk
pool’s service area; when an individual obtains other creditable coverage; and, in the
case of a death of the individual.
A.4.4 The Contractor shall provide customer service functions on behalf of high risk
pool enrollees.
1)
The Contractor shall operate a customer service call center that is appropriately
staffed to the number of plan enrollees so as to provide prompt and accurate
information and services to high risk pool program members.

6

2)
The Contractor shall have the capability to provide customer service and plan
enrollment information in languages other than English to meet the needs of the
population anticipated to be served by the high risk pool program and must also make
customer service and plan enrollment information available in formats that are
accessible by people with disabilities.
A.4.5 The Contractor, at a minimum, shall operate a technical support center, which
may include both a call center and an electronic/automated system, to respond to
health care and pharmacy providers seeking information related to an enrollee’s
benefits, coverage determinations (including exceptions and prior authorizations) and
enrollee appeals.
A.4.6 The Contractor shall be responsible for premium administration for the high risk
pool program.
1)
The Contractor shall calculate the appropriate premium amount, bill, and collect
premiums from health risk pool program enrollees or enrollee’s designee.
2)
The Contractor shall use premiums collected and any interest earned on
premiums held by the high risk pool program solely to offset the approved administrative
expenses and high risk pool program enrollee claims for health services as included in
this Contract.
A.4.7 The Contractor may develop and implement disease and utilization management
that will assure high risk pool program enrollees have access to necessary health care
services and prescription drugs via a provider network capable and available to deliver
those services for high risk pool program enrollees in a cost-effective manner.
A.4.8 The Contractor shall develop and implement a system for processing and paying
claims for health and prescription drug claims, including a point-of-sale claim system for
prescription drugs.
A.4.9 The Contractor shall develop and implement a plan for marketing and outreach
for the high risk pool program to make potentially eligible individuals and organizations
and providers that interact with potentially eligible individuals aware of the high risk pool
program and the coverage offered by the qualified high risk pool.
A.4.10 The Contractor shall establish procedures to identify and report to HHS instances
where health insurance issuers or group health plans are discouraging high-risk
individuals from remaining enrolled in their current coverage (or discouraging enrollment
in available coverage) in instances in which such individuals subsequently are eligible to
enroll in the qualified high risk pool. Such procedures may include, but are not limited
to:
1)
Questions on the high risk pool application form to identify applicants (or their
family members) that are employed, may have, or have had, access to other coverage
including employment based group health coverage, or are getting assistance in the
payment of premiums for the qualified high risk pool from employers or other sources.
7

2)
Questions on the application form asking applicants to identify their most recent
health coverage and the reasons for leaving or losing that coverage.
3)
A requirement that enrollees report changes in their employment status (or that
of a family member) during the course of enrollment.
A.4.11 The Contractor shall develop operating procedures to prevent, detect, recover
(when applicable or allowable), and immediately report to HHS incidences of waste,
fraud, and abuse and shall cooperate with Federal law enforcement authorities in cases
involving waste, fraud, and abuse.
A.4.12 The Contractor shall establish and implement an effective system for routine
monitoring and identification of compliance risks. The system shall include internal
monitoring and audits to evaluate the high risk pool program, including any subcontractors utilized by the program, in terms of compliance with HHS requirements.
A.4.13 The Contractor shall develop and implement a system for coordinating benefits
for health and prescription drug claims with other payers as needed, such as Workers’
Compensation.
A.5

PAYMENT TO CONTRACTOR

1)
The Contractor will not be responsible for the costs of covered health insurance
claims filed by enrollees in the State high risk pool program or for the administrative
expenses of operating those programs to the extent that those claims and
administrative expenses are in excess of the premiums collected by the State high risk
pool program. The contractor will ensure that the claims and administrative expenses
are incurred within the terms of the contract, and the claims and administrative
expenses do not exceed any limits set by HHS. HHS will reimburse the Contractor for
claims for covered services and for administrative expenses that are in excess of the
premiums collected by the qualified high risk pool. Reimbursement for claims and
administrative expenses is contingent on the extent that the Contractor complies with
the terms of the contract, including the Contractor’s responsibility to act in consultation
with HHS to limit the amount of anticipated expenses to the available funds HHS
allocates to the State to operate the high risk pool program.
2)
The Contractor shall receive actual cost reimbursement payments from HHS for
allowable and allocable administrative costs and claims costs incurred in the
development and operation of the qualified high risk pool.

8

3)
Invoices for Administrative Costs: The Contractor shall receive actual cost
reimbursement, subject to limits and approval of HHS, for administrative costs
associated with implementing the high risk pool program, including expenses directly
related to the tasks outlined in A.5 as well as other expenses including, but not limited to
the use of actuarial services, accounting and auditor fees, agent referral fees,
assessment operations, bank charges, board of director expenses, staff salary and
expenses, legal expenses, marketing and outreach, office rent, equipment and supplies,
postage, and printing and other administrative costs as approved by HHS. On a
monthly basis, the Contractor shall submit an invoice for administrative costs and shall
include a Statement indicating:
a)

The contract line item number

b)

The administrative expenses of the Contractor;

c)
The number of high risk pool program enrollees and the claims paid on behalf of
high risk pool enrollees;
d)

The amount of premiums billed and the amount of premiums collected.

