Creating the Most Value in Health Insurance Exchange Procurement RFP Guidance to States

Transcription

1 Creating the Most Value in Health Insurance Exchange Procurement RFP Guidance to States December 2011

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3 Table of Contents 1 Overview and Purpose HIX Solution Considerations Implementation Time Risk Mitigation Flexibility Total Cost of Ownership HIX Procurement Goals RFP Requirements: Implementing the Right Solution Cost: Creating the Most Value Administrative Efficiency Appendix: Sample RFP Language

4 1 Overview and Purpose As states begin the process of procuring Health Insurance Exchange solutions (also known as HIX), they face new and important challenges. For most states, HIX represents a first-time buy of complex systems and services supporting an entirely new line of business. And they have to make this purchase in a considerably uncertain environment. Because HIX is a new frontier unencumbered by legacy systems, it also represents an opportunity for states to take advantage of dramatic innovations in information technology and to reconsider how they procure that technology. The purpose of this document is to provide states with useful, high-level guidance in developing HIX Requests for Proposals, or RFPs. Specifically, we want to share: Key factors states should consider in evaluating HIX solutions. Key factors states should consider when drafting and evaluating RFPs. Examples of RFP language states should adopt and those they should avoid. Our suggestions are based on conversations with state agencies, HIX consultants and reviews of HIX RFIs and RFPs over the past 12 months.

5 2 HIX Solution Considerations Implementation Time The Affordable Care Act sets an aggressive implementation schedule, making deadline risk one of the key issues states currently face. This means that procurement efforts must give strong consideration to solutions that: Can be constructed quickly and reliably within ACA established timelines. Allow components to be rolled out independently of each other as they are needed. Software as a Service solutions, known as SaaS, are particularly well-suited for this implementation approach. Risk Mitigation For states, HIX procurement represents a first-time buy. This is also true for many of the vendors who will offer solutions. Additionally, in many instances HIX implementation will happen alongside other large-scale enterprise IT efforts already underway, such as MMIS and eligibility system modernization. To manage this risk, states should: Seek out vendors with HIX operating experience. There are firms already operating highly successful commercial insurance exchanges. Their experience, particularly with respect to the Small Business Health Option and non-subsidized populations, is essential to the success of a state HIX. Leverage technologies and services already in production. Adopt HIX solutions that can be implemented without impacting ongoing IT modernization efforts, but can still link or integrate to those efforts over time as needed without imposing additional implementation risk.

6 Flexibility HIX solutions must easily adapt to the widely varying needs of individual states. Once implemented, they must easily incorporate ongoing program and rule changes in what will be a highly dynamic environment. States should be seeking solutions that: Allow system changes to be made by program staff, through configuration changes, with minimal or no intervention from IT staff. Are truly agnostic to the methods and level of integration with Medicaid, CHIP and HHS eligibility systems. Total Cost of Ownership Even though HIX implementation will be 100 percent federally funded, states must still consider the relative costs of alternative solutions, as these must be justified in order to obtain the funding. More importantly, states need to take into account the full life cycle cost of operating their Exchanges net of federal contributions. This means looking at solutions that: Have low up-front implementation costs. Have low ongoing operating costs that can easily support the requirement that Exchanges be financially self-sustaining by Allow states to take advantage of product improvements over time at little or no additional cost. Promote long-term relevance of systems. Again, SaaS solutions are especially well-suited to meet these requirements.

7 3 HIX Procurement Goals As noted above, HIX procurement is a first-time event for both states and vendors. It involves the acquisition of complex systems and services to support an entirely new line of business. And it has to happen in an environment of evolving federal rules, against a very short timeline. More importantly, in many instances, newly formed Health Exchange Boards with limited or no systems procurement experience are the ones being charged with developing and issuing HIX RFPs. The initial round of HIX RFPs shows the effects of these combined factors. This section provides guidance on key considerations for structuring HIX procurements to ensure states fully consider and ultimately implement the solution that best meets their unique needs. The table in the Appendix provides specific examples of language for states to consider and avoid as they develop their own RFPs. It is based on RFI and RFP activity over the past 12 months. RFP Requirements: Implementing the Right Solution Because the HIX procurement process is so new, it allows states a unique opportunity to consider the full range of solution options ranging from traditional build and own DDI approaches to pure service-based (i.e., SaaS) solutions. This means that RFP requirements should: Emphasize business and functional requirements over technical specifications. Be specific enough to enable clear, easily comparable vendor responses, but not be so narrow that they arbitrarily or inadvertently preclude consideration of approaches that might best suit the state s needs. Many states are opting for streamlined procurement processes run by Exchange Boards rather than under traditional state procurement rules. While there can be advantages to this added flexibility, it can also create challenges by introducing ambiguity and the appearance of subjectivity. Evaluation criteria for vendor selection are clear and understandable to all vendors. The same is true for rules regarding requests for exceptions, disputes and protests. Unnecessary subjectivity real or apparent will slow down the procurement process as vendors request modifications, or worse, reduce the pool of respondents.

