DoD's $98M Pharmacy Benefit Management contract saw a 366-day term in FY12, awarded to Wisconsin Physicians Service Insurance Corp

Contract Overview

Contract Amount: $98,180,865 ($98.2M)

Contractor: Wisconsin Physicians Service Insurance Corp.

Awarding Agency: Department of Defense

Start Date: 2012-06-29

End Date: 2013-06-30

Contract Duration: 366 days

Daily Burn Rate: $268.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: FISCAL YEAR 2012 FUNDING FOR THE EXERCISE OF OPTION 5 OF THE CONTRACT.

Place of Performance

Location: MONONA, DANE County, WISCONSIN, 53713

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $98.2 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP. for work described as: FISCAL YEAR 2012 FUNDING FOR THE EXERCISE OF OPTION 5 OF THE CONTRACT. Key points: 1. The contract's value for money is difficult to assess without detailed performance metrics and cost breakdowns. 2. Competition dynamics indicate a full and open approach, suggesting potential for competitive pricing. 3. Risk indicators are moderate, with contract type and duration being key factors. 4. Performance context is limited to the specified fiscal year funding. 5. Sector positioning places this within Defense Health Agency's pharmaceutical services.

Value Assessment

Rating: fair

The reported value of $98.2 million for a 366-day period represents a significant investment in pharmacy benefit management. Benchmarking this against similar contracts is challenging without more granular data on the scope of services provided and the number of beneficiaries served. The fixed-price incentive contract type suggests an attempt to align contractor performance with cost objectives, but the ultimate value for money depends on the achieved efficiencies and savings in drug costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically fosters a competitive environment among potential bidders. This approach aims to ensure that the government receives the best possible pricing and services by allowing all qualified sources to participate. The number of bidders is not specified, but the method itself suggests a robust process for price discovery.

Taxpayer Impact: A full and open competition process is generally favorable for taxpayers as it increases the likelihood of obtaining competitive pricing and innovative solutions, potentially leading to cost savings.

Public Impact

Beneficiaries include military personnel, retirees, and their families who rely on pharmacy services. Services delivered encompass the administration and management of pharmacy benefits. Geographic impact is nationwide, covering all eligible beneficiaries. Workforce implications are primarily related to the administrative and operational staff supporting the PBM services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if incentive targets are not met or if scope creep occurs.
Dependence on contractor's ability to manage complex pharmacy networks and formulary effectively.
Ensuring compliance with all federal regulations and healthcare standards.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Fixed-price incentive contract type aims to control costs and reward performance.
Long-term contract potential suggests a stable and ongoing need for these services.

Sector Analysis

This contract falls within the broader healthcare sector, specifically focusing on pharmaceutical benefit management (PBM). The PBM market is a significant segment of the healthcare industry, responsible for negotiating drug prices, managing formularies, and processing prescription claims. Comparable spending benchmarks for PBM services can vary widely based on the size of the covered population and the complexity of the benefit design.

Small Business Impact

Information regarding small business set-asides or subcontracting plans for this specific contract is not provided. However, large contracts in the healthcare administration sector often include provisions for small business participation, either directly or through subcontracting opportunities with the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Health Agency (DHA), with potential involvement from the Department of Defense's Inspector General for audits and investigations. Transparency is generally maintained through contract awards databases and reporting requirements, though specific performance data may be less publicly accessible.

Related Government Programs

TRICARE Pharmacy Program
Department of Veterans Affairs Pharmacy Benefits Management
Federal Employees Health Benefits Program Pharmacy Services

Risk Flags

Contract duration and funding level require careful monitoring for cost control.
Performance metrics and quality assurance are critical for ensuring effective PBM services.
Cybersecurity and data privacy are paramount given the sensitive nature of health information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $98.2 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP.. FISCAL YEAR 2012 FUNDING FOR THE EXERCISE OF OPTION 5 OF THE CONTRACT.

Who is the contractor on this award?

The obligated recipient is WISCONSIN PHYSICIANS SERVICE INSURANCE CORP..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $98.2 million.

What is the period of performance?

Start: 2012-06-29. End: 2013-06-30.

What was the specific performance of Wisconsin Physicians Service Insurance Corp. under this contract?

The provided data focuses on the funding for FY12 and the contract's duration, not on the specific performance metrics or outcomes achieved by Wisconsin Physicians Service Insurance Corp. To assess performance, one would need access to contract performance reports, quality metrics, beneficiary satisfaction surveys, and any documented instances of contractor non-compliance or exceptional service. Without this detailed information, a performance evaluation is not possible based solely on the award data.

How does the $98.2 million cost compare to similar pharmacy benefit management contracts for the military health system?

Direct comparison of the $98.2 million cost for FY12 is difficult without knowing the exact scope of services, the number of covered lives, and the specific benefits administered. The TRICARE program, for instance, is a massive undertaking. However, this figure represents a substantial investment for a single fiscal year. Benchmarking would require analyzing the cost per member per month (PMPM) for similar government or large commercial PBM contracts, taking into account differences in drug utilization, formulary management strategies, and administrative overhead.

What were the primary risks associated with this pharmacy benefit management contract?

Key risks for a contract of this nature include potential for rising drug costs that outpace negotiated savings, contractor performance issues in managing the pharmacy network or processing claims accurately, cybersecurity threats to sensitive beneficiary data, and challenges in ensuring beneficiary access to necessary medications. The fixed-price incentive structure aims to mitigate cost risks, but effective oversight is crucial to manage performance and compliance risks throughout the contract's life.

What is the historical spending trend for pharmacy benefit management services within the Department of Defense?

Historical spending on PBM services by the DoD, particularly through programs like TRICARE, has generally trended upwards due to increasing prescription drug costs and an expanding beneficiary population. While this specific contract represents a portion of that spending for FY12, a comprehensive analysis would involve examining annual expenditures over several years, identifying major contract vehicles, and understanding the factors driving cost increases, such as new high-cost drugs and utilization patterns.

Were there any notable issues or controversies related to this contract or contractor?

Based on the provided data, there are no immediate indicators of specific controversies or notable issues tied to this particular contract award for FY12. However, large-scale government contracts, especially in healthcare, can sometimes face scrutiny regarding pricing, performance, or contract modifications. A thorough review of contract history, including any modifications, task orders, and associated performance reviews or audits, would be necessary to identify any past issues.

Industry Classification

NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 1717 W BROADWAY, MADISON, WI, 53713

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $98,180,865

Exercised Options: $98,180,865

Current Obligation: $98,180,865

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9400207D0001

IDV Type: IDC

Timeline