The Contractor’s invoice shall not contain personally identifiable information describing
the enrollees in the qualified high risk pool.
4)
Claims Costs: Funds associated with the claims payments will be placed in an
account established with the Payment Management System (PMS). PMS is
administered by the The Division of Payment Management (DPM), an office of U.S.
Department of Health & Human Services' (HHS) Program Support Center, Financial
Management Service (http://www.dpm.psc.gov). On a weekly basis, the Contractor shall
submit a request for payment for the claims for review and approval, and shall include a
Statement indicating:
a)

The claims paid on behalf of high risk pool enrollees;

b)

The number of high risk pool program enrollees;

c)

The amount of premiums billed and the amount of premiums collected.

The Contractor’s request may not contain personally identifiable information describing
the enrollees in the qualified high risk pool.
Upon approval, funds will be disbursed to the Contractor via electronic funds transfer.
5)
HHS will reimburse costs incurred under the terms of this contract up to the
amount allotted to the state, but shall not pay the Contractor a fee or profit for
performing this contract.

9

6)
The Contractor shall monitor the total expenses submitted to HHS, as well as the
anticipated expenses of the high risk pool, in relationship to the total allotment of funds
available to the Contractor’s State. If the anticipated expenses of the high risk pool are
projected to exceed the available HHS allotment of funds for the State, the Contractor
shall make necessary adjustments to eliminate such deficit, in consultation with HHS.
A.6

PROMPT IMPLEMENTATION REQUIREMENT

The Contractor shall begin to accept enrollments into the qualified high risk pool and
provide coverage to enrollees within a timeframe to be specified in the proposal and
approved by HHS.
A.7

IMPLEMENTATION PLAN AND PROGRESS REPORTS

1)
Within calendar 10 days of award of this contract, the Contractor shall submit to
the HHS Contracting Officer Technical Representative (COTR) a project implementation
plan that includes planning for each of the requirements in A.4 and highlights each step
of implementation of this contract and that is consistent with the proposal submitted in
response to this solicitation. The implementation plan, at a minimum, shall include
specific dates on which the Contractor will:
a)

Announce the availability of the plan to the public,

b)

Begin accepting plan enrollments, and

c)
Begin to cover the claims submitted by or on behalf of high risk pool program
enrollees.
2) The Contractor shall submit progress reports to DHHS on the status of implementing
and carrying out the high risk pool program. Reports should be submitted in a format to
be provided by DHHS. The first progress report will be due 90 calendar days after the
award of the contract. Subsequent progress reports will be due on the second Monday
of January, April, July, and September in 2011, 2012, 2013, and on the second Monday
of January 2014. At a minimum, progress reports shall include:
a)
Evidence that the major milestones of the implementation plan have been met
and clear identification of milestones yet to be met.
b)
An updated timeline for implementing the program and meeting other identified
milestones.
c)
Risks and problems identified or encountered by the Contractor and mitigation
strategies implemented to address those risks and problems.
d)
A description of the enrollment into the high risk pool program, at least broken
down geographically and demographically to describe whether the enrollees in the
program are representative of the eligible individuals in the state.
e)

The number of new enrollees into the program.

10

f)
The number of individuals who have disenrolled from the program, including the
reason for the disenrollments, if known.
g)

The average length of enrollment in the program.

h)

A breakdown of how enrollees satisfied the pre-existing condition requirement.

i)
In the first progress report of each year, updated annual cost projections, based
on actual expenditures and enrollment. If a shortfall is projected, a plan with specific
cost-containment strategies will be submitted to HHS that assures high risk pool
expenditures stay within allotment levels.
The quarterly reports shall not contain personally identifiable information about the
enrollees in the high risk pool program.
3)
The Contractor shall submit monthly reports to HHS, beginning on the 15th day of
the month following the month of the effective date of the contract and continuing on the
15th day of each month until the expiration of the contract. Minimally, the monthly
reports shall provide information on the previous calendar month of operations and
contain a complete accounting of qualified temporary high risk pool expenditures and
revenue, the total number of enrollees, the number of new enrollments and
disenrollments, the average monthly premiums, and average out-of-pocket costs for
enrollees. The Contractor must certify that all information submitted to HHS in these
reports is true, accurate, and complete. The monthly reports shall not contain
personally identifiable information about the enrollees in the high risk pool program.
4)
On February 1, 2011 and each February 1 thereafter, the Contractor shall submit
an independently audited financial report detailing the finances of the high risk pool
program operated by the Contractor.
A.8

MEETINGS

The Contractor shall participate in monthly meetings or teleconferences with HHS to be
scheduled by HHS through January 2011 and as may be necessary thereafter to
provide for the exchange of information relative to the implementation of high risk pool
programs.
A.9

