CONFIDENTIAL TREATMENT REQUESTED

 

<PAGE>

 

                                                                    EXHIBIT 10.8

 

                        CONFIDENTIAL TREATMENT REQUESTED

   CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE MARKED

WITH BRACKETS ("[***]"). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

                                                              [CMS LOGO]

 

DEPARTMENT OF HEALTH & HUMAN SERVICES

Centers for Medicare & Medicaid Services

7500 Security Boulevard, Mail Stop C2-21-15

Baltimore, Maryland 21244-1850

 

OFFICE OF ACQUISITION AND GRANTS MANAGEMENT

 

March 7, 2005

 

Mr. Paul Dinkins, Exec. VP

PRG-Schultz International, Inc.

600 Galleria Parkway,

Suite 100 Atlanta, GA 30339

 

SUBJECT:  Notice of Award, Contract for Non-MSP Recovery Audit Work in the State

          of California

 

Dear Mr. Dinkins:

 

Congratulations, CMS has accepted PRG's final revised proposal for the subject

contract requirement. Attached is a copy of the subject contract.

 

The contract was developed from the Request for Proposal and now incorporates

your contractor-specific information and the state-specific information in

Sections B, C and G.

 

Please acknowledge acceptance of this award by providing two (2) original signed

SF 26 forms. The signature shall be by an authorized official of your

organization. Both originals shall be returned to CMS no later than March 10,

2005, 10:00 am local Baltimore time so that the Contracting Officer may

effectuate the award by COB on the 10th as well. Please return to the following

address:

 

                        Centers for Medicare & Medicaid Services

                        OAGM, Attn: Barbara J. Erbe

                        7500 Security Boulevard, MS C2-21-15

                        Baltimore, MD 21244-1850

                        RAC CONTRACT

 

You do not need to return the contractual document, just the signed forms. Upon

execution by the Contracting Officer, one original SF 26 will be returned to you

for your files. If you have any questions, please contact Barbara Erbe at (410)

786-5142.

 

Please understand you are not to have any press releases concerning this award

until the Secretary has officially announced the award to the public. We will

notify you at that time.

 

Sincerely,

 

/s/ Carol G. Sevel

Contracting Officer

 

Enclosure

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 3 of 40

 

                                TABLE OF CONTENTS

 

PART I - THE SCHEDULE

 

SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS

 

      B.1   DESCRIPTION OF SERVICES

 

      B.2   TYPE OF CONTRACT

 

      B.3   PRICE SUMMARY

 

SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT

 

      C.1   STATEMENT OF WORK

 

      C.2   INCORPORATION OF REPRESENTATIONS AND CERTIFICATIONS

 

SECTION D - PACKAGING AND MARKING

 

      D.1   PACKAGING AND MARKING

 

SECTION E - INSPECTION AND ACCEPTANCE

 

      E.1   FEDERAL ACQUISITION REGULATION (FAR) CLAUSES

 

      E.2   INSPECTION AND ACCEPTANCE

 

      E.3   ACCEPTANCE BY THE PROJECT OFFICER/GOVERNMENT TASK LEADER

 

SECTION F - DELIVERIES OR PERFORMANCE

 

      F.1   FEDERAL ACQUISITION REGULATION (FAR) CLAUSES

 

      F.2   PERIOD OF PERFORMANCE

 

      F.3   ITEMS TO BE FURNISHED AND DELIVERY SCHEDULE

 

      F.4   TIME AND PLACE OF DELIVERIES

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 4 of 40

 

SECTION G - CONTRACT ADMINISTRATION DATA

 

      G.1   DATA TO BE DELIVERED

 

      G.2   USE OF GOVERNMENT DATA (REPORTS/FILES/COMPTER TAPES OR DISCS)

 

      G.3   OMB A-130 INFORMATION RESOURCE POLICY

 

      G.4   KEY PERSONNEL

 

      G.5   GOVERNMENT PROJECT OFFICER (PO)/CONTRACT SPECIALIST

 

      G.6   CONTRACTING OFFICER'S RESPONSIBILITY

 

      G.7   DESIGNATION OF PROPERTY ADMINISTRATOR AND PROPERTY ADMINISTRATION

 

      G.8   INVOICING AND PAYMENT

 

      G.9   PAYMENT BY ELECTRONIC FUNDS TRANSFER-CENTRAL CONTRACTOR REGISTRATION

 

      G.10  CONSENT TO SUBCONTRACT

 

      G.11  PAST PERFORMANCE REGISTRATION

 

      G.12  ACCOUNTING AND APPROPRIATION DATA

 

SECTION H - SPECIAL CONTRACT REQUIREMENTS

 

      H.1   DELIVERABLES/INTERNET - INTRANET APPLICATIONS

 

      H.2   HHSAR 352.224-70 CONFIDENTIALITY OF INFORMATION

 

      H.3   CONTRACTING PROHIBITIONS/ORGANIZATIONAL CONFLICT OF INTEREST

 

      H.4   CONDITIONS FOR PERFORMANCE

 

      H.5   HHSAR 352.270-7 PAPERWORK REDUCTION ACT

 

      H.6   DISPOSAL OF IMAGED MEDICAL RECORDS

 

      H.7   HIPAA BUSINESS ASSOCIATE PROVISION

 

      H.8   COPYRIGHTS

 

