1. Request for Proposal (RFP) and Contract Monitoring Process
This chapter describes the Request for Proposal (RFP) process by which ADAPs request bids from organizations to provide pharmacy services for their programs. Other information in this chapter is adapted from Section II, Chapter 1 of the Ryan White CARE Act Title II Manual, “Contract Monitoring,” to include AIDS Drug Assistance Program (ADAP) specific information only.
All AIDS Drug Assistance Programs (ADAPs) contract with other organizations to provide pharmacy services for their clients. These contracts can encompass a wide range of services, including drug dispensing and/or distribution, drug utilization reviews, shipping, and pharmacy services. In order to obtain quality, low cost services, ADAPs publish Request for Proposals (RFPs) as an invitation for organizations to compete for a contract with the State ADAP.
The purpose of the RFP is to convey information that prospective contract organizations need in order to prepare a proposal. It describes all the information that the organization must furnish to permit a meaningful and equitable evaluation of their offer for services. The RFP includes a Statement of Work (SOW), and the terms, conditions, and provisions that will form the basis for the final definitive contract. The RFP must be clear, complete, accurate, and consistent with the requirements of the acquisition so that it provides all who receive it with the same understanding of the requirements.
ADAPs are responsible for preparing the RFP and should develop supporting documentation during the pre-solicitation phase that will fully satisfy program needs and objectives when included in the RFP.
Clear distinctions must be made between the contents and purpose of the SOW, the instructions to organizations, and the evaluation factors. The RFP should meet the following objectives:
The RFP should require that proposals be submitted in two parts: a "technical proposal" and a "business proposal." The technical and business proposal instructions in the RFP must describe all the information deemed essential for proper evaluation of the proposals. This will ensure that all prospective organizations are aware of all requirements, so that differences in proposals will reflect each organization's individual approach to the requirements, not different interpretations of the requirements. The instructions should request that the technical and business proposals be submitted as separate and complete sections so that the ADAP can independently evaluate each part. The technical proposal may include information on labor hours and categories, materials, and subcontractors.
The RFP must inform prospective organizations of all evaluation factors and of the relative importance or weight attached to each factor. Evaluation factors must be described in sufficient detail to inform prospective organizations of the significant matters that should be addressed in the proposals. Only the evaluation factors set forth in the RFP can be used in evaluating proposals; these factors can only be modified by a formal amendment to the RFP.
According to OMB Circular A-102 (or 45 CFR Part 92), local government grantees may use their own procurement procedures that reflect applicable State and local laws and regulations, provided that the procurement procedures conform to applicable Federal law and the standards identified in the Circular (Part 92.36). Identified standards concern the following areas:
A contract must contain the clauses necessary to ensure that all requirements under the grant will be satisfied, since neither 45 CFR Parts 74 and 92 nor other documents are directly binding on a contractor.
Under Title II/ADAP, contract monitoring is the responsibility of the State grantee. Contract monitoring includes both program and fiscal monitoring activities.
In cases where an ADAP is administered by another organization or State agency, such as the State Medicaid office, the ADAP may delegate some of its authority to monitor contracts to this agency. Such arrangements require a Memorandum of Understanding or Memorandum of Agreement (MOU/MOA) or a specific contract requirement that specifies methods, sets deadlines, and assigns responsibility for the monitoring activities. ADAPs must be careful to avoid conflicts of interest when assigning tasks related to program and fiscal monitoring, including the involvement of other agencies that are also contracted providers. Contracted providers have an inherent conflict of interest when they are involved in monitoring their own contracts.
ADAP programs vary in many ways and contract with a wide range of entities. Some contractors are large and well established, while others are new and inexperienced. While there is no one right way to monitor ADAP contracts, a strong monitoring program includes a core of basic strategies, activities, and standards that can be tailored to specific situations.
This chapter outlines "good practice" in designing, developing, and implementing a contract-monitoring program. After completing it, readers will be able to answer these questions:
There are multiple requirements in the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act for which grantees are accountable. Contract monitoring can serve as a primary mechanism for documenting compliance with these areas. The following are legislative requirements:
Payor Of Last Resort
The Payor of Last Resort issue is of particular importance during the contract-monitoring phase. This assures that funds are not used to provide items or services for which payment already has been made, or reasonably can be expected to be made by a third party Payor including State or local entitlement programs, prepaid health plans, or private insurance. It is incumbent upon the ADAP to assure that eligible individuals are expeditiously enrolled in Medicaid and that CARE Act funds are not used to pay for any Medicaid covered services for Medicaid enrollees.