DATA USE AGREEMENTS

The Contractor shall enter into and comply with provisions of data use agreements with
HHS and other Federal agencies as may be required for the implementation of the high
risk pool program.
A.10 TRANSITION TO HEALTH BENEFIT EXCHANGES
The Contractor shall be responsible for implementing HHS procedures to provide for the
transition of eligible enrollees in high risk pool programs into qualified health plans
offered through Health Benefit Exchanges as provided in the Affordable Care Act and
assure that there is no lapse in coverage for the individual involved.
11

A.11 NON-DISCRIMINATION
The Contractor shall not discriminate based on race, ethnicity, religion, gender, age, or
disability.
A.12 HHS RIGHT TO AUDIT
The Contractor agrees that HHS, other Federal agencies in the citizenship verification
process, the Comptroller General, any Federal law enforcement agency, or their
designee may evaluate, through inspection, audit or other means:
1)
The quality, appropriateness and timeliness of services furnished to high risk
pool enrollees under the Contract.
2)
Compliance with HHS and other Federal requirements for maintaining the privacy
and security of protected health information and other personally identifiable information
of high risk pool enrollees, including, but not limited to the Federal Information Security
Management Act of 2002 (44 U.S.C. §3541, et seq.), Computer Matching and Privacy
Protection Act of 1988, and The Privacy Act of 1974 (5 U.S.C. §552a).
3)
The facilities of high risk pool programs to include computer and other electronic
systems.
4)
Any books, contracts, computer or other electronic systems, including medical
records and documentation of sub-contractors related to the HHS Contract with the high
risk pool program.
A.13 RECORD RETENTION
The Contractor is required to retain records that the Contractor or sub-contractors
create, collect or maintain while participating in the high risk pool program for at least six
years following termination. This retention period may be extended by the Secretary if a
qualified high risk pool’s records relate to an ongoing investigation, litigation or
negotiation by the Secretary, the Office of the Inspector General, the Department of
Justice or a State, or such documents otherwise relate to suspicions of fraud and abuse
or violations of Federal or State law. The Contractor shall return or destroy protected
health information created or received in the Contractor’s capacity in operating a high
risk pool program under this contract.
A.14 DISPUTES
This contract is subject to the Contract Disputes Act of 1978, as amended
(41 U.S.C. 601-613). Except as provided in the Act, all disputes arising under or
relating to this contract shall be resolved under the disputes clause contained in
Appendix 3 of this solicitation.

12

SECTION B –OTHER PROVISIONS
B.1 DESIGNATION OF CONTRACTING OFFICER TECHNICAL
REPRESENTATIVE (COTR)
HHS will designate an HHS COTR who will be responsible for monitoring the
Contractor’s progress in the implementation of the high risk pool program, interpret the
Statement of Work and any other technical performance requirement, perform technical
evaluation as required, and assist in the resolution of technical problems encountered
during performance. HHS may change its COTR designation.
B.2

REGULATORY GUIDANCE

HHS will provide guidance on regulations that it may promulgate that will govern
requirements and operations of high risk pool programs. Contractors must follow such
guidance for the duration of the contract, as well as other applicable laws and
regulations.
B.3

MONITORING OF AVAILABLE FUNDS

HHS will monitor the total expenses paid to the Contractor in relationship to the total
allotment of funds available to the Contractor’s State and will work with the Contractor to
develop mitigation strategies should the actual or projected expenses reimbursable
under this contract and through the high risk pool program be projected to exceed the
total funding allotment available for the State. If HHS determines that the amounts
available for the payment of expenses of the high risk pool will be less than the
projected amount of such expenses, the Contractor shall make necessary adjustments
to eliminate such deficit, in consultation with HHS. Nothing in this provision relieves a
contractor of the obligation to monitor and report its expenditures or to permit
expenditures beyond the amount specified in the contract.
B.4

TERMINATION OF CONTRACT

(1)
HHS may terminate a contract with the Contractor if the Contractor fails at any
time to maintain compliance with any element or requirement of its contract with HHS,
or if entity is at any time out of compliance with any provision of this part. The entity will
be notified in writing of any contract termination.
(a)
Should a Contractor receive notice from HHS that HHS intends to terminate the
contract under the terms of B.4(1), the qualified high risk pool will have 30 days to cure
its failure(s) that were the basis for the termination and to notify HHS in writing at the
address specified in the notification letter. HHS will review the correction and notify the
entity in writing of its decision to either find the contractor has cured its failure(s) or to
proceed with the termination.

13

(b)
If the contract is with multiple States, each State will be individually notified of
the termination. Any correction of the deficiencies must be submitted jointly and on
behalf of all of the affected States.
(2)
HHS, by written notice, may terminate this contract, in whole or in part, when it is
in HHS’s interest. If this contract is terminated, the rights, duties, and obligations of the
parties, including compensation to the Contractor, shall be in accordance with Part 49 of
the Federal Acquisition Regulation in effect on the date of this contract.