      H.9   DISSEMINATION, PUBLICATION AND DISTRIBUTION OF INFORMATION

 

      H.10  FAR 52.204-7 CENTRAL CONTRACTOR REGISTRATION (CCR)

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 5 of 40

 

PART II - CONTRACT CLAUSES

 

SECTION I - CONTRACT CLAUSES

 

      I.1   FEDERAL ACQUISITION REGULATION (FAR) CLAUSES

 

      I.2   DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATIONS

            (HHSAR)

 

      I.3   FAR 52.215-19 NOTIFICATION OF OWNERSHIP CHANGES (OCT 1997)

 

      I.4   FAR 52.244-6 SUBCONTRACTS FOR COMMERCIAL ITEMS (JUL 2004)

 

PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS

 

SECTION J - LIST OF ATTACHMENTS

 

      J.1   STATEMENT OF WORK - NO. 40700NMSPB

 

      J.2   GLOSSARY

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 6 of 40

 

SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS

 

B.1 DESCRIPTION OF SERVICES

 

The purpose of this contract will be to support the Centers for Medicare &

Medicaid Services (CMS) in conducting a demonstration project in the state of

California using recovery audit contractors (RACs) to provide recovery audit

services to identify underpayments and overpayments and/or recoup overpayments

under the Medicare program for services for which payment is made under part A

or B of title XVIII of the Social Security Act.

 

B.2 TYPE OF CONTRACT

 

This is an Indefinite Delivery (ID) Requirements contract.

 

B.3 PRICE SUMMARY

 

a.    All payments shall be paid only on a contingency basis. The contingency

      fees shall be paid once the recovery audit contractor collects the

      Medicare overpayments. The recovery audit contractor shall not receive any

      payments for the identification of the underpayments or overpayments.

 

b.    For the identification of non-MSP overpayment and underpayments and the

      recovery of non-MSP overpayments under SOW 40700NMSPB the RAC will receive

      [***]% of the amount that is collected.

 

      A reduced contingency percentage shall apply to a recoupment by offset.

      (See below.)

 

      The RAC shall receive [***]% of the agreed upon contingency fee percentage

      for any of the following recovery efforts:

 

            (a)   Recovery efforts accomplished through the offset process of a

                  fiscal intermediary or carrier.

 

            (b)   Recovery efforts accomplished through Treasury offset or

                  another collection vehicle after the debt is referred to the

                  Department of Treasury.

 

            (c)   Recoveries made through a self-disclosure made by a provider

                  as a result of a prior RAC identified request for medical

                  records or demand letter. Self- disclosed service and time

                  period must be included in the RAC's project plan.

 

[***] - CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN REDACTED ARE

MARKED WITH BRACKETS ("[***]"). THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY

WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 7 of 40

 

            d.    If the provider files an appeal disputing the overpayment

                  determination and the appeal is adjudicated in the provider's

                  favor at the first level, the recovery audit contractor shall

                  repay Medicare the contingency payment for that recovery. If

                  the appeal is adjudicated in the agency's favor at the first

                  level, the recovery audit contractor shall retain the

                  contingency payment for that recovery. Subsequent appeals,

                  after the first level of appeal, will not affect the recovery

                  audit contractor's ability to retain the contingency payment.

                  See Payment Methodology Chart in Attachment J-1.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 8 of 40

 

SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT

 

C.1 STATEMENT OF WORK

 

Independently and not as an agent of the Government, the Contractor shall

furnish all the necessary services, qualified personnel, material, equipment,

and facilities, not otherwise provided by the Government, as needed to perform

the Statement of Work (SOW), SECTION J. ATTACHMENT J.1, SOW 40700NMSPB, attached

hereto and made a part of this solicitation.

 

C.2 INCORPORATION OF REPRESENTATIONS AND CERTIFICATIONS

 

The Contractor's Representations and Certification's, submitted in response to

the solicitation's Section K, dated December 14, 2004, are hereby incorporated

by reference and made a part hereof of this contract.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 9 of 40

 

SECTION D - PACKAGING AND MARKING

 

All deliverables required under this contract shall be shipped and marked in

accordance with Section C.1 Statement of Work and Section F.3 Items to be

Furnished and Delivery Schedule

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 10 of 40

 

SECTION E - INSPECTION AND ACCEPTANCE

 

E.1 FEDERAL ACQUISITION REGULATION (FAR) CLAUSES

 

52.246-5 INSPECTION OF SERVICES - COST REIMBURSEMENT (APR 1984)

 

E.2 INSPECTION AND ACCEPTANCE

 

a.    All work under this contract is subject to inspection and final acceptance

      by the Contracting Officer or the duly authorized representative of the

      Government.

 

b.    The Government's Project Officer or Government Task Leader are duty

      authorized representatives of the Government and are responsible for

      inspection and acceptance of all items to be delivered under this

      contract.

 

c.    Inspection and acceptance of the Contractor's performance shall be in

      accordance with the applicable FAR Clauses in Section E.1 above.

