CMS-718-721 Final Supporting Statement - Part A 508 Compliant

Supporting Statement for the Business Proposal Forms for Quality Improvement
Organizations (QIO) - PART A
A.

Background
In 1982, Congress modified requirements for medical peer review in the Medicare
program and passed the “Peer Review Improvement Act” of 1982. This legislation was
enacted as part of the Tax Equity and Fiscal Responsibility Act of 1982 (P.L. 97-248),
which authorizes the establishment of Quality Control Peer Review Organizations
(PROs), currently known as Quality Improvement Organizations (QIOs). The QIO
program was designed, as described in 42 CFR parts 475, 476, 478, and 480, to redirect
and enhance cost-effectiveness of Medicare peer review.
Prior to the original inception of this business proposal format, QIO business (i.e.,
contract) proposals submitted to the Centers for Medicare and Medicaid Services (CMS)
have not categorized the components of price (i.e., cost to the Government) of QIO
activities in a manner that is satisfactory for contract negotiations. Beginning in the fifth
round of contracts, CMS requested that QIOs submit business proposals in the current
format.
As explained in the instructions for completing these business proposal forms, a
substantial portion of the cost data, on some of the forms, is automatically calculated
from previous entries on other forms. The cost reports will be revised to collect data in
the same format as the business proposals. Of the business proposal forms included in
this revised package, only CMS Form 719 BP will be used for cost reporting purposes
during the 5-year contract cycle. For this purpose, the form will be designated CMS
Form 719.
The revised business proposal forms will be useful in a number of important ways. The
Government will be able to compare the costs reported by the QIOs on the cost reports to
the proposed costs noted on the business proposal forms. Subsequent contract and
modification negotiations will be based on historic cost data. The business proposal
forms will be one element of the historical cost data from which we can analyze future
proposed costs. In addition, the business proposal format will standardize the cost
proposing and pricing process among all QIOs. With well-defined cost centers and line
items, proposals can be compared among QIOs for reasonableness and appropriateness.
With this submission, CMS is requesting approval of the following forms which are
described below. Copies of these forms and instructions for completion are attached to
this request.

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CMS Form 718 BP - Quality Improvement Organization Business Proposal Summary
This form summarizes the offeror’s proposed costs for the 5-year CMS Medicare Review
Contract and CMS’s recommended costs.
CMS Form 719 BP - Quality Improvement Organization Business Proposal
This form provides the offeror’s proposed costs by contract task or activity. The form
provides a detailed breakdown of the offeror’s total 5-year cost proposal for the CMS
Medicare Review Contract.
CMS Form 720 BP - Fringe Benefit Proposal
This form provides the details of the fringe benefit costs proposed on CMS Form 719 BP.
The form furnishes the total fringe benefit costs for the CMS Medicare Review Contract.
CMS Form 721 BP - Indirect and Other Direct Cost
This form provides the details for the indirect and other direct costs proposed on CMS
Form 719 BP. The form furnishes the total indirect/other direct costs for the CMS
Medicare Review Contract.
CMS Form SUM - Staffing Proposal Summary
This form summarizes the offeror’s labor cost information in the various categories
needed to analyze the 5-year costs that the offeror proposes for the CMS Medicare
Review Contract.
CMS Form STAFFING - Personnel Loading Chart
This form consolidates the information previously provided by 4 forms for each of the
four categories of personnel (Professional, Information Systems, Corporate Management,
and Support Staff) for the offeror’s cost information. The format provides a high level of
detail as costs are entered by individual positions and tasks. This format is needed to
properly analyze the 5-year labor costs that the offeror proposes for the CMS Medicare
Review Contract.
CMS Form SC 1 - Subcontracts Proposal, Physician Reviewers and Physician Advisors
This form provides cost details regarding the physician reviewers/advisors that will be
used for the CMS Medicare Review Contract.

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CMS Form SC 2 - Subcontracts Proposal, Other Consultants and Other Subcontractors
This form provides cost details regarding subcontractors, other than physician
reviewers/advisors, who will be used for the CMS Medicare Review Contract.
CMS Form QIO ODC - Other Direct Costs
This form provides further details for the other direct costs proposed on CMS Form 21
BP. The form furnishes the other direct costs separated by the various categories for the
CMS Medicare Review Contract.
CMS Form Other Beneficiary Protection Supplemental - Beneficiary Protection
Supplemental Information.
This form furnishes the other beneficiary protection supplemental information separated
by the various categories within this theme area for the CMS Medicare Review Contract.
CMS Form Travel Detail - QIO Travel Detail
This form details travel costs for the CMS Medicare Review Contract.
B.

