General Questions

1. If a bidder is selected to audit the administrative aspect of the IHC Program, would there be a conflict in selecting the same bidder to perform audits in accordance with the RFP to Audit Losses of Carriers Seeking Reimbursements from the IHC Program?
   
   • The same audit firm could be selected for both RFPs.
     
     
2. Should carrier losses be audited before auditing of the administrative aspects of the IHC Program?
   
   • That may be the ideal situation, however, planning and performing audits of the losses at the carrier locations may not be as easily scheduled and completed as the administrative audits at the Board’s office in Trenton.  Please note, the administrative audit would evaluate the billings and collections of loss assessments during the fiscal year being audited.  Adjustments, if any, to the reported losses would be recorded in the fiscal year when loss audits are completed and the amount of adjustment is known.
     
     
3. Will the IHC Board provide access to background data, including legal opinions that support the Board’s treatment of an issue?
   
   • The IHC Board will provide information necessary for completing the audit.
     
     
4. Will Executive Session minutes be available to the successful bidder?
   
   • Executive Session discussions are privileged and confidential; however, all IHC Board action is reported in Open Session, including actions resulting from Executive Session discussions.
     
     
5. Will questions at the pre-bid meeting be limited to only those forwarded in advance?
   
   • No, additional questions may be raised.
     
     
6. Can you provide the names of the IHC Board of Directors?
   
   • The IHC Board is composed of nine members, but currently only has seven seats filled by representatives from Aetna, UnitedHealthCare, Horizon, Guardian, the New Jersey Department of Banking & Insurance, an employer representative and a consumer representative.  More information is on the website at http://www.state.nj.us/dobi/ihcpage.htm.
     
     
7. Can you provide the names of the members of the Operations and Audit Committee?
   
   • The committee is composed of representatives of Aetna, Oxford (United HealthCare), and the NJ Department of Banking & Insurance.
     

Questions by RFP Item Number

1. Paragraph 1.1 (and 4.2.1) – it appears the IHC wants separate audits for the companies grouped in the three annual buckets outlined in Exhibit B.  Should the bid be per audit of each carrier in each annual grouping or in aggregate for all three, and is the intention to award by bucket?
   • The bid should be by calculation period, that is, 2001/2002 losses, 2003/2004 losses, and 2005/2006 losses.  At this time, the IHC Board would prefer to award the contract to a single firm for all three calculation periods.
     
     
2. Paragraph 1.1 – Since it appears audits are to be performed at the carrier, will the State provide the carrier addresses?
   • Carriers will provide exact locations where fieldwork will be performed, but we believe it is likely the auditor will need to perform some work in Florida, Wisconsin, Illinois, Iowa, New York and/or Pennsylvania. 
     
     
3. Paragraph 1.1 – Is travel covered at the NAIC allowed rates or at actual costs (since travel expense guidance is only for guidance purposes and not subject to State limitations on its employees)?
   • The IHC Board has not established a specific standard for travel expenses, but naturally, does not intend to reimburse in excess of actual costs. The standards for travel expenses each auditor presents in its bid is a factor that will be considered in evaluating the bid.
     
     
4. Paragraph 1.2 – Will DOBI provide the bidder with relevant carriers’ financial condition or market conduct reports which might impact an auditor’s review?
   • Filed financial information and market conduct reports are subject to public disclosure, and would be available for the auditor’s review if necessary.
     
     
5. Paragraph 1.2 – Will the bidder have access to the AG’s office since they are counsel to the IHC, particularly if there were issues with any carrier per se?
   • The contracted auditor will have access to the assigned Deputy to the extent necessary for performance of the audits.
     
     
6. Paragraph 1.2 – Is an auditor supposed to audit all standards required for each carrier or is the auditor to assume that, in absence of any financial condition or market conduct information to the contrary, that each carrier is complying with the IHC rules and regulations?
   • The auditor will be required to audit a carrier’s compliance with relevant IHC rules and regulations without regard to financial condition or market conduct information.
     
     
7. Paragraph 1.3 – Does the IHC expect an invoice at the completion of each audit or would the IHC consider progress billing throughout the course of each carrier audit?
   • The IHC Board expects progress billing throughout the course of each loss audit. 
     
     
8. Paragraph 2.0 – Although we typically provide an hourly rate based upon level of skill required, does the All Inclusive Rate referenced in the RFP suggest that the IHC requires a blended rate for each audit?
   • Yes.
     
     
9. Paragraph 2.0 – Depending upon location of the fieldwork, does the IHC allow for excess commutation time to be billed?
   • No, if we understand the question correctly.  The IHC Board expects to be billed for time worked at the carrier’s location, and expenses actually related to travel, but not for travel delays.  The IHC Board has not established a standard for reimbursement of travel expenses, but the standards for travel and travel expenses each auditor presents in its bid is a factor that will be considered in evaluating the bid.
     
