presentation to the board it activities and strategic decisions december 12, 2011

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Presentation to the Board

IT Activities and Strategic Decisions

December 12, 2011

Overview

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• Activities of the IT and Implementation Committee

• Acquisition Scope and Strategy

• Acquisition Process, Timeline and Key Activities

• Preliminary Cost Estimates for System and Services

• Level of Interoperability between COHBE and State Medicaid Systems and Business Processes

• Recommendations of the IT and Implementation Committee and Decisions before the Board

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Activities of the IT and Implementation Committee

Activities of the IT and Implementation Committee

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• Met 2x since last Board meeting

• Good participation from Board members and some public input

• Presented proposed approach, options and issues to triangulate on and to refine acquisition scope, strategy, process, timeline, participants, etc.

• Performed additional research and follow-up to questions raised and issues identified

• Shared understanding of the urgency and need to move quickly to meet aggressive timelines

Review of Committee and Board Meetings Leading to Start of Formal Acquisition Process

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Date Topic of Meeting Objective/Decisions/Issues Impact on Next Steps11/28 Board Meeting

Present decision, decision framework, approach and timeline to Board.

Can Acquisition of Exchange system(s) and services proceed prior to award of the Level 1 grant?

Sequential process of issuing RFP/RFQQ after 02/15/12 will likely reduce implementation time by approximately 1 month.

Week of 11/28 Present Acquisition process (what/why/when), timeline, options and highlights from vendor in-depth demos and RFI process.

Concur with Acquisition process, options and timeline.

Plan out remaining activities leading up to issuance of RFP

Week of 12/05 Present preliminary results of analysis of SAAS vs. licensing.

Informational. Ensure that Committee understands trade-offs.

12/12Board Meeting

Present information on acquisition, i.e. scope, strategy, timeline

Key acquisition decisions. Strategy and detailed timeline for systems and services acquisition needed to proceed.

Week of 12/12 Present outline of RFP key requirements, etc., i.e. acquisition and evaluation guide.

Concur with direction of acquisition. Identify Board members to serve on acquisition evaluation team.

Begin drafting acquisition RFP and supporting documents.

Week of 12/19 Send preliminary draft RFP to federal sponsors for review and comment.

Identify any major gaps or issues in RFP. Will work federal reviews in parallel to maximum extent possible.

Week of 01/02 Review draft RFP.Review results of RFIResolve RFP issues/questions

Provide guidance on RFP issues/questionsWill likely need turn-around in one week and approval to present to full Board.

Incorporate comments and provide final draft to full Board.

01/09Board Meeting

Provide final draft of acquisition documents to full Board.

Will likely need turn-around in one week. Incorporate comments and finalize.

01/23Board Meeting

Motion to release RFP. Approval of Board to release RFP.

Week of 01/23 Release RFP.

Definitions of IT Terms

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• Commercial-Off-the-Shelf Software (COTS) – standard software application sold to multiple customers; normally upgraded periodically to provide customers additional capabilities.

• Software as a Service (SaaS) – business arrangement were software application and all related support services to utilize the application are furnished by the vendor; normally on a per month or per unit (i.e. person basis); Service Level Agreements often negotiable.

• Software Application Licensing – conveys the right to restricted use the application in exchange for upfront licensing fee; terms and conditions vary; e.g. right to modify the application, right to interface or integrate the application with other applications.

• Application Maintenance and Support – agreement normally with application vendor for product support and access to enhancements; 20% per year fee is standard but can vary.

• Hosting and Operations – vendor provides facility, hardware, software infrastructure (firewalls), networking, application monitoring, communications, continuity of operations for a monthly fee.

Definitions of IT Terms

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• Exchange Administrative Services – services needed to support business processes (some of these services are associated with the system); includes call center, print/mail, financial management, carrier support, broker support, regulatory support, content management.

• Application Configuration – activities performed during system implementation to set-up the software application to meet the business requirements, e.g. branding, workflow, business rules, security – does not involve changing the code.

• Application Customization – activities performed during system implementation to modify the software code to enable the application to perform business functions that can not be met through configuration.

• Application Upgrades – periodic releases of enhanced functionality or other capabilities; significant effort to upgrade an application that has many customizations.

• Request For Information (RFI) – structured process to obtain information from target vendor community to inform acquisition decisions.

• Request for Proposals (RFP) – solicitation sent to potential vendors with whom a partnership is being considered; typically reflects the strategy and short/long-term business objectives, providing detailed insight for suppliers to offer a perspective and creative solutions.