14

SECTION C – PROPOSAL PROCESS
The Department of Health and Human Services is seeking proposals from States to
establish and administer temporary high risk health insurance pool programs to provide
coverage for eligible individuals beginning in 2010 and ending on December 31, 2013.
Only States or their designated entities are eligible to submit proposals and States are
required to submit proposals according to the process described under “Instructions to
Proposers” in Section C.2. HHS will award one contract to operate a high risk pool
program in each State that submits a qualifying proposal in response to this solicitation.
C.1

PROPOSAL PROCESS

The following chart depicts the key dates and steps in the proposal process for this
solicitation.

April 2, 2010

April 22, 2010

April 30, 2010

May 10, 2010

June 1, 2010

July 1, 2010

PROPOSAL AND REVIEW PROCESS
DATE
MILESTONE
HHS issues letter to States seeking from
each by April 30, 2010 a State a Notice of
Intent relative to the operation of high risk
pool programs.
HHS holds a call with States to review the
anticipated requirements of the contract
solicitation.
Deadline from April 2, 2010 letter for
States to send HHS a Notice of Intent that
they intend to submit a proposal to operate
a high risk pool program.
HHS issues a solicitation for States to
submit proposals to operate high risk pool
programs.
Deadline for State submission of proposal
for HHS evaluation and contract awards by
July 1, 2010.
HHS awards contracts to States that have
submitted acceptable contract proposals
by June 1, 2010, to operate high risk pool
programs.

15

Questions from Proposers
Proposers may request clarifications of this solicitation, including the requirements and
the proposal process, using the following procedures:
• Submit questions in writing, through an email or Word attachment to an email.
Include in the email the point of contact’s name, email address, phone number,
and name of the State.
• For each question, please reference the section number referenced in the
question.
• Questions should be sent via email to highriskpools@cms.hhs.gov.
HHS Point of Contact for Solicitation
Prior to the contract award, HHS points of contact for all inquiries and submission of
required documents from potential proposers shall be:
For policy and program development questions:
Kevin Simpson
410-786-0017
Linda Anders
410-786-0459
Email: highriskpools@cms.hhs.gov
For proposal submission questions:
Jacquelyn Carey (primary)
301-443-6557
David Snight (secondary)
301-443-6557
HHS Qualifications to Proposal Process
This solicitation does not commit HHS to pay for any cost for the preparation and
submission of a proposal. HHS reserves the right to amend or cancel this solicitation.

16

C.2

INSTRUCTIONS TO PROPOSERS

States shall use the following process to submit proposals in response to this
solicitation. States are advised that the information in their proposals, and any
subsequent written clarifications provided in response to HHS’ request will be
referenced in the contract with HHS.
1)
The State must submit comprehensive information to support the proposal.
Proposals shall have three sections:
a)
b)
c)

Certification
Technical Approach
Cost Proposal

2)
Certification -In preparing the signed certification, please print out the certification
provided in Appendix 2 of this solicitation and submit an original document signed by
the Governor or official designated by the State’s response to the HHS April 2, 2010
letter.
3)
Technical Approach – Using each requirement for the proposal outlined in
Section C.4 below, States shall provide a description of the proposed program,
demonstrating how it meets the qualifications described in Section A of the Statement of
Work. In preparing the Technical Approach section of the proposal, respond to the
requirements in Section C.4 of this solicitation. Please repeat each proposal
requirement as stated, followed by your response. Provide complete answers. If you
have additional information that you would like to provide, please include it as an
appendix to your proposal, and cross-reference its relationship to the information
requested. If the approach plans to use sub-contractors, identify the name of the
organization(s) and the role(s) to be filled by the organization(s) that are proposed as
sub-contractors.
4)
Cost Proposal – In preparing this section of your proposal, submit the information
in the required formats specified in Section C.5 of this solicitation. Provide complete
answers. If you have additional information you would like to provide, please include it
as an appendix to your original proposal, and cross-reference its relation to the
information requested.
5)
Proposal Format – States shall submit both written and electronic versions of
their application to HHS.
All copies and the original proposal should be in 3-ring binders. Tab indexing
should be used to identify all major sections of the proposal. Page size should be 8.5
by 11 inches, with one inch margins, and the pages should be numbered. Type size
should not be less than 12 point with a space and a half between lines. HHS requires
that one original and two copies of the proposals be delivered.

