HHS Paid $76.7M for Cancer Hospital Cost Report Audits, Facing Delays and Appeals

Contract Overview

Contract Amount: $76,696,560 ($76.7M)

Contractor: Blue Cross and Blue Shield of Alabama

Awarding Agency: Department of Health and Human Services

Start Date: 2007-09-13

End Date: 2017-09-30

Contract Duration: 3,670 days

Daily Burn Rate: $20.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 21

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Official Description: CANCER HOSPITAL COST REPORT AUDITS/HEARING APPEALS

Place of Performance

Location: BIRMINGHAM, SHELBY County, ALABAMA, 35244

State: Alabama Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $76.7 million to BLUE CROSS AND BLUE SHIELD OF ALABAMA for work described as: CANCER HOSPITAL COST REPORT AUDITS/HEARING APPEALS Key points: 1. Significant spending on audits and appeals suggests potential issues with initial cost reporting or billing accuracy. 2. The contract's duration and fixed-fee structure may incentivize efficiency, but the high cost warrants scrutiny. 3. Reliance on a single contractor for such a critical function could pose a risk if performance falters. 4. The sector involves complex healthcare regulations, making accurate cost reporting and auditing challenging.

Value Assessment

Rating: questionable

The total award of $76.7 million over 10 years for audit services is substantial. Without specific benchmarks for similar audit contracts, it's difficult to definitively assess value. However, the extended duration and the need for appeals suggest potential inefficiencies or complexities that may inflate costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the high volume of appeals and the extended contract period might indicate that the initial pricing or the scope of work was not fully optimized, or that the audit process itself is inherently complex and prone to disputes.

Taxpayer Impact: Taxpayer funds are used to pay for these audits. While audits are necessary for program integrity, the high cost and the need for appeals suggest that the process could be more efficient, potentially leading to higher overall program costs.

Public Impact

Ensures Medicare/Medicaid compliance for cancer hospitals. Audits aim to prevent improper payments and fraud. Appeals process indicates disputes over hospital billing or audit findings. Potential for increased healthcare costs if audits are inefficient or ineffective.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High total contract value.
Long contract duration.
Significant number of delivery orders.
Appeals process indicates potential disputes.

Positive Signals

Awarded under full and open competition.
Contract aims to ensure program integrity.

Sector Analysis

This contract falls within the healthcare administration sector, specifically focusing on auditing Medicare and Medicaid cost reports for cancer hospitals. Spending benchmarks in this area are highly variable, depending on the complexity of hospital billing and the scope of audits. The $76.7 million award over a decade suggests a significant ongoing need for these services.

Small Business Impact

The provided data does not indicate whether small businesses were involved in this contract. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The Centers for Medicare and Medicaid Services (CMS) is responsible for overseeing these contracts. The existence of a hearing appeals process suggests that there are established mechanisms for dispute resolution, but the volume and duration of appeals could indicate a need for improved oversight in the initial audit process or clearer guidance for hospitals.

Related Government Programs

Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

High total contract value.
Long contract duration.
Potential for disputes indicated by appeals.
Lack of clear performance metrics for audit effectiveness.
Single contractor may limit competitive pressure on quality.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $76.7 million to BLUE CROSS AND BLUE SHIELD OF ALABAMA. CANCER HOSPITAL COST REPORT AUDITS/HEARING APPEALS

Who is the contractor on this award?

The obligated recipient is BLUE CROSS AND BLUE SHIELD OF ALABAMA.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $76.7 million.

What is the period of performance?

Start: 2007-09-13. End: 2017-09-30.

What is the average cost per audit, and how does it compare to industry standards for similar healthcare cost report audits?

The total award is $76.7 million over approximately 10 years for 21 delivery orders. This averages to roughly $3.65 million per year or $3.65 million per delivery order. Without specific industry benchmarks for cancer hospital cost report audits, it's challenging to provide a direct comparison. However, the substantial amount suggests complex audits or a high volume of them.

What are the primary reasons for the hearing appeals, and what is the success rate of these appeals?

The primary reasons for appeals typically stem from disagreements between the audited entity (hospitals) and the auditor (CMS or its contractors) regarding allowable costs, billing practices, or interpretation of regulations. The success rate of these appeals is not provided in the data, but a significant number of appeals could indicate systemic issues in the audit process or documentation.

How effective has this contract been in identifying and recovering improper payments or preventing future fraud?

The effectiveness of the contract in identifying and recovering improper payments or preventing fraud is not directly quantifiable from the provided data. While audits are designed for these purposes, the high cost and the appeals process suggest that the efficiency and ultimate impact on program integrity warrant further investigation.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 21

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 450 RIVERCHASE PARKWAY EAST, BIRMINGHAM, AL, 35244

Business Categories: Category Business, Nonprofit Organization, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $85,080,773

Exercised Options: $85,080,773

Current Obligation: $76,696,560

Actual Outlays: $564,955

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 500990017

IDV Type: IDC

Timeline