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Acquisition Scope and Strategy

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Acquisition Scope and Strategy• Three core areas:

1. Software application and maintenance and support2. Application hosting and operations3. Administrative services

• Teaming OK but single point of accountability, i.e. “prime” contractor for all three areas

• Fixed-price – by scope element and implementation vs. operating (granularity of pricing is under development and will be very structured); per person per month for admin services

• Strict adherence to SLAs w/ material penalties for non-performance

• At least one team member in healthcare exchange business for three years.

• Software application licensing proposed as an option (not mandatory); preliminary research indicates potential for significant savings in out years and provides COHBE opportunity to take full advantage of federal funding

• Pricing requested for 1, 3 and 5 years

• Call center must be located in US; “extra credit” for call center operations (and jobs) located in CO

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Acquisition Process, Timeline and Key Activities

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RFI Data Gathering and Market Intelligence• RFI status:

• Three vendors have provided in-depth product demonstrations and four more are scheduled over next two weeks

• Most vendors indicate they will “team” with other vendors to provide the core systems and services needed by COHBE

• Collecting preliminary cost information – pricing models, price points, have cost information from KS

• End-to-end solutions viewed to-date range from small gaps to significant gaps which will require design, development and implementation by vendor(s) (i.e. scope and schedule risk)

• Few states currently in the Exchange Acquisition process; “first mover” advantage

• Vendors anxious to present solutions, get a foothold in market and begin implementation for leading states

• Actual cost data will be available in early-May when proposals are received

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Acquisition Process and Timeline• 01/23 – Release RFP

• 02/27 – Vendors submit proposals

• 03/09 – Down select to 2 - 4 vendor finalists

• 03/19 – Conduct demos/orals/discovery with finalists

• 03/26 – Develop Best and Final Offer (BAFO) guidance

• 04/02 – Review and rank BAFOs and select vendor(s) for negotiations

• 04/09 – Negotiate with vendor(s) including Statement of Work

• 05/04 – Award contract

• 05/11 – Project Kick-off

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Acquisition Process and Timeline

Define Acquisition Strategy and

Gather Requirements

Evaluate:• Software solution• Hosting• Services• Costs• Skills/qualifications of vendor• Skills/qualifications of proposed team• Implementation approach and methodology

Release RFP

ConductReference Checks

for 2-4 Vendors

Develop BAFO Guidance (for each vendor) & Transmit to Finalists

Approx 30 days

Negotiate w/Vendor(s) including Statement of Work

RFI and OtherInformationGathering

Draft RFP Review RFP(Board)

RFPApproved

for Release?

Develop VendorList

VendorsPrepare & Submit

Proposals

EvaluateProposals

(Technical & Cost)

Down Select to 2-4 Finalists &

Notify Vendors

Finalists DevelopBAFOs

Review and Rank BAFOs and Select Vendors for

NegotiationsAward

Conduct System Demos and Orals

w/ FinalistsProject Kick-off

12/01 01/23 03/0902/27

Approx 15 days

A

A03/19 05/1105/04

Begin formalAcquisition Process

Iterative w/ CCIIO for Review and Comments

12/15

03/26 04/02 04/09

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Acquisition ProcessAnalysis and ranking of proposals• Solution Fit/Coverage and Gaps – single vendor or teaming arrangement must provide required

system and services that constitutes entire solution

• End user experience, i.e. application usability

• Experience and wherewithal of vendor in exchange space and knowledge of healthcare reform

• Company qualifications and resources (Corporate and Proposed Project Team)

• Cost (implementation, 3-Year, Option Years); total lifecycle costs

• Strategic fit of exchange business and COHBE in vendor’s overall corporate strategy

• Partnership fit

• References

• Exceptions to proposed contract Terms & Conditions

• Other factors, e.g. call center

Beyond meeting minimum requirements, weighting matters; will propose approach to weighting later, i.e. during evaluation team orientation (mid-Feb)

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Acquisition ProcessOutline of RFP:1. Purpose of RFP, Vision, Concept of Operations2. COHBE Background3. General and Administrative Procurement Information and Timeline4. Scope of Implementation and On-going Services5. Proposal Response – System, Implementation Services, On-going

Operations and Administrative Services:• Solution Proposal (business, technical)• Cost Proposal (cost model will be provided ; line items broken down between

implementation and on-going costs to insure ability to accurately compare costs)6. Proposed Contract Terms and Conditions7. Appendices:

• Appendix A – Business Process Models• Appendix B – Business Requirements (functional, technical)• Appendix C – Interoperability with State Medicaid Systems and Business

Processes• Appendix D – Reporting and Business Intelligence• Appendix E – Technical Architecture• Appendix F – Operations, SLAs, and Continuity of Operations• Appendix G – Interfaces• Appendix H – Conversions• Appendix I – Deliverables• Appendix J – Turnover