 

E.3 ACCEPTANCE BY THE PROJECT OFFICER/GOVERNMENT TASK LEADER

 

All items to be delivered to the Project Officer will be deemed to have been

approved 60 calendar days after date of delivery, except as otherwise specified

in this contract, if written approval or disapproval has not been given within

such period.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 11 of 40

 

SECTION F - DELIVERIES OR PERFORMANCE

 

F.1 FEDERAL ACQUISITION REGULATION (FAR) CLAUSES

 

52.242-15 STOP-WORK ORDER. (AUG 1989) - ALTERNATE I (APR 1984)

 

F.2 PERIOD OF PERFORMANCE

 

This is a three (3) year contract. The period of performance is 3 years from the

time of award: March 10, 2005 through March 9, 2008. No contingency fees shall

be paid after the end of the period of performance.

 

F.3 ITEMS TO BE FURNISHED AND DELIVERY SCHEDULE

 

The Contractor shall furnish the items required under this contract in

accordance with the reporting instructions and delivery schedule set forth in

Attachment J.1.

 

F.4 TIME AND PLACE OF DELIVERIES

 

The supplies/services to be furnished shall be delivered in accordance with the

delivery schedule as specified in the statement of work.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 12 of 40

 

SECTION G - CONTRACT ADMINISTRATION DATA

 

G.1 DATA TO BE DELIVERED

 

a.    Any working papers, interim reports, data given by the Government to the

      Contractor or first produced by the Contractor under the contract, data

      collected or otherwise obtained by Contractor under the contract (subject

      to any specific restrictions that may pertain to this data), or results

      obtained or developed by the Contractor (subcontractor or consultants)

      pursuant to the fulfillment of this contract are to be delivered,

      documented, and formatted as directed by the Contracting Officer.

 

b.    In addition, information and/or data, which are held by the Contractor

      related to the operation of their business and/or institution and which

      are obtained without the use of Federal funds, shall be considered

      "PROPRIETARY DATA" and are not "subject data" to be delivered under this

      contract.

 

G.2 USE OF GOVERNMENT DATA (REPORTS/FILES/COMPUTER TAPES OR DISCS)

 

Any data given to the Contractor by the Government shall be used only for the

performance of the contract unless the Contracting Officer specifically permits

another use, in writing. Should the Contracting Officer permit the Contractor

the use of Government-supplied data for a purpose other than solely for

performance of this contract and, if such use could result in a commercially

viable product, the Contracting Officer and the Contractor must negotiate a

financial benefit to the Government. This benefit should most often be in the

form of a reduction in the price of the contract; however, the Contracting

Officer may negotiate any other benefits he/she determines is adequate

compensation for the use of these data.

 

Upon the request of the Contracting Officer, or the expiration date of this

contract, whichever shall come first, the Contractor shall return all data given

to the Contractor by the Government (including any images of medical records).

However, the Contracting Officer may direct that the Contractor retain the data

for a specific period of time, which period shall be subject to agreement by the

Contractor. Whether the data are to be returned, retained, or destroyed shall be

the decision of the Contracting Officer with the exception that the Contractor

may refuse to retain the data. The Contractor shall retain no data, copies of

data, or parts thereof, in any form, when the Contracting Officer directs that

the data be returned or destroyed. If the data are to be destroyed, the

contractor shall directly furnish evidence of such destruction in a form the

Contracting Officer shall determine is adequate.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 13 of 40

 

G.3 OMB A-130 INFORMATION RESOURCE POLICY

 

Each RAC is required to follow the established comprehensive approach to improve

the acquisition and management of their information resources in accordance with

this OMB Circular. This circular is issued pursuant to the Paperwork Reduction

Act (PRA) of 1980, as amended by the PRA of 1995, the Clinger-Cohen Act of 1996,

et al. The PRA establishes a broad mandate to perform information resources

management activities in an efficient, effective, and economical manner.

 

G.4 KEY PERSONNEL

 

a.    For the purposes of this contract, the key person shall be the Project

      Director/Project Manager, Rob Paulsson. It will be his responsibility to

      obtain the staff necessary and to direct the work for the conduct of this

      project. The key person under this contract shall be in accordance with

      the HHSAR clause provided below.

 

b.    HHSAR 352-270-5 KEY PERSONNEL (APR 1984)

 

      The personnel specified in this contract are considered to be essential to

      the work being performed hereunder. Prior to diverting any of the

      specified individuals to other programs, the Contract shall notify the

      Contracting Officer reasonably in advance and shall submit justifications*

      (including proposed substitutions) in sufficient detail to permit

      evaluation of the impact on the programs. No diversion shall be made by

      the Contractor without the written consent of the Contracting Officer;

      provided, that the Contracting Officer may ratify in writing such

      diversions and such ratification shall constitute the consent of the

      Contracting Officer required by the clause. The contract may be amended

      from time to time during the course of the contract by either add or

      delete personnel, as appropriate. (End of Clause)

 

      *All proposed substitutions shall be submitted, in writing, to the

      Contracting Officer at least 30 days prior to the proposed substitution.