     
10. Paragraph 3.2.2 – Is pre-registration required to attend the bidder’s conference, and if so, will you provide information in advance?
    • Potential bidders should contact Rosaria Lenox by email, phone or fax.  Information for contacting Ms. Lenox is in the RFP.  Potential bidders wishing to call-in will receive the conference call phone number and access codes upon request.  Potential bidders should contact Ms. Lenox no later than 1:00 P.M. on June 10th to assure a timely response. 
      
      
11. Paragraph 3.2.2 – Has an agenda been prepared for the mandatory pre-bid conference on June 11?  Will topics in addition to the answers to submitted questions and subsequent follow up questions be covered? If so, what topics do you anticipate addressing?
    • An agenda has not been prepared at this time, but will be posted on the web at http://www.state.nj.us/dobi/ihcpage.htm prior to the conference.  The topics are unlikely to be substantially different than those covered in the RFP.  We will begin with a general overview of the IHC Program, and it is possible additional questions will be raised during the conference.    
      
      
12. Paragraph 3.7 – Does the IHC anticipate that the auditor will obtain external actuarial certification of information provided by the carrier in addition to our audit procedures?
    • No.
      
      
13. Paragraph 4.2.1 – Has an audit of the carriers’ losses reported to the IHC Program ever been completed prior to this request? If so, would a copy of the report(s) be available for our review?
    • With respect to the carriers addressed by the RFP in question, all have filed losses previously with the exception of Guardian; thus, there is no prior loss audit for Guardian.  The most recent audits for Aegon and Fortis remain open (for the 1997/1998 and 1999/2000 calculation periods).  The most recent audits for Celtic, Metropolitan and Principal have been completed, and could be reviewed.  In addition, all loss audits through the 1996 calculation period have been completed, and would be available for review.    
      
      
14. Paragraph 4.2.2 – Can we assume that since you want us to review data files related to both payment and premiums that the IHC wants the auditors to apply financial examination and market conduct procedures to them as well?
    • The loss audits are neither financial exams nor market conduct exams.  However, in evaluating the premium data, some of the verification may be similar to that done in a financial exam.  Likewise, in reviewing claims files, some of the review for the audit may be similar to that done in a market conduct exam in that the audit will address whether claims have been paid properly pursuant to the term of the standard health benefits plans and applicable regulations.     
      
      
15. Paragraph 4.2.2 – Has there been any significant changes in the nature of operations of the carriers over the periods requested for audit?
    • While there has been no change in the IHC Program that would necessarily result in a change in carrier operation for the periods in question, we are unable to comment as to whether a carrier may have instituted a change in operations for some other reasons.
      
      
16. Paragraph 4.2.2 – Do related party allocations come into play or are they to be ignored?
    • If we understand the question correctly, we are unable to respond because the situations are fact-sensitive.
      
      
17. Paragraph 4.2.2 – Does the IHC or AG have any concerns about investment income losses (Exhibit B) which appear to inflate overall carrier losses irrespective of their actual loss?
    • Investment income losses are to be audited using the standards in the regulations.  The relationship to the claims loss is not a factor in either the audit or in the IHC Board’s evaluation as to the appropriateness of the investment income loss.
      
      
18. Paragraph 4.2.2 – With respect to the Investment departments of the carriers, how are investment transactions conducted and maintained? Do they utilize many derivatives? How is the investment income allocated to the Health policies?
    • We are unable to answer these questions because they are carrier-specific.  Please note, however, the reporting of net investment income for purposes of Exhibit K should be in accordance with N.J.A.C. 11:20-8.5(d), included in Attachment D of the RFP. 
      
      
19. Paragraph 4.2.2 – What is the approximate volume of the premium and claim data for each carrier? Volume of policies in force?
    • It is unclear whether the question is limited to the IHC market, or if the question is broader.  General information on each carrier’s business in New Jersey (and worldwide) can be viewed using the Commissioner’s Report online at http://www.state.nj.us/dobi/commissreport/carmenu.htm. (AEGON’s information is under TransAmerica Life Insurance Company, and Fortis is now Time Insurance Company.)  The most recently posted Commissioner’s Report is for calendar year 2005.  Volume of policies is not provided.
      
    • With respect to IHC market-specific information for the calculation periods covered in the RFP, premium and claim data (as reported to the IHC Program on Exhibit K) is included in Attachment B to the RFP.  The carriers also reported their enrollment (covered lives) on their Exhibit Ks by quarter, and then obtained an average two-year enrollment.  For the 2001/2002 calculation period, all of the carriers in question reported average enrollment, as follows:  AEGON, 16.2; Celtic, 18; Guardian, 35.38; Fortis, 2; Metropolitan, 15; and Principal, 6.  AEGON, Fortis, Metropolitan and Principal reported no enrollment in the following two calculation periods.  Celtic and Guardian reported average enrollment of 8 and 34, respectively, for the 2002/2003 calculation period, and 3 and 9, respectively for the 2004/2005 calculation period.      
      