•Procurements will b

e:

•Well-structured

•Efficient

•Competitiv

e

•Fair

•Transparent

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Acquisition ProcessEvaluation Committee• Seeking Board members to participate in COHBE vendor selection; crucial

decision which can only be made once (for several years); leverage experience and perspective of diverse group will lead to better decision

• Duties and time commitment:

• Review and rank proposals using evaluation sheets provided; note areas of concern, be available to discuss evaluation and proposal rankings (need to be able to review all qualified proposals)

• Depending on number of quality proposals received likely 40 hours during first two weeks of March

• Demonstrations/orals likely 20 hours in late March

• BAFO review and recommendation 16 hours in early April

• HCPF participation

• Approximately 200 – 300 hours required for legal services; may be able to supplement need for legal services with procurement support services

Preliminary Cost Estimate for System and Services

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• RFI process in KS involved six Exchange solution providers

• Results indicated that there may be substantial cost savings from licensing the application (i.e. sizeable upfront payment)

• As mentioned in Slide #9, licensing option may provide COHBE to take full advantage of temporary federal funding and reduce on-going operations costs by several millions of dollars per year

• Some vendors amenable to licensing option and some are not

• Will have cost estimates and better perspective on current market in two weeks after receiving RFI responses from critical mass of vendors

• Administrative services will drive operational costs and are likely to be 10x – 15x annual system-related costs

• “Thickness” vs. “Thinness” of COHBE includes both system capabilities and services


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Exchange Capability and/or Service Category

Exchange Capability and/or ServiceStrawman Priority for 2013

(depends on “who” is asked)Impact on

Implementation and Operational Costs

High Moderate LowImpact on

Implementation Cost

Impact on Operation

al Costs

Eligibility, Plan Shopping and Enrollment (System)

MAGI eligibility for individuals and households (subsidized coverage and State Medicaid and CHIP) and enrollment

XHigh Moderate

SHOP employee eligibility and enrollment X High ModerateEligibility and enrollment of SHOP employees and their household members in private coverage or State Medicaid and CHIP X High ModerateMulti-dimensional search criteria (network, provider, disease specialty, deductable, co-pay, etc.)

XModerate Moderate

Multi-lingual on-line system High Moderate

Broker-Related Features & Tools (System)

Directory of available brokers and qualifications X Moderate LowAbility for broker to access SHOP employer data X Low LowAbility to develop comparative quotes and to sort information to support recommendations and decision making X Moderate LowAbility for broker to work remotely and one-on-one with employer through the system

X Moderate Low

Plan Management

Interfaces/admin tools and associated services for carriers to load plans into COHBE

X Moderate Low

Admin tools and associated services for regulators to approve plans in COHBE

X Moderate Moderate

Solution Cost Estimate – Cost Drivers 1 of 3

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(depends on “who” is asked)Impact on Implementation and

Operational Costs


Implementation Cost

Impact on Operational Costs

Customer ServiceCall center support for on-line eligibility and enrollment (individual households, SHOP employees)

X Moderate High

Call center support for SHOP employers and brokers X Moderate High

Support for carriers X Low ModerateSupport for regulators X Low LowCall center for Navigators X Moderate HighPrint/mail for notices X Moderate HighMulti-lingual call center support X Moderate HighCustomer support for mail-in applications X Moderate HighCustomer support for walk-in applications X Moderate High

Financial Management

A/R management (including billings) for premiums from SHOP employers and consumers; A/P management for payment to carriers (system and support) including electronic and paper notifications, invoices and receipts (systems and services)

X High High

Aggregated premium billing for SHOP employers X High Moderate

On-line payment service for individuals and SHOP employers & employees (ACH, credit card)

X High High

Flexible spending accounts, health reimbursement accounts, health savings accounts (system and support)

X Moderate High

Managing commissions/ payments to brokers and Navigators (system and services)

X Moderate High



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(depends on “who” is asked)Impact on

Implementation and Operational Costs


Implementation Cost

Impact on Operation

al Costs

Other Exchange Features

Data repository of all plan/carrier ratings, transactions, enrollments, disenrollments, trend reporting, performance indicators/metrics to support COHBE improvements and to provide useful information to navigators, agents, brokers, carriers, regulators, consumers

X High High

Track all consumers/enrollees into and out of plans

Individual homepage and account management (system and services)

X Moderate Low

Wellness program functionality (system and services) X Moderate Low

On-line advertising capabilities (system and services) X Low Low

Electronic content management to store and access electronic documents (notices, receipts, invoices, forms, etc.) X High Moderate

Outreach ServicesPromotion of COHBE to public, Navigators, brokers, etc. X Moderate Moderate

Promotion of wellness programs, enrollment, monitoring, etc. X Low Low

Web and classroom training for brokers, navigators, Counties X Moderate Moderate

Content/resources for consumers, agents, brokers, providers, carriers

X Moderate Moderate

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SaaS – Software-as-a-Service PMPM – per member per month

SaaS model yields annual costs of $20M – $60M at 750K enrollment.