      Each request shall provide a detailed explanation of the circumstances

      necessitating the proposed substitution, a complete resume and any other

      information required by CMS. All proposed substitutions shall have

      qualifications equal, to or greater than the person being replaced.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 14 of 40

 

G.5 GOVERNMENT PROJECT OFFICER (PO)/CONTRACT SPECIALIST

 

a.    The Project Officer (PO) for this task order is Ms. Connie Leonard. Her

      address is:

 

                  Centers for Medicare and Medicaid Services

                  7500 Security Blvd.

                  ATTN: Ms. Connie Leonard

                  Mailstop: C3-14-20

                  Baltimore, MD 21244-1850

                  (410) 786-0627

 

b.    The Project Officer is responsible for: (1) monitoring the Contractor's

      technical progress, including the surveillance and assessment of

      performance and compliance with all substantive project objectives; (2)

      interpreting the statement of work and any other technical performance

      requirements; (3) performing technical evaluation as required; (4)

      performing technical inspections and acceptances required by this

      contract; (5) assisting in the resolution of technical problems

      encountered during performance; and (6) providing technical direction in

      accordance with Section G.6.; and, (7) reviewing of invoices/vouchers.

 

c.    The Project Officer does not have the authority to act as agent of the

      Government under this contract beyond the roles defined in G.5.b. above.

      Only the Contracting Officer has authority to: (1) direct or negotiate any

      changes in the statement of work; (2) modify or extend the period of

      performance; (3) change the delivery schedule; (4) authorize reimbursement

      to the Contractor any costs incurred during the performance of this

      contract; or (5) otherwise change any terms and conditions of this

      contract.

 

d.    The Contract Specialist for this task order is Ms. Barbara Erbe. Her

      address is:

 

                       Centers for Medicare and Medicaid Services

                       7500 Security Blvd.

                       ATTN:  Ms. Barbara Erbe

                       Mailstop:  C2-21-15

                       Baltimore, MD 21244-1850

                       (410) 786-5142

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

Page 15 of 40

 

G.6 CONTRACTING OFFICER'S RESPONSIBILITY

 

In accordance with FAR 52.201-1 Definitions, The term Contracting Officer means

a person with the authority to enter into, administer, and/or terminate

contracts and make related determinations and findings. The term includes

certain authorized representatives of the Contracting Officer acting within the

limits of their authority delegated by the Contracting Officer.

 

Notwithstanding any of the other provisions of this Contract, the Contracting

Officer shall be the ONLY individual authorized to:

 

      enter into and commit/bind the Government by contract for supplies or

      services;

 

      accept nonconforming work or waive any requirement of this Contract;

 

      authorize reimbursement to the Contractor for any costs incurred during

      the performance of the Contract, and

 

      modify any term or condition of this Contract, i.e., make any changes in

      the Statement of Work; modify/extend the period of performance; change the

      delivery schedule.

 

G.7 DESIGNATION OF PROPERTY ADMINISTRATOR AND PROPERTY ADMINISTRATION

 

a.    The CMS Property Administrator, Administrative Services Group, Office of

      Property and Space Management at (410) 786-3346, is hereby designated the

      property administration function for this contract. The Contractor agrees

      to furnish information regarding Government Property to the Property

      Administrator in the manner and to the extent required by the Property

      Administrator, his duly designated successors, and in accordance with FAR

      Part 45 and DHHS Manual entitled, Contractor's Guide for Control of

      Government Property (1990).

 

b.    The contractor is responsible for an annual physical inventory accounting

      for all Government property under this contract. The inventory must be

      conducted by September 30th and the form 565, Report of Accountable

      Personal Property (J-15) submitted by October 31st of each year.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

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c.    The inventory report shall include all items acquired, furnished, rented

      or leased under the contract. Employees who conduct the inventories should

      not be the same individuals who maintain the property records. Following

      the physical inventory, the contractor shall prepare an inventory report

      and submit the report to the CMS Property Administrator at the following

      address:

 

                   Centers for Medicare & Medicaid Services

                   OICS, Administrative Services Group

                   Division of Property and Space Management

                   7500 Security Blvd., Mailstop: SLL-14-06

                   Baltimore, MD 21244-1850

 

d.    Commercially leased software is subject to these reporting requirements.

 

e.    The RAC shall submit a consolidated report of all accountable Government

      property under this contract, including subcontractor inventory

      information.

 

f.    The final inventory report shall indicate that all items required for

      continued contract performance are acceptable and free from contamination.

      Property that is no longer usable or required shall be reported and

      disposition requested.

 

G.8 INVOICING AND PAYMENT

 

Invoicing and Payment

 

a.    Submission of Invoices and Place of Payment

 

      (i)   No more than once each month following the effective date of this

            contract, the Contractor may submit to the Government an invoice (or

            public voucher) for payment, in accordance with FAR Clause 52.216-7

            "Allowable Cost & Payment." Invoices shall be prepared in accordance

            with this contract. All invoices shall be reconciled against the RAC

            Database (40700NMSPB) or other documentation as appropriate to

            ensure collection has been made and funds recouped deposited prior

            to any invoice being paid.

 

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      (ii)  To expedite payment, invoices shall be sent, as follows:

 

            Monthly invoices (original and four copies) shall be sent directly

            to the address below (where applicable, the Contractor shall submit

            the invoice to said office via the cognizant government auditor):

 

            Department of Health and Human Services

            Centers for Medicare & Medicaid Services

            P.O. BOX 7520

            7500 Security Boulevard

            Baltimore, Maryland 21207-0520

 

      (iii) Content of Invoice (if Applicable):

 

            Contractor's name and invoice date;

 

            Contract number of other authorization for delivery of property

                 and/or services;

 

            Description, cost or price, and quantity of property and/or

                 services actually delivered or rendered;

 

            Shipping and payment terms;

 

            Othersubstantiating documentation or information as required by

                 the contract; and

 

            Name (where practicable), title, phone number, and complete

                 mailing address of responsible official to whom payment is

                 to be sent.