      
20. Paragraph 4.2.2 – With respect to the information submitted by the carriers to the IHC on Exhibit K, are the supporting data files received from the carriers or do the carriers maintain all supporting information? If the IHC receives data files, in what format(s) are the data files?
    • Supporting information is retained by the carriers.   
      
      
21. Paragraph 4.3.1 – Does the IHC want the auditor to audit medical record data supplied as requested by the carriers only, or to audit medical records that support claimed provider losses?
    • The auditor will audit medical record data supplied as requested by the carriers only. 
      
      
22. Paragraph 4.3.2 – In reference to completing the fieldwork within 120 days of the carrier making the required information available, when does the IHC anticipate the carriers will have the records available to the auditor?
    • Upon selection of an auditor, the IHC Board notifies carriers of the selection, and requests that the carriers prepare the records.  Generally, the IHC Board anticipates carriers will have the information available within approximately 90 days following this notice.     
      
      
23. Paragraph 4.3.2 – Is the contractor held harmless from any specific carrier delays since they may impact other scheduled carrier audit services?
    • In general, yes.  However, the IHC Board anticipates the auditor will have the ability to adjust audit schedules and work on another audit during any carrier delay. 
      
      
24. Paragraph 4.4.3 – Are the audit reports limited to IHC use or are they for others (legislature, DOBI, general public)?
    • The loss audit reports are intended for use by the IHC Board.  However, these audit reports are subject disclosure pursuant to Open Public Records Act requests. 
      
      
25. Paragraph 4.4.4 – Per the RFP, invoices are to be submitted on a carrier-by-carrier basis, and by 2-year calculation period. Is this also the requested format for the fee information in the proposals? Or should the fees be presented in the aggregate?
    • Fees should be presented in the aggregate by calculation period.
      
      
26. Paragraph 4.4.4 – Is it correct that the auditor can bill with any frequency desired?
    • The auditor must submit invoices at least quarterly, but may submit them more frequently.
      
      
27. Paragraph 4.4.4 – How timely will IHC payments be?
    • The lag time between when an invoice is submitted and when payment is made may vary.  The IHC Board is scheduled to meet monthly, and considers expenses at every board meeting.  Unless there is a question about an invoice from the Board that IHC staff is unable to answer, or some extraordinary event, invoices will typically be paid within 30 days following submission.  The meeting schedule is posted at http://www.state.nj.us/dobi/division_insurance/ihcseh/ihcmeetings.htm.
      
      
28. Paragraph 4.4.5 – Workpapers will be maintained on a licensed software audit database; does the State intend to purchase a license for its own use or view as needed on a contractor supplied machine?
    • The State does not intend to purchase a license for the software.  Typically, if a request for the workpapers is made, review would be of paper copies.  A contractor-supplied machine might be acceptable, but more explanation of this would be necessary.
      
      
29. Paragraph 4.4.6 – Will the litigation testimony rate be factored into the bid evaluation, and if so, how will it be weighted?
    • The litigation testimony rate will be considered in the bid evaluation.  We are not providing information on weighting of factors at this time. 
      
      
30. Paragraph 4.4.6 – Is litigation arising as a result of the audit of a claim submission a frequent occurrence? How many times in the past has litigation been brought?
    • To date, only one loss audit has been the subject of litigation.  Note, however, that loss audits have only been completed through 1996.  Three loss audits remain outstanding each for the 1997/1998 and 1999/2000 calculation periods.  There is an expectation that two of these will result in litigation; however, the litigation may address regulatory requirements rather than the performance of the audit, per se.     
      
      
31. Paragraph 5.3 – Please clarify whether bidders are required to discuss an audit approach or to provide an audit plan per se with the RFP?
    • The bidder is not expected to provide an audit plan, but must provide an audit approach.
      
      
32. Paragraph 5.3.3 – If the bidder already has a completed Business Registration Certificate and/or W-9 on file with the Treasury, is another required to be sent since the information is on file already?
    • The bidder should submit a copy with the bid.
      
      
33. Paragraph 5.5 – Is there an overall budgeted cost for the audits? And if so, what is the overall budgeted cost for the audits?
    • We have included an estimated amount in the budget, however, that may have to be adjusted depending on the firm selected.
      
      
34. Paragraph 7.5 – Is the signed Confidentiality Agreement a required part of the bid submission, or is it required only upon the awarding of the bid?
    • The Confidentiality Agreement is required only upon the awarding of the bid, but is a condition of the award.