17

In addition to submitting written versions of the proposal, States must email to
HHS a zip file of the certification and proposal (in a format compatible with MS Office
2007). The Cost Proposal shall be in Excel.
Both written and electronic versions of the proposal shall have, on the first page,
the following:
Name of this RFP, i.e. “Solicitation for State Proposals to Operate Qualified High
Risk Pools”
The State’s name, contact’s name, address, email, and telephone and facsimile
numbers
If applicable, the designated nonprofit entity’s name, contact’s name, address,
email, and telephone and facsimile numbers
Names, titles, emails, and telephone and facsimile numbers of persons
authorized to negotiate on the State’s behalf with the Government in connection with
this solicitation.
The rest of the required sections shall be in the following order:
a)
b)
c)

Certification
Technical Approach
Cost Proposal

7)
Submitting the Proposal – States should deliver written proposals to the address
below:
Department of Health and Human Services
Program Support Center
Strategic Acquisition Service
Division of Acquisition Management
Parklawn Building, Room 5-101
5600 Fishers Lane
Rockville, MD 20857
The electronic version of the proposal shall be sent via email to
highriskpools@cms.hhs.gov and to pscacquisitions@psc.hhs.gov concurrently.
8)
Deadline for Submission – HHS will begin to review proposals upon submission.
HHS must receive completed proposals by June 1, 2010 from States intending to
establish qualified high risk pools on July 1, 2010.

18

9)
Withdrawal of a Proposal – A State (or States) may withdraw a proposal at any
time before the contract is signed and becomes effective. Proposal withdrawals shall
be submitted in writing to the HHS contact noted above, and are effective upon receipt.
10)
Amendments to an Proposal – States may submit modifications to their
proposals at any time before the proposal deadline or, upon the request of HHS, up to
the effective date of the contract, whichever comes first.
11)
Protection of Confidential Commercial Information – If any information within a
submitted proposal (or attachments thereto) constitutes and is clearly labeled by the
proposer as a trade secret, privileged or confidential information, (as such terms are
interpreted under the Freedom of Information Act and applicable case law), then such
information will be protected from release by HHS under 5 U.S.C Section 552(b)(4).
12)
Certification Instructions – After submitting the proposal, States must notify HHS
in writing if they become aware of changes to the certification provided (see Appendix
2), including:
• Any information in the proposal that is not true, correct, or complete
• There are any changes that may jeopardize the proposers ability to meet
the qualifications and fulfill the Statement of Work of the proposed contract
Changes to the information furnished in this proposal must be reported promptly to the
designated point of contact for the solicitation listed in C.1.
13)
Multi-state proposals - If two or more States elect to join together to establish and
operate a single qualified high risk pool that covers enrollees in each State, a single
proposal may be submitted. The proposal, however, must:
• Be jointly certified by the governors or independent insurance
commissioners of each State.
• Include all of the information described in this section.
• Separate the requested proposal elements (to the extent applicable) by
State.

C.3

SUMMARY OF QUALIFICATIONS

This is a non-competitive solicitation seeking proposals from States who will be
awarded contracts to establish and administer temporary high risk health insurance pool
programs to provide coverage for eligible individuals beginning in 2010 and ending on
December 31, 2013. Each State-submitted proposal that meets those requirements will
be eligible for award of a contract.
HHS will review the proposals to ensure that each one has been submitted by a State
and that any designation of a nonprofit as a contractor to operate the high risk pool
program is accompanied by copies of all governing authorities of the nonprofit entity,
including statutes, regulations, governance, and plan of operation.

19

HHS will not score proposals in comparison to one another and no scoring scale will be
used by proposal reviewers. Reviewers will evaluate whether the proposal addresses
each element of the prompts in Section C.4 and whether the responses in the proposal
fully comply with the requirements in the Statement of Work.
HHS will review proposals to verify that the cost estimates contained in the Cost
Proposal are actuarially sound, given a comparative cost analysis of currently operating
State high risk pool programs and considering costs associated with the start-up of the
pools to be created under contracts awarded through this solicitation. HHS will also
review cost estimates in the Cost Proposal in comparison to the available funding
allocated to the State based on a formula used by HHS for the initial estimated
allocation of available funds.
HHS will promptly contact States if reviewers identify elements of the proposal that are
missing, incomplete, or that do not appear to fully comply with the requirements in the
Statement of Work. States will be given an opportunity to submit amended proposals
that comply with those requirements.
C.4

TECHNICAL APPROACH CONTENT

Please respond to the following questions regarding your State’s proposed high risk
pool program. You may submit additional information that demonstrates your proposal
meets and/or exceeds the requirements of the Statement of Work outlined in Section
A.4 and Summary of Qualifications found in Section C.3.
C.4.1 Describe in detail the State proposal for establishing and providing for the
ongoing administrative functions of operating a high risk pool program. The description
should describe how the State proposes to make the high risk pool program operational,
including all sub-contracting relationships that may be included in the implementation
plan and a proposed timeline for the implementation of the high risk pool program that
includes the first date on which the program will accept enrollments and the first date on
which the program will provide coverage for enrollees. If the State operates another
high risk pool, describe how the State will segregate funding and expenditures for the
two programs and track enrollees separately across all benefits and services.
If the proposal is to delegate the operation to a nonprofit entity, the State should clearly
indicate if it proposes that HHS contract with the State (that will subcontract with the
nonprofit) or proposes that HHS contract directly with the nonprofit high risk pool. If the
State proposes that HHS contract directly with the nonprofit high risk pool, provide
copies of all governing authorities of the nonprofit entity, including statutes, regulations,
governance, and plan of operation.
As part of the technical approach, the State or its designated entity may subcontract
with either a for-profit or nonprofit entity.