* Rates remains flat over the years for these scenarios.

SaaS pmpm scenariosannual costs

$20

$40

$60

$80

'13 '14 '15 '16 '17 '18

($ M

per

yea

r)

$ 6.50*

$ 5.00

$ 3.50

$ 2.00

Enrollment 550K 650K 720K 750K 760K 770K


$200

$400

$600

$800

'12 '13 '14 '15 '16 '17 '18

($ 0

00's

) per

yea

r

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Licensing model estimates by component.

Enrollment (December) 550K 650K 720K 750K 760K 770K

Implementation – $2M

software – $3M $30M

$25M

$20M

$15M

$10M

$5M

$5M

maintenance/support hosting operations ~$3.00 pmpm


$10

$20

$30

$40

$50

'12 '13 '14 '15 '16 '17 '18

($ M

per

yea

r)

Acquisition

SaaS

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Acquisition model results in $14M – $18M annual savings based on the assumptions.

$5 pmpm

$17M—$18M/yr; $ 1.88 pmpm

Enrollment (December) 550K 650K 720K 750K 760K 770K

(Services $3 pmpm)


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Level of Interoperability between COHBE and State Medicaid Systems and Business Processes

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What is the “optimal” level of “interoperability” and coordination with the State’s Medicaid/CHIP systems, business processes and existing customer support services?

CBMS/PEAK &Medicaid/CHIP Eligibility & EnrollmentBusinessProcesses

COHBEEligibility & EnrollmentSystemsand BusinessProcesses

InteroperabilityBetween COHBE& State Medicaid/CHIP Systemsand Business Processes

Extent of “interoperability” (i.e. amount of overlap) between COHBE system and business processes and CBMS/PEAK

and associated State eligibility and enrollment business processes increase s complexity and schedule risk but improves

some consumer populations’ experience

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Interoperability design principles and best practices:

• Shared MAGI eligibility process

• Maximize “no touch” eligibility

• Simplify eligibility and enrollment for “mixed” households (i.e. combination of SHOP, subsidized private coverage and Medicaid/CHIP)

• Single sign-on/account management

• Unified master person index

• Data only entered 1x and shared among systems

• Request only information needed for medical coverage determination

• Interfaces to/from PEAK and CBMS to support “no wrong door”

• Provide links to non-medical eligibility processes and pre-populate w/ all relevant consumer data previously collected


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Interoperability Decision CriteriaConsumer Experience- Make enrolling in coverage for the individual/household as fast and as simple as possible- Balance administrative simplicity, efficiency and effectiveness- Enable continuity of care- Provide user-friendly access to all eligible CO citizens and small CO businesses that desire access- Leverage and integrate with State systems and business processes as appropriate

Reliability/Simplicity in Getting Consumer Enrolled- Make enrolling in coverage for the individual/household as fast and as simple as possible- Leverage and integrate with the State system(s) and business processesReliability/Backend Complexity of Having All Solution Components Fully Functioning- Leverage and integrate with the other systems w/o reducing reliabilityPrivacy and Security- Leverage and integrate security, i.e. account management and MPI- Minimize proliferation and transmission of PIICost- Minimize costs to the COHBE, consumers, employers and carriers

Risk to COHBE Project Deadlines- Minimize Risks of: 1) not meeting federal milestones, 2) delivering baseline scope and 3) completing the project within the baseline budgetStrategic Direction and Latitude- Maximize flexibility to change its direction; enable the state to go in a different direction in the future without COHBE or State incurring a large potential cost impact or disruption to end users; this could include a different Exchange solution provider (re-compete) or a different Exchange solution direction such as building or buying the Exchange software and integrating with State system in futureStakeholder Acceptability- Recognize limitations of interoperability given political realities, funding constraints, etc.

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Small Business Owners& Employees(% and # expected)

IndividualHouseholds &Small BusinessEmployees(% and # expected)

IndividualHouseholds(seeking public assistance,i.e. Medical, Food or Cash Assistance)

(% and # expected)

Pre-screening

SHOPExchange

PEAK

IndividualExchange

Account Mgmt & MPI

EligibilityDetermination

Plan Selection &Enrollment

MAGI(including interfacing w/ federal data hub)

Set-up Employee Roster

Create Account

MMISCBMS

Should Pre-Screening Step be

Included?