Definition of Terms
Contract monitoring includes program monitoring and fiscal monitoring. These two functions are complementary and interdependent.
Contract Monitoring Versus Evaluation
Though many methods used in program and fiscal monitoring are the same as those used in program evaluation, these activities should be understood as distinct. Contract monitoring is concerned with oversight of use of funds and accomplishment of activities as outlined in program contracts. Evaluation is similar in that it can also focus on documentation of program accomplishments. An important distinction, however, is that evaluation studies also assess the impact of programs on clients by examining delivery of services and outcomes attributable to service efforts. Contract monitoring can typically provide this type of information.
Program monitoring means assessing the quality and quantity of the services being provided by a particular contractor, according to the terms of an ADAP contract. For the ADAP staff involved in implementing a contract monitoring effort, program monitoring might include reviewing client enrollment, interacting with participating pharmacies, reporting fiscal information, managing data, and monitoring a contracted Pharmacy Benefits Management (PBM) company. Staff responsible for monitoring contracts would also want to evaluate any possible barriers or problems associated with delivery of pharmaceuticals to clients.
Fiscal monitoring means assessing how efficiently a contractor is able to use ADAP funding to purchase and/or dispense pharmaceuticals. Staff will want to monitor funding from various sources to the ADAP such as State funding, voluntary and 340B rebate income, and reimbursements from Medicaid. Fiscal monitoring should include regular reviews and assessments of contractors' expenditure patterns and processes to ensure adherence to Federal, State, and local rules and guidelines on the use of CARE Act funds.
The following examples show how program monitoring and fiscal monitoring may be linked:
Establishing a Contract Monitoring System
Grantees should ensure up front that contractors understand how the grantee plans to monitor contracts. The grantee may want to outline the contract monitoring process before contracts are signed. In some cases, grantees may prefer to develop a process jointly with contractors after contracts are up and running. For example, implementing a peer review process for contractor staff would require joint planning.
A complete contract monitoring system includes these key elements:
Grantees should address each of the elements listed in full detail before a contract-monitoring program begins. The grantee and contractor should clearly understand the basis upon which contracts will be monitored.
CARE Act funding is based on a "partnering" model that links funding agencies and contractors in a collaborative effort to ensure the quality, quantity, effectiveness, and appropriateness of services for people living with HIV disease (PLWH). In this model, clear expectations and conditions help facilitate cooperative solutions to problems. Therefore, contract-monitoring roles for funding agencies and contractors should be clearly specified.
The Title II grantee retains ultimate accountability to the Health Resources and Services Administration (HRSA) for all contracts awarded through its Title II program. The grantee, therefore, determines the personnel on the monitoring team and the nature and extent of each person's involvement.
The grantee will designate a person or team to review fiscal and program reports, conduct site visits, interact on an ongoing basis with contracted providers, and implement remedial steps or corrective action if necessary. A grantee may distribute monitoring functions across its organization. For example, a different person, team, or even division within a health department may handle fiscal monitoring activities versus those who monitor program activities.
A written contract describes the obligations of both the funding agency and the contractor in providing services to PLWH. It is sometimes incorrectly assumed that local application guidance, standards of care, written responses to RFPs, and other such documents provide sufficient expectations against which a provider can be assessed. The missing piece in this approach-the written and signed contract-brings together the many expectations outlined in a range of sources and makes them legally binding.
The grantee must be careful to obligate funding only through signed, written contracts. Following are examples of items that might appear in a signed, written contract.
Scope of Work
The scope of work, or the activities to be performed by the contractor, must be outlined in the contract. The scope of work can be written in a number of ways, including sub-sections on goals, objectives, work plan, timelines, and deliverables.
The scope of work must include clear expectations for the provider as to how the work will be assessed. Funding agencies must clearly describe what they will consider a successful or unsuccessful implementation of a program, to ensure that contractors document the program with the appropriate and necessary information.
The written contract should include a budget that establishes the financial obligation of the funding agency. A budget can set the funding agency's maximum obligation, even when the provider draws funds down from a pool, based on fee-for-service or unit cost accounting systems.
If the provider is using multiple funding streams to support a particular service, the budget should clearly indicate the other funding sources and specify within the contract which line items are supported by each funding source. Because most ADAPs operate from a number of funding streams, the breakdown of funding source should be specified whenever possible. To the extent that contractors are providing services prohibited with ADAP earmark or other Federal dollars, the alternative funding source (e.g., State dollars) should be clearly stated.