20

C.4.2 In response to the questions below, describe how the State will design a high risk
pool program that will meet the basic requirements to operate the program as described
in A.4.2 of the Statement of Work.
1)
Describe the eligibility criteria that the qualified high risk pool will use to
determine if individuals are eligible to enroll in the proposed high risk pool program.
2)
Describe the coverage and benefits to be offered by the qualified high risk pool.
At a minimum, the response to this question must address the benefits elements
contained in A.4.2 of the Statement of Work and include all benefit plan variations that
may be proposed by the State.
3)
How will the qualified high risk pool comply with the requirements to cover preexisting conditions described in A.4.2.3?
4)
Describe how the qualified high risk pool will derive its premiums, including a
description of its methodology in determining the standard risk rate.
5)
Describe the cost sharing structure of the benefit package(s) proposed to be
offered by the qualified high risk pool that complies with the requirements outlined in
A.4.2.7.
6)
If applicable, describe the provider network(s) proposed to be used by qualified
high risk pool enrollees and demonstrate that the network(s) has a sufficient number
and range of providers to ensure that all covered services are reasonably available and
accessible in those networks.
7)
Describe the appeals and reconsiderations process that the qualified high risk
pool proposes to make available to enrollees in the high risk pool program as per the
description of section A.4.2.10.
C.4.3 Describe the qualified high risk pool’s proposed eligibility determination and
enrollment standards as outlined in Section A.4.3.
1)
How will the qualified high risk pool develop and utilize an eligibility determination
process that will assure that only individuals eligible for coverage, as described in
Section A.4.2 of the Statement of Work, receive benefits from the program?
2)
How will the qualified high risk pool obtain all of the information described in
Section A.4.2 of the Statement of Work as part of the proposal process in the high risk
pool program?
3)
Describe the process that the qualified high risk pool will use to confirm that an
enrollee is a citizen or national of the United States or an alien lawfully present in the
United States.

21

4)

Describe the enrollment process that the qualified high risk pool proposes to use.

5)

Describe the disenrollment process that the high risk pool plan proposes to use.

C.4.4 Describe the customer service functions and standards that will be employed by
the qualified high risk pool program. The description should include the qualified high
risk pool’s proposal for the staffing, hours of operation and service levels that the
qualified high risk pool will provide to enrollees in the qualified high risk pool.
C.4.5 Describe the technical support center to respond to health care and pharmacy
providers for information that will be employed by the qualified high risk pool. The
description should include the qualified high risk pool’s proposal for the staffing, hours of
operation and service levels that the qualified high risk pool will provide.
C.4.6 Describe the qualified high risk pool’s system for billing, collecting, and
accounting for premiums.
C.4.7 If the qualified high risk pool intends to develop and implement utilization and
care management as part of the qualified high risk pool coverage, describe the
utilization and care management processes that the qualified high risk pool proposes to
use.
C.4.8 Describe the system for processing and paying for health and prescription drug
claims that will be implemented by the qualified high risk pool. The description should
include the basis for payment rates and the timeliness of payments to providers. The
description should also include the point of sale claim system that will be utilized for
prescription drug claims.
C.4.9 Describe the qualified high risk pool’s proposed efforts to conduct outreach and
marketing for the high risk pool program.
C.4.10 Describe the process the qualified high risk pool proposes to use to identify and
report to HHS instances in which health insurance issuers or group health plans are
discouraging high-risk individuals from remaining enrolled in their current coverage in
compliance with A.4.10.
C.4.11 Describe the procedures that qualified high risk pool proposes to implement to
prevent, detect, and report incidences of waste, fraud, and abuse.
C.4.12 Describe the system for routine monitoring and identification of compliance risks.
C.4.13 Describe the system the qualified high risk pool proposes to implement to
coordinate benefits as described in A.4.13.

22

C.5

COST PROPOSAL

States must submit their estimated costs associated with operating high risk pool
programs. The state estimates should cover the duration of the program and
demonstrate that the high risk pool funds will be available every year for the life of the
program. The estimates in the cost proposals will be the basis for negotiating and
determining the payment rates under this contract. States must submit their projected
costs estimates and the assumptions used to develop these estimates using Tables 1,
and 2 provided below. The cost estimates submitted in these tables will be subject to
review and negotiation by HHS for the purposes of determining the total amounts
payable under the contract. Proposers should be prepared, upon request, to provide
HHS with documentation to support the development of the estimates and data in
Tables 1 and 2. The data submitted shall be subject to audit by HHS or by any person
or organization that HHS designates.
Table 1
HHS intends to pay Contractors reasonable, allowable costs associated with initial
administrative expenses for the initial period of performance of high risk pool programs.
Given the nature of initiating a new high risk pool program or building upon an existing
program during this start-up period, HHS intends to reimburse Contractors for
reasonable, allowable administrative costs associated with developing the high risk
pools pursuant to the contract that are not tied to specific enrollment and claims
estimates until December 31, 2010.
HHS anticipates that, over the life of the program, the total administrative costs of the
program will not exceed 10% of the total claims costs of the program, as identified in
Table 2 below.
Using Table 1, proposers should itemize anticipated administrative costs for each
calendar year of the program’s operation. The projected administrative costs should be
broken down using the categories provided. Proposers should itemize any other
categories of anticipated administrative expenses not identified in a category already
provided in Table 1.