 

b.    Invoice Payment

 

      (i)   In accordance with FAR 52.232-33, the Centers for Medicare and

            Medicaid Services (CMS) shall only make an electronic

            reimbursement/payment.

 

            In accordance with FAR 52.204-7, the contractor must register in the

            Central Contractor Registration (CCR) database. Failure to register

            in CCR may prohibit CMS from making awards to your organization.

 

            The contractor shall notify CMS' Division of Accounting Operations

            of all EFT and address changes in CCR via the following email

            address: CCRChanges@cms.hhs.gov

 

      (ii)  The target date for payment pursuant to the provision of FAR Clause,

            52.216-7 "Allowable Cost and Payment" of this contract shall be 30

            calendar days after an invoice containing the information set forth

            in Paragraph "a" of this article is received in the 7 payment office

            designated herein.

 

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Contract No. HHSM-500-2005-000041

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      (iii) Upon receipt of the Contractor's "completion invoice" in the payment

            office designated in Paragraph "a" of this article, payment of any

            remaining cost and fee determined to be allowable pursuant to the

            provisions of FAR Clause, 52.216-7 "Allowable Cost and Payment" of

            this contract shall be due 30 calendar days after the Contracting

            Officer approves the "completion invoice" for payment.

 

      (iv)  Payment shall be authorized after the Division of Accounting has

            audited the invoice in accordance with Federal Regulations. This

            audit includes verification that the invoice contains the rates/unit

            prices, those indicated in the contract or purchase order. Any

            discrepancies determined as a result of the audit, could delay the

            processing of the invoice and may result in the invoice being

            returned to the vendor for correction. Inquiries relating to

            payments should be directed to Jean Katzen on (410) 786-5423 or

            Suzanne Turgeon on (410) 786-1924.

 

G.9 PAYMENT BY ELECTRONIC FUNDS TRANSFER - CENTRAL CONTRACTOR REGISTRATION

 

a. Method of payment. (1) All payments by the Government under this contract

shall be made by electronic funds transfer (EFT), except as provided in

paragraph (a)(2) of this clause. As used in this clause, the term "EFT" refers

to the funds transfer and may also include the payment information transfer. (2)

In the event the Government is unable to release one or more payments by EFT,

the Contractor agrees to either -

 

      (i)   Accept payment by check or some other mutually agreeable method of

            payment; or

 

      (ii)  Request the Government to extend the payment due date until such

            time as the Government can make payment by EFT (but see paragraph

            (d) of this clause).

 

b. Contractor's EFT information. The Government shall make payment to the

Contractor using the EFT information contained in the Central Contractor

Registration (CCR) database. In the event that the EFT information changes, the

Contractor shall be responsible for providing the updated information to the CCR

database.

 

c. Mechanisms for EFT payment. The Government may make payment by EFT through

either the Automated Clearing House (ACH) network, subject to the rules of the

National Automated Clearing House Association, or the Fedwire Transfer System.

The rules governing Federal payments through the ACH are contained in 31 CFR

part 210.

 

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Contract No. HHSM-500-2005-000041

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d. Suspension of payment. If the Contractor's EFT information in the CCR

database is incorrect, then the Government need not make payment to the

Contractor under this contract until correct EFT information is entered into the

CCR database; and any invoice or contract-financing request shall be deemed not

to be a proper invoice for the purpose of prompt payment under this contract.

The prompt payment terms of the contract regarding notice of an improper invoice

and delays in accrual of interest penalties apply.

 

e. Liability for uncompleted or erroneous transfers. (1) If an uncompleted or

erroneous transfer occurs because the Government used the Contractor's EFT

information incorrectly, the Government remains responsible for -

 

      (i)   Making a correct payment;

 

      (ii)  Paying any prompt payment penalty due; and

 

      (iii) Recovering any erroneously directed funds.

 

      If an uncompleted or erroneous transfer occurs because the Contractor's

      EFT information was incorrect, or was revised within 30 days of Government

      release of the EFT payment transaction instruction to the Federal Reserve

      System, and -

 

      (i) If the funds are no longer under the control of the payment office,

      the Government is deemed to have made payment and the Contractor is

      responsible for recovery of any erroneously directed funds; or

 

      (ii) If the funds remain under the control of the payment office, the

      Government shall not make payment, and the provisions of paragraph (d) of

      this clause shall apply.

 

f. EFT and prompt payment. A payment shall be deemed to have been made in a

timely manner in accordance with the prompt payment terms of this contract if,

in the EFT payment transaction instruction released to the Federal Reserve

System, the date specified for settlement of the payment is on or before the

prompt payment due date, provided the specified payment date is a valid date

under the rules of the Federal Reserve System.

 

<PAGE>

 

Contract No. HHSM-500-2005-000041

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g. EFT and assignment of claims. If the Contractor assigns the proceeds of this

contract as provided for in the assignment of claims terms of this contract, the

Contractor shall require as a condition of any such assignment, that the

assignee shall register separately in the CCR database and shall be paid by EFT

in accordance with the terms of this clause. Notwithstanding any other

requirement of this contract, payment to an ultimate recipient other than the

Contractor, or a financial institution properly recognized under an assignment

of claims pursuant to subpart 32.8, is not permitted. In all respects, the

requirements of this clause shall apply to the assignee as if it were the

Contractor. EFT information that shows the ultimate recipient of the transfer to

be other than the Contractor, in the absence of a proper assignment of claims

acceptable to the Government, is incorrect EFT information within the meaning of

paragraph (d) of this clause.