8 Cost: Creating the Most Value HIX procurement is happening under significant uncertainty. The issues include incomplete Federal guidance, legal challenges to key provisions of the ACA, unclear status of the federal verification hub and the federal Exchange, and more. This makes costing HIX solutions especially challenging. States should write RFPs that: Encourage a sufficiently large vendor response. Promote competition among vendors. Avoid unnecessary ambiguity that will cause vendors to build risk premiums into their proposals. Allows apples-to-apples solution life cycle cost comparison. Administrative Efficiency Writing and responding to RFPs represents a considerable investment for both states and vendors. It is important that avoid administrative procedures and contract terms and conditions that: Limit vendor responses. Impose unnecessary administrative costs on vendors and on states. Encourage requests for exceptions or disputes. Lengthen the procurement process. States should adopt a flexible administrative process that can be easily tailored to the various HIX solutions that respondents might offer as opposed to a one-size-fits-all approach. This is particularly true with respect to: Software licensing and intellectual property: The intellectual property issues associated with a build and own system are considerably different from those of a SaaS implementation. Contracting procedures can be structured to allow for those differences while fully protecting the state. Financial Guarantees: Financial guarantee requirements (bonds, letters of credit) need to be reasonably related to the implementation risk and cost of the proposed solution.

9 4 Appendix: Sample RFP Language Category RFP/RFI Reference RFP/RFI Language Comments Aligned / Not Aligned Requirements Health Benefit Exchange Market Research Questionnaire How does the Respondent s envisioned solution ensure seamless coordination and integration between the Exchange, the [Medicaid] program and the [lowincome family insurance] program? While more detailed requirements are expected, this type of open-ended question allows vendors to propose solutions to that may enhance states current vision for the Exchange and/or provide more cost effective solutions. Aligned Requirements Health Insurance Exchange Component Solutions and Services The Marketing and Outreach component facilitates public awareness of available plans, programs, and services. It ensures that Exchange external stakeholders, including employers, employees, customers, carriers and broker /navigators are aware of, and use, Exchange services. Responders should demonstrate the ability of the solution to support the outreach program by informing health care consumers about the Exchange and the new coverage options available to them. The component description should include details on the proposed solution s functionality to produce sales / marketing materials, manage sales leads, and mechanisms to manage marketing and outreach business and workflow rules. Tying the vendor to responsibility for the outreach components of the Exchange is a benefit to the Exchange program overall. By making the vendor responsible for the outreach and success, not only will new and innovative solutions rise to the top, but the state can also make the vendor financially responsible for the Exchange s success. Aligned Requirements Health Benefit Exchange Technical Infrastructure Prototypes Include a description as to whether the proposal will be comprised of a 1) build and turn over approach, 2) license or software as a service model, 3) cloud based platform as a service model, or 4) some other approach and/or combination of approaches. Respondents are encouraged to provide a benefit analysis of the module solution based on the ability to deliver the solution in a timely manner, ability to deliver on module objectives, cost factors, and quality of service including availability, redundancy, and security. Allowing vendors to offer multiple approaches judged against a common set of criteria enables states to evaluate options they may not have considered at the outset the but that could represent the best solution. Aligned Administrative / Legal Health Benefits (Insurance) Exchange Systems Integrator Services (Contract Requirements) Under no circumstances is a Vendor to submit their own standard contract terms and conditions as a response to this solicitation. Instead, Vendor must review and identify the language in Appendix F that Vendor finds problematic, state the issue, and propose the language or contract modification Vendor is requesting. All of Vendor s exceptions to the contract terms and conditions in Appendix F must be submitted within the Proposal, attached to Appendix E: Certification and Assurances. The Authority expects the final Contract signed by the ASV to be substantially the same as the Contract located in Appendix F. Provisions requiring vendors to agree to contract terms prior to negotiation or risk being non-responsive limits the state s ability to take advantage of all available market solutions and discourages broad vendor participation. Not Aligned The sample language above is from actual RFPs and RFIs.