Fiscal assurances include policies, limits, or requirements regarding financial controls, independent audits, allowable expenditures, funding of last-resort requirements, administrative costs, liability/risk insurance, collections from third party payors, and other fiscal matters. In a written contract, fiscal assurances should be spelled out in a manner that ensures each party's ability to satisfy Federal, State, and local regulations.
The funding agency may require contractors to follow policies on record maintenance, client confidentiality, standards of care, or client eligibility restrictions and protections. Also, a written contract may include a commitment to follow HRSA and State program policies.
Administrative provisions are processes and parameters tied to a contract. Such provisions may specify a budget modification process, procedures for modifying the scope of work mid-contract, method of payment, and duration of the contract.
When a service provider is newly established, staffing patterns can "make or break" a program's success. Particularly where funding agencies wish to build new capacity in a service category, a written contract may require that specific staff positions be filled by qualified individuals and by a stated deadline.
Every ADAP contract must include expectations about using HRSA's CARE Act Data Report (CADR) or client-level data collection to report demographic and utilization figures in each of the service categories being funded. Without this obligation contractually in place, the State may be unable to meet its requirement to complete the HRSA CADR.
Additionally, each contract must include expectations for completing the ADAP Monthly Report (AMR). Reporting requirements for the AMR include the number of clients, total funds expended for ADAP, substantive programmatic changes, and prices paid for specific HIV pharmaceuticals.
Contracts should spell out how often and on what dates reports are due. In addition to the reports for CADR or the AMR, contracts should require monthly or quarterly expenditure and utilization reports. Local and State guidelines for HIV/AIDS surveillance may present additional reporting obligations for providers; these may be included in the written contract.
Funding agencies should describe a dispute resolution process, including a description of "worst case" corrective actions that may be taken if contractual obligations are not met.
The contract should describe the administrative remedies available through the grantee office if a provider wishes to appeal any corrective action that has been taken.
Before implementing a contract monitoring system, grantees should have in place a Memorandum of Understanding or Memorandum of Agreement (MOU/MOA) between the grantee and contractor. HRSA strongly recommends the use of MOU/MOA unless a State agency has an administrative or regulatory contract monitoring process in place that achieves the goals of a MOU/MOA. In such a case, the grantee will be required to document that the State process is consistent with MOU/MOA requirements.
A MOU/MOA will typically address more than just the contract monitoring process. They are usually developed among the parties that are involved in any stage of planning, oversight, contract monitoring, evaluations or administration of services.
The MOU/MOA clarifies local roles and responsibilities in all areas related to the contracts in question. The document spells out how the relationships between decision makers will be governed. Again, because of the enormous diversity across Title II/ADAP programs, what works in one region may not work in another.
The MOU/MOA should provide detailed descriptions of the following:
The MOU/MOA should name the individuals or organizations entering into the agreement.
The MOU/MOA should stipulate the number and type of contracts covered by the agreement.
The scope and purpose of each contract covered by the agreement should be described. If the agreement covers contracts and activities beyond Title II/ADAP, such as the Centers for Disease Control and Prevention (CDC), Housing Opportunities for People With AIDS (HOPWA), Medicaid, or other programs, the MOU/MOA should specify which provisions apply to Title II/ADAP and which do not.
The MOU/MOA should specify how long the agreement would be in place.
The MOU/MOA should identify those responsible for specific activities, and provide a time-line for delivery of services or obligations. The MOU/MOA should specify responsibilities for any activities that require extensive collaboration among a number of parties, such as a Statewide drug utilization review or other project.
If any costs are to be accrued, the MOU/MOA should describe how they are allocated and the means of paying them.
Effective contract monitoring involves a constructive, interactive process of feedback by the grantee and the contractor on how the contract obligations are being met. A rigid, one-way process that looks only for flaws in provider performance runs the risk of undermining trust and communication between the funding agency and the contractor. Clarity and courtesy should guide the funding agency's approach to contract monitoring. For example, funding agencies should give advance notice before site visits are made, and supply the provider with a checklist of items to be reviewed during the visit; the items to be reviewed should follow directly from the obligations outlined in the provider's original contract.
Ongoing program expenditures and staffing requirements may be assessed without delay after a contract begins. However, monitoring of program performance should be delayed until programs have become established enough to provide sufficient data.