 

h. Liability for change of EFT information by financial agent. The Government is

not liable for errors resulting from changes to EFT information made by the

Contractor's financial agent.

 

i. Payment information. The payment or disbursing office shall forward to the

Contractor available payment information that is suitable for transmission as of

the date of release of the EFT instruction to the Federal Reserve System. The

Government may request the Contractor to designate a desired format and

method(s) for delivery of payment information from a list of formats and methods

the payment office is capable of executing. However, the Government does not

guarantee that any particular format or method of delivery is available at any

particular payment office and retains the latitude to use the format and

delivery method most convenient to the Government. If the Government makes

payment by check in accordance with paragraph (a) of this clause, the Government

shall mail the payment information to the remittance address contained in the

CCR database.

 

G.10 CONSENT TO SUBCONTRACT

 

      a.    The Contractor shall be in compliance with FAR Part 44 and the

            conflict of interest and exclusions provisions of this contract when

            entering into a subcontract arrangement for the purpose of

            performing this contract.

 

      b.    The Contractor shall be required to complete and submit the

            Subcontract Checklist in order to obtain subcontract consent after

            award of the contract.

 

      c.    Consent is granted to the following subcontracts:

 

               Concentra Preferred Systems

 

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G.11 PAST PERFORMANCE REGISTRATION

 

In accordance with the past performance requirements of the FAR, CMS shall

require the contractor to register with the National Institutes of Health (NIH)

Contractor Performance System (CPS). The database allows for the electronic

collection, maintenance and dissemination of contractor performance information.

Contractor registration is available online at: https://cpscontractor.nih.gov.

 

G.12 ACCOUNTING AND APPROPRIATION DATA

 

            CAN NO.         SOURCE OF RECORD NO.

 

             TBD                09-70-0005

 

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SECTION H - SPECIAL CONTRACT REQUIREMENTS

 

H.1 DELIVERABLES/INTERNET - INTRANET APPLICATIONS

 

If applicable, all written deliverables will include a version in Hypertext

Mark-Up Language (HTML) formatted according to Centers for Medicare and Medicaid

(CMS) Intenet, Intranet, and Extranet Standards; available online at

www.cms.gov/about/web/inetspecx.htm.

 

All websites. Internet applications, and content developed by Contractor shall

reside on CMS servers, follow CMS Standards and Guidelines, and fitter through

the standard agency Internet Clearance process.

 

If CMS agents or Contractor include information that appears on www.cms.gov or

www.medicare.gov as part of their websites, they must link directly to these

sites to ensure the validity and timeliness of the information. Duplication of

content is not permitted.

 

Contractor performing work on projects that include the development of Internet,

Intranet, or Extranet applications, shall schedule and meet with CMS's Web

Support Team for guidance before they begin to develop the project.

 

H.2. HHSAR 352-224-70 CONFIDENTIALITY OF INFORMATION (APR 1984)

 

      (a)   Confidential information, as used in this clause, means information

            or data of a personal nature about an individual, or proprietary

            Information or data submitted by or pertaining to an institution or

            organization.

 

      (b)   In addition to the types of confidential information described in

            paragraph (a) of this clause, information which might require

            special consideration with regard to the timing of its disclosure

            may derive from studies or research, during which public disclosure

            of preliminary unvalidated findings could create erroneous

            conclusions which might threaten public health or safety if acted

            upon.

 

      (c)   The Contracting Officer and the Contractor may, by mutual consent,

            identify elsewhere in this contract specific information and/or

            categories of information which the Government will furnish to the

            Contractor or that the Contractor is expected to generate which is

            confidential. Similarly, the Contracting Officer and the Contractor

            may, by mutual consent, identify such confidential information from

            time to time during the performance of the contract. Failure to

            agree will be settled pursuant to the "Disputes" clause.

 

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      (d)   If it is established elsewhere in this contract that information to

            be utilized under this contract, or a portion thereof, is subject to

            the Privacy Act, the Contractor will follow the rules and procedures

            of disclosure set forth in the Privacy Act of 1974, 5 U.S.C. 552a,

            and implementing regulations and policies, with respect to systems

            of records determined to be subject to the Privacy Act.

 

      (e)   Confidential information, as defined In paragraph (a) of this

            clause, that is information or data of a personal nature about an

            individual, or proprietary Information or data submitted by or

            pertaining to an institution or organization, shall not be disclosed

            without the prior written consent of the individual, institution, or

            organization.

 

      (f)   Written advance notice of at least 45 days will be provided to the

            Contracting Officer of the Contractor's intent to release findings

            of studies or research, which have the possibility of adverse

            effects on the public or the Federal agency, as described in

            paragraph (b) of this clause. If the Contracting Officer does not

            pose any objections in writing within the 45-day period, the

            Contractor may proceed with disclosure. Disagreements not resolved

            by the Contractor and the Contracting Officer will be settled

            pursuant to the "Disputes" clause.