Justification

1.

Need and Legal Basis
The Social Security Act, as amended by the Tax Equity and Fiscal Responsibility Reform
Act of 1982 (TEFRA, P.L. 97-248), requires that a QIO (in accordance with its contract
with CMS) review services and items provided by physicians, other health care
practitioners, and providers of health care services for which Medicare payment is
sought. The QIO’s review will determine whether:
•

the services and items are or were reasonable and medically necessary and meet
specific Medicare coverage requirements;

•

the quality of the services meets professionally recognized standards of health care;
and

•

those services and items proposed to be provided on an inpatient basis in a hospital or
other health care facility could, consistent with the provision of appropriate medical
care, be effectively provided more economically on an outpatient basis or in an
inpatient health care facility of a different type.

Furthermore, the Social Security Amendments of 1982 (P.L. 98-21) established the
Prospective Payment System (PPS) for Medicare, and amended section 1886(a)(1)(f) of
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the Act to specify that for those hospitals subject to PPS, QIOs must review.
•

the validity of diagnostic information supplied by the provider;

•

the completeness, adequacy, and quality of care provided;

•

the appropriateness of admissions and discharges; and

•

the appropriateness of care provided or proposed to be provided for which payment is
sought on an “outlier” basis under PPS.

The Omnibus Budget Reconciliation (OBRA) of 1986 added section 1154(a)(1) of the
Social Security Act, which has a provision for QIO review of ambulatory surgery
procedures performed in ambulatory surgery centers (ASC) and hospital outpatient
departments.
Additionally, in the Health Care Quality Improvement Initiative for the Fourth Contract
Cycle, CMS began a fundamental change in the way QIOs carried out their
responsibilities. QIOs now place less emphasis on dealing with individual clinical
concerns and focus more attention on helping physicians and providers improve the
mainstream of care. QIOs also analyze patterns of care and outcomes. QIOs share their
information with physicians and providers to help them identify ways to achieve the best
success rates in improved outcomes and quality of care.
2.

Information Users
This data is used by CMS to negotiate QIO contracts. CMS provided detailed
information in Part A of this supporting statement.

3.

Use of Information Technology
All current QIOs have computer capability for data generation, and will be required to
use such capability to submit data to CMS electronically. The electronic collection of
this information eases the burden to CMS staff when compiling and summarizing this
information.
When the QIOs fill out these forms, 90% of the process takes place electronically. A
non-electronic copy of the forms is required since the signed hardcopy of these business
proposal forms constitutes a contract between the QIO and CMS and requires a written
signature. For this reason CMS cannot accept only electronic copy in lieu of a hardcopy.
CMS also requires an electronic copy of the forms assist CMS in its analysis of the QIO
business proposals. If the QIOs only sent in electronic copies of the business proposal
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forms CMS would then have to allocate significant time and resources to the printing and
compilation of these forms. Additional resources would be required for mailing the
document back to the QIO for signature. Therefore to reduce CMS costs and burden both
a hardcopy and electronic copy of the business proposal forms is required.
4.

Duplication of Efforts
These are the only forms used by CMS to collect this data. They do not duplicate any
other data.

5.

Small Businesses
This does not affect small businesses.

6.

Less Frequent Collection
The data requested on the forms is collected once every 5 years. The frequency of
collection is not applicable, since this data is required to negotiate and award contracts
for the CMS Medicare Review.

7.

Special Circumstances
There are no special circumstances associated with this collection. This information
collection is consistent with guidelines at 5 CFR 1320.5.

8.

Federal Register/Outside Consultation
The 60-day Federal Register notice published on May 16, 2014 and there were no public
comments received.

9.

Payments/Gifts to Respondents
There are no payments or gifts associated with this information collection.

10.

Confidentiality
We do not pledge confidentiality.

11.

Sensitive Questions
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There are no questions of a sensitive nature.
12.

Burden Estimates (Hours & Wages)
The information requested is required from respondents every 5 years to negotiate,
renew, or award contracts. Offerors furnish this information in response to a Request for
Proposal. For purposes of burden estimates, it is estimated that there will be
approximately 20 respondents every year. This projection assumes that in an average
year, one-fifth of the 53 current QIOs, plus an additional 47 competitive bidders, will
submit Business Proposals for the twelfth round of the QIO contracts:
11 current + 9 prospective = 20 respondents
The annualized burden for each respondent of requested information is 50 hours. This is
derived as follows:
Form

Learning About
the Form

Preparing One Set
of the Forms

Form 718 BP

Learning about
Form 718 BP: .25
hours.