Grantees should use the monitoring process to reinforce and underscore mutual obligations between the funding agency and the contractor.
While grantees should use consistent contract monitoring methods for all funded providers, the methods should be flexible enough to address particular monitoring needs in different grantee/provider relationships. For example, while new programs may need more oversight of their fiscal accountability, program infrastructure, and staffing patterns, established programs may be monitored more for performance and output.
Following is a discussion of the many approaches grantees can use as they monitor their contractors. While a successful monitoring effort will include a number of these methods, funding agencies should also attempt to limit the time and resources required of contractors to meet their reporting obligations. Any single monitoring method is only as good as the accuracy of the information reported or collected. Mixing several types of monitoring activities into the process may help grantees verify the accuracy of information.
Disbursement of Funds and Budget Tracking
Grantees will want to closely monitor the rate of program expenditures to assure that adequate funding for pharmaceuticals exists through the fiscal year. Monthly reports will allow the grantee to review client utilization rates, expenditures, and client demographics.
Grantees should set up a system to track monthly expenditures in order to assure a quick response to possible program limitations due to insufficient funding or increased client utilization. Monthly monitoring will allow the grantee to determine if any changes will need to be made to the program, such as caps on expenditures per client, implementation of or changes to a client waiting list, or limitations on the formulary. Additionally, monthly monitoring will allow the grantee time to seek additional funding sources to prevent possible program limitations.
Grantees may want to require contractors to submit monthly and/or quarterly utilization reports. Reports generated and submitted by contractors typically include information on the following:
Additional program information might include staffing and program changes, successes, failures, technical assistance needs, and plans for quality improvement. Grantees can use the monthly data to assess appropriate distribution of pharmaceuticals to target communities by contractors.
Effective April 1, 1999, HRSA requires States to submit monthly information on client utilization and monthly expenditures though the AMR. These reports allow HRSA to collect current, comprehensive data at the national and State levels. The AMR collects monthly information on the number of enrolled and utilizing ADAP clients, the amount of program expenditures, and any other significant program change. The AMR also collects quarterly data on expenditures for common HIV medications. As of March 2001, the AMR is available as an Internet-based application.
Monthly utilization reports can be compiled to complete the CARE Act Data Report (CADR) and the AMR. HRSA requires States to submit an annual CADR to document clients served and the services provided through Title II/ADAP funds. The CADR aggregates this information from providers to obtain a summary of client demographic characteristics and service utilization.
Quality Assurance Review
A quality assurance review focuses on contractor compliance with a set of standards taken directly from the written contract and compiled in a quality assurance checklist.
A quality assurance checklist can be developed by contractors to use as a self-assessment tool or by grantee staff to use during periodic reviews or site visits. The checklist may ask for information on fiscal controls, independent audit requirements, standards of care, client confidentiality provisions, and staffing patterns.
Quality assurance reviews, based on a quality assurance checklist, underscore the importance of the provisions of the written contract and help the contractor identify areas for improvement.
Agencies with enhanced computer capabilities can track the results of quality assurance reviews as part of their everyday data collection process.
Beginning in FY 2002, States are expected to develop and implement Quality Management Programs to assess the extent to which HIV health services are provided to patients under the grant consistent with the most recent Public Health Service guidelines for the treatment of HIV disease and related opportunistic infection.
The grantee will want to maintain close contact with the contractor, ranging from once a month to once a day. Monitoring is important to review program expenditures and to develop strategies in the event expenditures exceed projections resulting in possible program limitations. Grantees will want to perform site visits to assure contractual obligations such as the appropriate distribution of pharmaceuticals.
If another State agency is responsible for contract monitoring, it is important that ADAP staff work closely with those individuals to conduct quality assurance and monitoring activities.
The grantee may want to schedule formalized site visits. A site visit might include staff reviews, observation of services, a facility tour, and review of documentation relating to the following aspects of contractor operations:
A review of documentation can include as wide a range of information as is needed to satisfy local, State, and Federal contracting regulations.
When problems with a contractor become apparent, grantees must undertake some form of corrective action. Grantee staff, including the State's purchasing or contracts office if necessary, and the provider generally meet first to discuss specific problems. Indicators for corrective action include the following:
Grantees should have in place a "graduated" corrective action plan so that a number of informal mechanisms are available before formal approaches are necessary. The first priority is to assure that technical assistance (TA) is available to contractors. Grantee staff may prompt a request for TA by informing the contractor of problems verbally and then in writing if necessary. Written communications can be sent to a contractor in "draft" form, to avoid making the issue a matter of permanent record. If informal efforts fail and formal mechanisms are necessary, the graduated approach should continue to be used before termination of the contract becomes necessary.