 

      (g)   Whenever the Contractor Is uncertain with regard to the proper

            handling, of material under the contract, or If the material In

            question is subject to the Privacy Act or is confidential

            Information subject to the provisions of this clause, the Contractor

            should obtain a written determination from the Contracting Officer

            prior to any release, disclosure, dissemination, or publication.

 

      (h)   Contracting Officer determinations will reflect the result of

            internal coordination with appropriate program and legal officials.

 

      (i)   The provisions of paragraph (e) of this clause shall not apply when

            the information is subject to conflicting or overlapping provisions

            in other Federal, State or local laws.

 

H.3 CONTRACTING PROHIBITIONS/ORGANIZATIONAL CONFLICT OF INTEREST

 

      a.    The RAC and all subcontractors must be in compliance with FAR 9.5,

            Conflict of Interest.

 

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b.    In addition, Section 306 of the Medicare Prescription Drug and

      Modernization Act of 2003 stipulates that the Secretary may not enter into

      a recovery audit contract under this section with an entity to the extent

      that the entity is a fiscal intermediary under section 1816 of the Social

      Security Act (42 U.S.C. 1395h), a carrier under section 1842 of such Act

      (42 U.S.C. 1395u), or a Medicare Administrative Contractor under section

      1874A of such Act.

 

c.    In further carrying out the intention of the prohibition of MMA Section

      306, CMS has determined the following exclusions apply:

 

      (i)   For the purpose of this contract, FIs, Carriers, PSCs, COBCs, and

            DMERCs are precluded from being in a team arrangement, joint venture

            arrangement, subcontract or in a wholly owned subsidiary arrangement

            in order to perform this work.

 

      (ii)  If you are a Fl, Carrier, PSC, COBC, or DMERC with a wholly owned

            subsidiary, that wholly owned subsidiary is also prohibited from

            receiving an award at any tier for this work.

 

      (iii) Any vendor that holds a MMA 306 RAC contract is prohibited from

            entering into any other contract with CMS for the purpose of

            identifying and/or recoupment of underpayments and overpayments

            relating to Medicare claims. This prohibition shall be in effect for

            the full term of the RAC contract.

 

H.4 CONDITIONS FOR PERFORMANCE

 

In addition to the performance requirement of this contract as set forth under

Section C. DESCRIPTION/SPECIFICATIONS/WORK STATEMENT, the Contractor may be

required to comply with the requirements of any revisions in legislation or

regulations which may be enacted or implemented during the period of performance

of this contract, and are directly applicable to the performance requirements of

this contract.

 

In the event new legislation or regulations impacting the Contract require

immediate implementation, the Contracting Officer shall issue a change order

pursuant to FAR Clause 52.243-1, entitled Changes - Cost Reimbursement.

 

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H.5 HHSAR 352.270-7 PAPERWORK REDUCTION ACT (JAN 2001)

 

(a)   In the event that it subsequently becomes a contractual requirement to

      collect or record information calling either for answers to identical

      questions from 10 or more persons other than Federal employees, or

      information from Federal employees which is outside the scope of their

      employment, for use by the Federal government or disclosure to third

      parties. The Paperwork Reduction Act of 1995 (Pub. L. 104-13) shall apply

      to this contract. No plan, questionnaire, interview guide or other similar

      device for collecting information (whether repetitive or single-time) may

      be used without first obtaining clearance from the Office of Management

      and Budget (OMB). Contractors and Project Officers should be guided by the

      provisions of 5 CFR 1320, Controlling Paperwork Burdens on the Public, and

      seek the advice of the HHS operating division or Office of the Secretary

      Reports Clearance Offers to determine the procedures for acquiring OMB

      clearance.

 

(b)   The Contractor shall obtain the required OMB clearance through the Project

      Officer before expending any funds or making public contacts for the

      collection of data. The authority to expend funds and proceed with the

      collection of information shall be in writing by the Contracting Officer.

      The Contractor must plan at least 120 days for OMB clearance. Excessive

      delays caused by the Government that arises out of causes beyond the

      control and without the fault or negligence of the Contractor will be

      considered in accordance with the Excusable Delays or Default clause of

      this contract.

 

H.6 DISPOSAL OF IMAGED MEDICAL RECORDS

 

Imaged medical records must be disposed of in a manner than leaves no trace of

data. The RAC shall use a method compliant with CMS operating procedures and

standards. In addition, a log of all disposed records shall be maintained by the

RAC.

 

H.7 HIPAA BUSINESS ASSOCIATE PROVISION

 

HIPAA BUSINESS ASSOCIATE PROVISION II

 

DEFINITIONS:

 

All terms used herein and not otherwise defined shall have the same meaning as

in the Health Insurance Portability and Accountability Act of 1996 ("HIPAA," 42

U.S.C. sec. 1320d) and the

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corresponding implementing regulations. Provisions governing the Contractor's

duties and obligations under the Privacy Act (including data use agreements) are

covered elsewhere in the contract.

 

"Business Associate" shall mean the Contractor.

 

"Covered Entity" shall mean CMS' Medicare Fee for Service program and/or

Medicare's Prescription Drug Discount Care and Transitional Assistance Programs.

"Secretary" shall mean the Secretary of the Department of Health and Human

Services or the Secretary's designee.