Preparing one set of
Form 718 BP: 0.4
hours.

Form 719 BP

Learning about
Form 719 BP: .25
hours.

Preparing one set of
Form 719 BP: 3.3
hours.

Form 720 BP

Learning about
Form 720 BP: .25
hours.

Preparing one set of
Form 720 BP: 1.7
hours.

Form 721 BP

Learning about
Form 721 BP: .25
hours.

Preparing one set of
Form 721 BP: 1.7
hours.

Staffing Form

Learning about the
Staffing Form: .50
hours.

Preparing one set of
the Staffing Form:
12.5 hours.

Learning about
Form SC 1: .25
hours.

Preparing one set of
Form SC 1: 3.3
hours.

Form SC 1

Assembling and
Sending All Forms
to CMS
Assembling and
sending all Forms
718 BP to CMS: .80
hours.
Assembling and
sending all Forms
719 BP to CMS: .80
hours.
Assembling and
sending all Forms
720 BP to CMS: .80
hours.
Assembling and
sending all Forms
721 BP to CMS: .80
hours.
Assembling and
sending all Staffing
Forms to CMS: 1.7
hours.
Assembling and
sending all Forms
SC 1 to CMS: .80
hours.
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Form SC 2

Learning about
Form SC 2: .50
hours.

Preparing one set of
Form SC 2: 3.3
hours.

Staffing Summary
Form

Learning about the
Staffing Summary
Form: .25 hours.

ODC Form

Learning about the
ODC Form: .25
hours.

Preparing one set of
the Staffing
Summary Form: 0.4
hours.
Preparing one set of
the ODC Form: 3.3
hours.

Travel Detail Form

Learning about the
Travel Detail Form:
.25 hours.

Preparing one set of
the Travel Detail
Form: 3.3 hours.

BFCC Supplemental Learning about the
Schedule Form
BFCC
Supplemental
Schedule Form: .25
hours.
Total hours learning
Totals:
about the forms:
3.25 hours.

Preparing one set of
the BFCC
Supplemental
Schedule Form: 3.3
hours.
Total hours
preparing one set of
the forms: 36.67
hours.

Assembling and
sending all Forms
SC 2 to CMS: .80
hours.
Assembling and
sending all Staffing
Summary Forms to
CMS: .80 hours.
Assembling and
sending all ODC
Forms to CMS: .80
hours.
Assembling and
sending all Travel
Detail Forms to
CMS: .80 hours.
Assembling and
sending all BFCC
Supplemental
Schedule Forms to
CMS: .80 hours.
Total hours
assembling and
sending all forms to
CMS: 10.00 hours.

Hours estimated for one set of forms: 50.0 hours.
Total hours for preparing forms: 36.67 hours.
Plus 3.25 hours learning about the forms.
Plus 10 hours assembling and sending all forms to CMS.
Equals a total annual burden per response of 50 hours.
Times 20 respondents annually equals 1,000 total hours.
All costs are incurred by contracts with CMS, see #14 below.
13.

Capital Costs
The QIOs will not have any capital costs associated with this information collection that
they would not have without this requirement.
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14.

Cost for Federal Government
All costs incurred by the QIOs are regarded as bids and proposal costs, and treated as
required by Federal Acquisition Regulations (FAR). Cost estimates will vary between
QIOs or offerors. On average, the hourly rate of the person completing these forms is
equivalent to a General Schedule (GS) 12 ($36.23 per hour). Once received, the forms
are reviewed by a GS-12 federal employee for approximately eight hours; yielding a
labor cost of $289.84 (utilizing the current hourly rates reported by the Office of
Personnel Management).

15.

Changes to Burden
Due to changes in the scope of work, the total annual burden per response was reduced
from 85 to 50 hours. The previous package included spreadsheets that are no longer
required; e.g. CKD spreadsheet, Disparities spreadsheet, and Patient Pathways
spreadsheet.
Furthermore, we anticipate a decrease in burden when these forms are used for the 12th
round contract negotiations because the QIOs will be more familiar with the forms, and
will have implemented the accounting system revisions for the corresponding cost
reports.

16.

Publication/Tabulation Dates
There are no publication and tabulation dates associated with this collection.

17.

Expiration Date
CMS does not object to displaying the OMB expiration date.

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