23

Table 2
Table 2 provides a template for summarizing the projected administrative and claims
expenses that high risk pool programs anticipate for 2010 – 2014, based on the number
of people that the States anticipate enrolling in the programs during that time.
Proposers should provide projected average enrollment numbers for each calendar
year, beginning with the partial year 2010 and going through 2013. States should use
the projected administrative costs detailed in Table 1 to calculate the total projected
administrative costs for each year. States should indicate the total projected premiums
that the high risk pool program will collect in each year as well as the projected total
claims.
If States choose to offer more than one plan option to individuals eligible for the high
risk pool program, States should list the anticipated number of enrollees, premium
revenue, and claims expenses for each plan option separately using the format
provided in the template provided for Table 2.
As part of the cost proposal, States should include their strategies for limiting program
costs to the anticipated allocations available for each State.
Budget Narrative
State shall provide a budget narrative as part of the cost proposal. The budget narrative
should provide an explanation of each of the administrative costs identified in Table 1,
including the basis of the cost estimates and indication of any sub-contracting
arrangements the State intends to make to acquire administrative services.
States are also required to include an attestation from a certified actuary as to the
actuarial soundness of the projections in the cost proposal, as those projections relate
to the anticipated enrollment levels, premium revenue, and claims costs identified for
each plan option identified by the State in Table 2. If the State proposes cost limiting
strategies (such as enrollment limits) to keep the total program costs within the amount
supported by premiums and available Federal funds allotment for the state, the State
should describe those strategies in the Budget Narrative.
After review and potential negotiation between HHS and the proposer, the amount of
projected costs to be reimbursed to high risk pool programs under these contracts will
be the total of administrative and claims expenses, minus the premiums collected by the
high risk pool programs. Each contract will contain a “not to exceed” amount available
under the contract corresponding to each State’s allotment. HHS will continually
monitor actual State expenses in comparison to the cost estimates contained in the
Cost Proposal and will negotiate with States to amend contracts accordingly to keep
total program costs within the amount of funding available from the Federal funding
allotment.

24

Maintenance of Effort Description and Table
The budget narrative should contain a separate section that describes how the State
proposes to meet the maintenance of effort requirement set forth in section 1101(b)(3)
of the Affordable Care Act. A State should provide a narrative description of its
maintenance of effort strategy and also provide a table identifying State allocated funds
and other current State high risk pool program revenues that supplemented premiums
paid by current state high risk pool program enrollees in 2009. The narrative and
accompanying table should demonstrate how the State will maintain that level of
support of its state high risk pool program.

25

Cost Proposal Tables
Tables 1 and 2 are templates that States should follow in detailing program costs as
part of the Cost Proposal.
Table 1
Administrative Costs
The administrative costs projected in Table 1 should include all administrative costs that the State
anticipates during each calendar year from 2010-2013.
Administrative Costs
Cost Category
Annual Administrative Costs
2010
2011
2012
2013
Marketing and Outreach
Member Materials
Customer Service
Provider Relations
Information Technology
Eligibility/Enrollment
Premium Administration
Claims Processing**
Appeals/Reconsiderations
Legal Services
Accounting Services
Actuarial Services
Procurement
Personnel Expenses
Overhead*
Other Administrative
Costs*
TOTAL

2014

*Provide a detailed description of costs included in this category of administration costs
**Including prescription drug point of sale claims

26

Table 2
Administrative and Claims Costs
Year

Average
Enrollment

Premium
Revenue

Total Claims

Administrative
Costs

Total Claims
Against
Federal Fund
Allotment

2010
Plan Option 1
Plan Option 2
2010 TOTAL
2011
Plan Option 1
Plan Option 2
2011 TOTAL
2012
Plan Option 1
Plan Option 2
2012 TOTAL
2013
Plan Option 1
Plan Option 2
2013 TOTAL
2014 TOTAL
TOTAL
Notes:
•

State should list total administrative costs for each calendar year. Administrative costs do not
need to be broken down for each plan option if multiple plan options are offered.

•

States may offer one or more plan option. State may add additional plan options following the
format in template Table 2.

•

Claims against Federal Fund Allotment for each year and for the total contract equal the total
administrative and claims expenses, minus the premium revenue.

•

The projected total for the term of the contract should not exceed the provided Federal fund
allotment.

•

States must attest to the actuarial soundness of the projects contained in this table in the
budget narrative section of the Cost Proposal.