 

OBLIGATIONS AND ACTIVITIES OF BUSINESS ASSOCIATE

 

(a)   Business Associate agrees to not use or disclose Protected Health

      Information ("PHI"), as defined In 45 C.F.R. ss. 160.103, created or

      received by Business Associate from or on behalf of Covered Entity other

      than as permitted or required by this Contract or as required by law.

 

(b)   Business Associate agrees to use safeguards to prevent use or disclosure

      of PHI created or received by Business Associate from or on behalf of

      Covered Entity other than as provided for by this Contract. Furthermore,

      Business Associate agrees to use appropriate administrative, physical and

      technical safeguards that reasonably and appropriately protect the

      confidentiality, integrity and availability of the electronic protected

      health information ("EPHI"), as defined in 45 C.F.R. 160.103, it creates,

      receives, maintains or transmits on behalf of the Covered Entity to

      prevent use or disclosure of such EPHI.

 

(c)   Business Associate agrees to mitigate, to the extent practicable, any

      harmful effect that is known to Business Associate of a use or disclosure

      of PHI by Business Associate in violation of the requirements of this

      Contract.

 

(d)   Business Associate agrees to report to Covered Entity any use or

      disclosure involving PHI it receives/maintains from on behalf of the

      Covered Entity that is not provided for by this Contract of which it

      becomes aware. Furthermore, Business Associate agrees to report to Covered

      Entity any security incident involving EPHI of which it becomes aware.

 

(e)   Business Associate agrees to ensure that any agent, including a

      subcontractor, to whom it provides PHI received from Covered Entity, or

      created or received by Business Associate on behalf of Covered Entity,

      agrees to the same restrictions and conditions that apply through this

      Contract to Business Associate with respect to such information.

      Furthermore, Business Associate agrees to ensure that its agents and

      subcontractors implement reasonable and appropriate safeguards for the PHI

      received from or on behalf of the Business Associate.

 

(f)   Business Associate agrees to provide access, at the request of Covered

      Entity, to PHI received by Business Associate in the course of contract

      performance, to Covered Entity or, as directed by Covered Entity, to an

      individual In order to meet the requirements under 45 CFR ss. 164.524.

 

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(g)   Business Associate agrees to make any amendment(s) to PHI in a Designated

      Record Set that Covered Entity directs or agrees to pursuant to 45 CFR ss.

      164.526 upon request of Covered Entity.

 

(h)   Business Associate agrees to make internal practices, books, and records,

      including policies and procedures and PHI, relating to the use and

      disclosure of PHI received from, or created or received by Business

      Associate on behalf of Covered Entity, available to Covered Entity, or to

      the Secretary for purposes of the Secretary determining Covered Entity's

      compliance with the various rules implementing the HIPAA.

 

(i)   Business Associate agrees to document such disclosures of PHI and

      information related to such disclosures as would be required for Covered

      Entity to respond to a request by an individual for an accounting of

      disclosures of PHI In accordance with 45 CFR ss. 164.528.

 

(j)   Business Associate agrees to provide to Covered Entity, or an individual

      identified by the Covered Entity, information collected under this

      Contract, to permit Covered Entity to respond to a request by an

      Individual for an accounting of disclosures of PHI in accordance with 45

      CFR ss. 164.528.

 

PERMITTED USES AND DISCLOSURES BY BUSINESS ASSOCIATE

 

Except as otherwise limited in this Contract, Business Associate may use or

disclose PHI on behalf of, or to provide services to, Covered Entity for

purposes of the performance of this Contract, if such use or disclosure of PHI

would not violate the HIPAA Privacy or Security Rules if done by Covered Entity

or the minimum necessary policies and procedures of Covered Entity.

 

OBLIGATIONS OF COVERED ENTITY

 

(a)   Covered Entity shall notify Business Associate of any limitation(s) in its

      notice of privacy practices of Covered Entity in accordance with 45 CFR

      ss. 164.520, to the extent that such limitation may affect Business

      Associate's use or disclosure of PHI.

 

(b)   Covered Entity shall notify Business Associate of any changes in, or

      revocation of, permission by Individual to use or disclose PHI, to the

      extent that such changes may affect Business Associate's use or disclosure

      of PHI.

 

(c)   Covered Entity shall notify Business Associate of any restriction to the

      use or disclosure of PHI that Covered Entity has agreed to in accordance

      with 45 CFR ss. 164.522, to the extent that such restriction may affect

      Business Associate's use or disclosure of PHI.

 

PERMISSIBLE REQUESTS BY COVERED ENTITY

 

Covered Entity shall not request Business Associate to use or disclose PHI in

      any manner that would not be permissible under the HIPAA Privacy or

      Security Rules.

 

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TERM OF PROVISION

 

(a)   The term of this Provision shall be effective as of March 10, 2005, and

      shall terminate when all of the PHI provided by Covered Entity to Business

      Associate, or created or received by Business Associate on behalf of

      Covered Entity, is destroyed or returned to Covered Entity, or, if it is

      infeasible to return or destroy PHI, protections are extended to such

      information, in accordance with the termination provisions in this

      Section.

 

(b)   Upon Covered Entity's knowledge of a material breach by Business

      Associate, Covered Entity shall either:

 

      (1)   Provide an opportunity for Business Associate to cure the breach or

            end the violation consisten