From time to time, providers may believe that corrective actions are being taken against them too swiftly or unfairly. The grantee should have grievance procedures in place to resolve such disputes as quickly as possible.
Technical Assistance (TA)
Technical assistance programs provide contractors with resources to aid in the development or compliance of their programs. On-site TA is typically provided by peer and other professional consultants with specific experience in assisting, training, or guiding contractors through Title II/ADAP requirements. Local ADAPs may also develop TA documents or products including manuals, reports, conference calls, meetings, training tools, and newsletters. HRSA provides ADAP grantees with a number of such documents, such as this manual, which can be used by grantees, consortia, lead agencies, and contractors.
TA is most effective when requested by the contractor. At a minimum, TA should be acceptable to the contractor before any large-scale effort is undertaken. Significant time and money may be wasted if the intended recipient will not accept outside help.
Conditions of Award/Contract Remediation Plan
If a contractor does not accept TA even while obligations are not being met, the grantee or lead agency can issue "conditions of award." Issuing a condition of award is a way of repeating obligations set forth in the original contract. The conditions should include a clear statement of the obligations that are not being met and a timetable for making a correction. This approach may convince a contractor to accept TA that was resisted in the past. Conditions of award usually do not require acceptance of TA; the contractor may continue to work without assistance. The conditions are, however, a serious warning sign to the contractor that funding may be suspended or terminated if action is not taken.
The contract remediation plan combines the conditions of award with a TA plan. The plan can be mandated by the grantee or mutually agreed upon by the grantee and the contractor. In any case, it is a signed, dated document specifying the steps and timetable by which the contractor must come into compliance.
Suspension, Reallocation, or Termination of Funding
Any action with respect to funding must be preceded by extensive documentation of the contractor's compliance problems. Documentation should include the following:
Funding can be suspended or reallocated without full termination of a contract. Efforts at building contractor compliance and accountability may extend over a number of years or contract periods.
All contractors should have the right to appeal decisions regarding suspension, reallocation, or termination of funding. If the contractor in question provides drug dispensing or distribution to ADAP clients, alternative sources of medications should be identified by the ADAP to ensure continual coverage.
Only the grantee is fully accountable to HRSA for contract monitoring in ADAPs. Contract monitoring processes should be based on obligations as outlined in a written contract and responsibilities as outlined in a Memorandum of Understanding or Memorandum of Agreement. Grantees may decide upon a range of contract monitoring methods. If contractors encounter repeated compliance problems, corrective action may be needed. It is best to offer a "graduated" corrective action plan so that a number of informal mechanisms are available before a contract gets into significant trouble and more formal approaches are necessary.
Sources Used for This Chapter
HRSA, HIV/AIDS Bureau, Division of Service Systems. "Choosing and Using an External Evaluator." HIV/AIDS Evaluation Monograph Series. Rockville, MD: U.S. Department of Health and Human Services, 1997.
HRSA, HIV/AIDS Bureau, Division of Service Systems. "Contract Monitoring." Title II Manual. Rockville, MD: U.S. Department of Health and Human Services, 1999, revised 2002.
HRSA, HIV/AIDS Bureau, Grants Management Branch. Fiscal Year 2001 Title II Conditions of Award. Rockville, MD: U.S. Department of Health and Human Services, March 31, 1997.
HRSA, HIV/AIDS Bureau, Division of Service Systems. "Program and Fiscal Monitoring at the Local Level." Title I Manual. Rockville, MD: U.S. Department of Health and Human Services, 1997, revised 2002.
Moreau, Walter. Prepared for HRSA, HIV/AIDS Bureau, Office of Science and Epidemiology. Determining the Unit Cost of Services. Rockville, MD: U.S. Department of Health and Human Services, 1998.
For More Information on Topics Mentioned in This Chapter
ADAP Monthly Report. See Section IV, Chapter 2 in this manual.
Grievance procedures. See Section VI, Chapter 8 in the Ryan White CARE Act Title II Manual, “Grievance Procedures.”
Program reports: CARE Act Data Report (CADR), See Section IV, Chapter 3 in this manual.
SCSN. See Section VII, Chapter 4 in the Ryan White CARE Act Title II Manual, “Statewide Coordinated Statement of Need.”