27

APPENDICES
Appendix 1

Timelines for Deliverables

Appendix 2

Proposal Certification

Appendix 3

Disputes

28

APPENDIX 1 – TIMELINE FOR DELIVERABLES
Deliverable
Project Implementation Plan

ITEM (Task #)
A.7

Quarterly Progress Reports

A.7

Monthly Reports

A.7

Audited Financial Report

A.7

29

DUE DATE
Within 10 calendar days of Date
of Contract Award
Quarterly, beginning 90 calendar
days after Date of Contract
Award
Monthly, beginning 30 days after
Date of Contract Award
Annually, beginning on
February 1, 2011

APPENDIX 2 – PROPOSAL CERTIFICATION
I, (Name and Title) , attest to the following:

I have read the contents of the completed proposal and the information contained herein is true,
correct, and complete. If I become aware of any information in this proposal that is not true, correct, or
complete, I agree to notify the Department of Health and Human Services (HHS) immediately and in
writing.
I authorize HHS to verify the information contained herein. I agree to notify HHS in writing of any
changes that may jeopardize my State’s ability to meet the qualifications stated in this proposal prior to
such change or within 30 days of the effective date of such change.
I agree that if HHS approves this proposal and awards a contract to my State or State’s designated high
risk pool, that my State or State’s designated high risk pool will abide by the requirements contained in
the contract and provide the services as outlined in this proposal.
I agree that HHS may inspect any and all information necessary, including inspecting the premises of the
high risk pool program’s organization or contractors to ensure compliance with Stated Federal
requirements. I further agree to immediately notify HHS if, despite these attestations, I become aware
of circumstances which preclude full compliance with the requirements stated in this proposal.
I certify that I am authorized to certify this submission on behalf of my State or my State’s designated
entity.

_____________________________________
Authorized Representative Name (printed)

_____________________________
Title

_____________________________________
Authorized Representative Signature

______________________________
Date (MM/DD/YYYY)

30

APPENDIX 3 – DISPUTES
a) This contract is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. 601-613).
(b) Except as provided in the Act, all disputes arising under or relating to this contract shall be resolved
under this clause.
(c) “Claim,” as used in this clause, means a written demand or written assertion by one of the
contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment
or interpretation of contract terms, or other relief arising under or relating to this contract. However, a
written demand or written assertion by the Contractor seeking the payment of money exceeding $100,000
is not a claim under the Act until certified. A voucher, invoice, or other routine request for payment that is
not in dispute when submitted is not a claim under the Act. The submission may be converted to a claim
under the Act, by complying with the submission and certification requirements of this clause, if it is
disputed either as to liability or amount or is not acted upon in a reasonable time.
(d)(1) A claim by the Contractor shall be made in writing and, unless otherwise stated in this contract,
submitted within 6 years after accrual of the claim to the Contracting Officer for a written decision. A claim
by the Government against the Contractor shall be subject to a written decision by the Contracting
Officer.
(2)(i) The Contractor shall provide the certification specified in paragraph (d)(2)(iii) of this clause
when submitting any claim exceeding $100,000.
(ii) The certification requirement does not apply to issues in controversy that have not been
submitted as all or part of a claim.
(iii) The certification shall state as follows: “I certify that the claim is made in good faith; that the
supporting data are accurate and complete to the best of my knowledge and belief; that the amount
requested accurately reflects the contract adjustment for which the Contractor believes the Government is
liable; and that I am duly authorized to certify the claim on behalf of the Contractor.”
(3) The certification may be executed by any person duly authorized to bind the Contractor with
respect to the claim.
(e) For Contractor claims of $100,000 or less, the Contracting Officer must, if requested in writing by
the Contractor, render a decision within 60 days of the request. For Contractor-certified claims over
$100,000, the Contracting Officer must, within 60 days, decide the claim or notify the Contractor of the
date by which the decision will be made.
(f) The Contracting Officer’s decision shall be final unless the Contractor appeals or files a suit as
provided in the Act.
(g) If the claim by the Contractor is submitted to the Contracting Officer or a claim by the Government
is presented to the Contractor, the parties, by mutual consent, may agree to use alternative dispute
resolution (ADR). If the Contractor refuses an offer for ADR, the Contractor shall inform the Contracting
Officer, in writing, of the Contractor’s specific reasons for rejecting the offer.
(h) The Government shall pay interest on the amount found due and unpaid from (1) the date that the
Contracting Officer receives the claim (certified, if required); or (2) the date that payment otherwise would
be due, if that date is later, until the date of payment. With regard to claims having defective certifications,
as defined in FAR 33.201, interest shall be paid from the date that the Contracting Officer initially receives
the claim. Simple interest on claims shall be paid at the rate, fixed by the Secretary of the Treasury as
provided in the Act, which is applicable to the period during which the Contracting Officer receives the
claim and then at the rate applicable for each 6-month period as fixed by the Treasury Secretary during
the pendency of the claim.

31

(i) The Contractor shall proceed diligently with performance of this contract, pending final resolution of
any request for relief, claim, appeal, or action arising under the contract, and comply with any decision of
the Contracting Officer.

32