• California Medi-Cal Fraud Analytics Bid and Procurement Reform – Case Study I

    November 23rd, 2016 by admin Categories: Blogs Tags: , , , , , , ,

    It’s heartening to see that the Calif DHCS has re-released their Request for Proposal (RFP) for its $40 million Medi-Cal Program Integrity Data Analytics II Program and technical proposals are due next week, with cost proposals due next month.

    California’s Medi-Cal (also known as Medicaid) program provides free or low-cost health coverage for children and adults with limited income and resources. With an overall annual budget approaching $100 Billion it is second only to education in the state’s total spending. It is also the state budget item most cited for fraud which the U.S. Government Accountability Office (GAO) estimates nationally at 8% while other experts such as Harvard University’s Malcolm Sparrow suggest that improper payments account for 20 percent of spending in federal/state health care programs.

    Obviously, in California, those estimates mean the state is losing $8 to $20 billion each year to fraud, a fact that goes back for many years, almost half of which is state general fund dollars (the remainder is paid by the federal government.) Ergo, the need for a comprehensive fraud prevention solution which the DHCS is finally pursuing through this bid is clearly evident. The fact that we tried to do get DHCS to do this when I was State CIO 20 years ago is a story for another day.

    This re-bid is significant because as TechLeader.TV followers will recall, DHCS unexpectedly and curiously cancelled their initial procurement in August following Intent to Award and a subsequent bidder protest which drove the decision to cancel and rebid the procurement. In Major Surprise, State’s Medi-Cal Data Analytics/Fraud RFP CANCELLED!!!

    Many were bothered by this protest decision, citing the protest process itself, and the eventual explanation for the cancellation.

    But first a little background.

    Michele Villados, the assigned DHCS Hearing Officer, found that inconsistency in DHCS’s RFP regarding the bidders’ references requirements “cannot be reasonably reconciled. Thus, it cannot be determined if the Awardee [OnCore] satisfied the client reference requirement.” (Italics TLTV)

    It’s early in the process but in my reading of the Hearing Officer’s letter to the bidders I find her conclusion, as the NYT likes to refer, troubling…

    The Hearing Officer has focused on the issue of bidders’ references, and area that has traditionally and often been a source of confusion, i.e., do references have to be from the prime contractor only, or can they be from the proposing team consisting of a prime’s and subcontractors’ references. We have seen many procurement documents in the past which raised this question among bidders. And we have seen the state’s subsequent clarification, and its position can go either way, depending on the state’s intentions.

    Once clarified, however, calling for prime references only, or team references, the issue is resolved. And in this case as the Hearing Officer’s letter even states, DHCS did clarify this issue in response to a bidder’s formal question.

    She even cites the specific section of the procurement documents, RFP Bulletin 3, Questions and Responses, Question 7, where in answer to a request for reference clarification, the state said,  “DHCS is seeking three total references from three different entities. They may include references from both primary and subcontractors.”

    What could be clearer than that???

    The Intent to Award vendor supplied team references… However, the Hearing Officer stated “it cannot be determined if the Awardee [OnCore] satisfied the client reference requirement.”

    The Hearing Officer seemed to recognize inconsistency where none exists, directing DHCS to reject all bids, rescind the Intent to Award, and cancel the procurement.

    As we said, troubling…

    However, let’s move along to perhaps the other, larger question posed by this procurement, i.e., bidders’ references and evidence of bidders’ prior performance…

    California Medi-Cal Fraud Analytics Bid and Procurement Reform – Case Study II

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