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By Nick Wakeman

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Nick Wakeman

Incumbents lose pre-award protests

CGI Federal and HealthDataInsights have lost their argument with Centers for Medicare and Medicaid that a request for proposals for a contract to stop improper payments was unfair.

The two companies each filed pre-award protests with the Government Accountability Office over a CMS RFP for contracts they are currently the incumbents on. The contracts are used to ferret out and collect overpayments and underpayments under Medicare Part A and B.

CGI and HealthDataInsights argued that CMS had changed the solicitation in a way that restricts competition and violates current laws and regulation. They companies also think the payment terms in the contract are improper, according to the GAO ruling against the companies.

While the value of the contracts hasn’t been released, it is a big job; CMS processes 1 billion claims each year.

According to the discussion in the GAO decision, CMS is changing the processes in the new contract. The two companies point to the structure of their current contracts as part of their argument that the changes CMS wants in the new contract don’t follow commercial practices and will restrict competition.

For example, the companies currently are paid once an overpayment has been collected. With the new contract, CMS wants the payment contingent on clearing the appeals process. Contractors will have to wait more than 120 days and as a long as 420 days to invoice for a payment.

They also claim that CMS didn’t get a waiver to deviate from commercial practices for the contract.

CGI said that the payment terms “present an intolerable revenue flow model.”

But GAO found that CMS “reasonably established a legitimate basis for the solicitation’s payment terms.”

The companies also couldn’t demonstrate that the risks posed by the change in the payment process were unreasonable.

GAO also ruled that CMS didn’t need a waiver as the companies had argued.

Now the question is left to CGI and HealthDataInsights on whether to bid on the contracts. In this case, losing a pre-award protest doesn’t restrict them form bidding.

They will have to decide whether the changes make business sense or not.

Posted by Nick Wakeman on Apr 30, 2014 at 9:22 AM

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