Enrollment inCarrier Systems

Create Account

Review Subsidy/Out-of-Pocket Costs

Select Plan & Enter Enrollment Information

Interface Enrollment

Information to Carriers’ Systems

Review Out-of-Pocket Costs

Select Plan & Enter Enrollment Information

Eligible for Employer Plan &

Amount of Coverage

Interface Enrollment

Information to MCO Systems

Moderate Interoperability – MAGI & MMIS Interface

Eligible for Medical or HS Programs

Working closely with HCPF to define interoperability options and analyzing cost/benefit (and to whom do costs and benefits accrue)

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Decisions before the Board

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Recommendations of the IT and Implementation Committee and Decisions before the Board

• Agree on acquisition scope, strategy, process and timeline

• Agree to release RFP on or about 01/23 – prior to award of Level 1 grant

• Agree on composition of Evaluation Committee; participation begins in review of RFP late-December and early-January

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Wrap-up

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Background Material

COHBE Implementation and Start-up Timeline

34Note: Accompanying timeline for required enhancements to PEAK

& CBMS not shown

Analysis/Confirmation of Current Approach & Prel

RFP

High-Level Timeline – COHBE Policy & Business Decisions and IT

Procure IT Systems & Services for HIX

COHBE Certificationby HHS

11/11 01/12 03/12 05/12 07/12 09/12 11/12 01/13 03/13 05/13 07/13

2011 2012

HIXIntegration Testing

Design/Build/Test HIX Systems (Eligibility/Enrollment/Plan Mgmt and Associated Services Interface w/ Federal Data Hub, Other Data Sources, MMIS, PEAK/CBMS)

2013

Policy & BusinessDecisions and Activities

HIX - IndividualPilot Phase06/13 – 10/13

HIX Deployment

Policy & Business Decisions

Impacting IT

Supreme CourtRuling on Mandate

Evolving Policy and Business Decisions based on CCIIO/CMS/Board/Executive Director/Legislative Oversight/etc.

Start-up and Operational Decisions

Start-up Activities

Operational Activities

Analysis/Confirmation of Current Approach & Prel

RFP

IT/Systems

Procure IT Systems & Services for HIX

HIX SHOPIntegration TestingDesign/Build/Test HIX Systems for SHOP

HIX - SHOPPilot Phase04/13 – 10/13

HIX Deployment

Establish PMO

Draft COHBE Guiding Principles for Systems and Implementation

Category Guiding Principle

Exchange Functions, Features and Business Processes

Meet the minimal requirements of federal regulations; enhanced functions, features and integration will be considered in the future. New business processes to execute Exchange business processes shall minimize the impact to other State agencies’ business processes or systems.

Exchange Customers and Business Lines

Customers of the Exchange are individuals and small business owners and their employees.There will be a single Exchange. The Exchange will have two business lines: 1) the SHOP Exchange and 2) the Individual Exchange

Market Competition Encourage competition in the market whether it is inside or outside the Exchange.

Continuity of Care Ensuring continuity of care is a personal responsibility; the Exchange will not pro-actively enroll or change enrollments of consumers (i.e. individuals and small employers and their employees).

Integration with Medicaid

Minimize integration with Medicaid eligibility in the near-term; consider tight integration (and possible upgrade of State’s eligibility system) in long-term (i.e. 3-5 years); make investments based on this strategy. Send consumers to the “right” door first but enable cross (MAGI) eligibility determination.

Federal Deadlines Work with State Medicaid agency but do not jeopardize meeting federal and state deadlines.

Solution Acquisition Leverage existing solutions and solution components from other states and federal partners to the maximum extent possible.

Inter-agency Partnerships

Work in concert with all State agencies, e.g. HCPF, DHS, OIT and Insurance Department.

Regulatory Authority Maintain the Colorado Insurance Department as the single regulator.

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Role of IT and Implementation Committee

• Role is to provide guidance to COHBE executive leadership and early input into major strategic decisions such as IT investments, acquisition of services and Acquisition strategy

• These initial acquisition decision(s) will likely be in the order of tens of millions of dollars over the first 3 – 5 years

• Acquisitions will be structured to be competitive, fair and transparent

• Due to the political sensitivities and visibility surrounding the COHBE, it is important that there be no real or apparent conflicts of interest in Acquisitions activities and operational decisions

• Meet weekly leading up to the start of the formal acquisition process

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presentation to the board it activities and strategic decisions december 12, 2011

Documents

acquisition rfp

services acquisition

strategy acquisition

board members

approval of board

board meetingmotion

board meetings

direction of acquisition