HHS awards $89.4M to Deloitte for risk adjustment data validation, with 5 years remaining

Contract Overview

Contract Amount: $89,422,865 ($89.4M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Health and Human Services

Start Date: 2018-11-20

End Date: 2026-11-28

Contract Duration: 2,930 days

Daily Burn Rate: $30.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: TIME AND MATERIALS

Sector: Healthcare

Official Description: LEAD ANALYTICAL CONTRACTOR (LAC) FOR RISK ADJUSTMENT DATA VALIDATION (RADV)

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $89.4 million to DELOITTE CONSULTING LLP for work described as: LEAD ANALYTICAL CONTRACTOR (LAC) FOR RISK ADJUSTMENT DATA VALIDATION (RADV) Key points: 1. Contract value of $89.4M over its potential lifespan indicates significant investment in data integrity. 2. Full and open competition suggests a robust market for these specialized consulting services. 3. The contract's duration and delivery order structure imply ongoing, evolving needs for RADV support. 4. Deloitte's established presence in federal contracting, particularly with HHS, provides performance context. 5. The 'Administrative Management and General Management Consulting Services' NAICS code positions this within a broad professional services sector. 6. The contract's Time and Materials pricing structure warrants scrutiny for cost control and efficiency.

Value Assessment

Rating: good

The contract value of $89.4M for RADV support over approximately 8 years (from 2018 to 2026) appears reasonable given the critical nature of Medicare and Medicaid data integrity. Benchmarking against similar large-scale data validation contracts is challenging without more specific service details, but the scale suggests a significant undertaking. The Time and Materials (T&M) pricing model, while common for evolving scopes, necessitates careful monitoring to ensure value for money and prevent cost overruns compared to fixed-price arrangements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of 5 bidders suggests a competitive environment for this type of specialized consulting service. A competitive process generally leads to better price discovery and potentially more innovative solutions, as vendors strive to offer the most compelling value proposition.

Taxpayer Impact: Taxpayers benefit from a competitive award process as it is more likely to result in a fair market price for the services rendered, preventing potential overpayment that could occur with less competitive solicitations.

Public Impact

Beneficiaries of accurate risk adjustment data include Medicare and Medicaid enrollees, ensuring appropriate funding for their care. The services delivered are crucial for the financial stability and operational integrity of federal healthcare programs. Geographic impact is nationwide, affecting all states and territories participating in Medicare and Medicaid. Workforce implications include the need for skilled data analysts, consultants, and project managers within the contractor organization and potentially within CMS for oversight.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing can lead to cost escalation if not closely managed.
The long duration of the contract (up to 8 years) may reduce flexibility to adapt to rapidly changing data validation needs or technologies.
Reliance on a single contractor for a critical function like RADV could pose a risk if performance falters.

Positive Signals

Awarded through full and open competition, suggesting a strong initial value proposition.
Deloitte is a well-established contractor with significant experience in federal IT and consulting services.
The contract addresses a critical need for data integrity in federal healthcare programs, supporting program effectiveness.

Sector Analysis

This contract falls within the professional services sector, specifically management and administrative consulting. The market for such services supporting federal healthcare programs is substantial, driven by regulatory requirements and the need for data accuracy. Comparable spending benchmarks would likely be found in other large federal IT and data analytics contracts, particularly those managed by HHS and CMS, which often involve complex data validation and processing.

Small Business Impact

The data provided does not indicate any specific small business set-aside provisions for this contract, nor does it detail subcontracting plans. Given the prime contractor is Deloitte Consulting LLP, a large business, the absence of set-aside information suggests it was not specifically targeted for small business participation at the prime level. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within the scope of this large contract.

Oversight & Accountability

Oversight for this contract is likely managed by the Centers for Medicare and Medicaid Services (CMS) program office responsible for Risk Adjustment. Accountability measures would be embedded in the contract's performance work statement and delivery orders, with potential for award fee evaluations. Transparency is facilitated through contract award databases like FPDS, though detailed performance metrics may be internal. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse related to the contract.

Related Government Programs

Medicare Fee-for-Service Improper Payments
Medicaid Data Integrity Initiatives
Healthcare Fraud and Abuse Control Program
CMS Health Insurance Marketplace Data Validation
Federal Health IT Modernization Programs

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Long contract duration may limit adaptability to evolving needs.
Dependence on a single contractor for a critical function.
Complexity of RADV process requires continuous monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $89.4 million to DELOITTE CONSULTING LLP. LEAD ANALYTICAL CONTRACTOR (LAC) FOR RISK ADJUSTMENT DATA VALIDATION (RADV)

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

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 $89.4 million.

What is the period of performance?

Start: 2018-11-20. End: 2026-11-28.

What is Deloitte's track record with HHS and CMS on similar data validation or consulting contracts?

Deloitte Consulting LLP has a long and extensive history of contracting with the Department of Health and Human Services (HHS) and its sub-agency, the Centers for Medicare and Medicaid Services (CMS). They have been awarded numerous contracts across various domains, including IT modernization, data analytics, program management, and consulting services. Specifically related to risk adjustment and data validation, Deloitte has likely been involved in supporting CMS's efforts to ensure the accuracy of health plan payments based on enrollee health status. Their consistent presence suggests a strong working relationship and a demonstrated capability to meet the complex requirements of these federal healthcare programs. Reviewing past performance evaluations and contract histories would provide a more granular understanding of their specific successes and any challenges encountered on prior engagements.

How does the $89.4M contract value compare to other RADV or similar data analytics contracts at CMS?

The $89.4 million total potential value for this contract, spanning from 2018 to 2026, positions it as a significant investment in data validation services for CMS. While direct comparisons are difficult without knowing the exact scope and duration of other RADV contracts, this figure is substantial. CMS frequently awards large contracts for data analytics, IT systems, and program integrity efforts, often in the tens or hundreds of millions of dollars, due to the complexity and scale of its operations serving millions of beneficiaries. Contracts for similar data validation, actuarial support, or program integrity functions within CMS could range from tens to hundreds of millions over their lifecycles. The value here reflects the critical nature of ensuring accurate risk adjustment payments, which directly impact program finances.

What are the primary risks associated with a Time and Materials contract of this magnitude and duration?

The primary risks associated with a Time and Materials (T&M) contract of this magnitude ($89.4M) and duration (up to 8 years) revolve around cost control and ensuring efficient performance. T&M contracts pay the contractor for the actual labor hours and materials used, plus a fee. This structure can lead to cost overruns if the scope is not well-defined, if project timelines extend unnecessarily, or if resource utilization is inefficient. For CMS, the risk is paying more than necessary if the contractor does not manage its resources effectively or if the project scope creeps without adequate justification. Robust oversight, detailed tracking of hours and expenses, and clear milestones are crucial to mitigate these risks and ensure the government receives good value for its investment.

How effective are RADV programs in ensuring the accuracy of payments to health plans?

Risk Adjustment Data Validation (RADV) programs are a critical mechanism employed by CMS to ensure the accuracy of payments made to Medicare Advantage and Affordable Care Act (ACA) marketplace health plans. These programs aim to prevent plans from inflating their reported enrollee diagnoses to receive higher payments. By validating a sample of medical records against submitted diagnosis codes, RADV helps to identify and correct overpayments or underpayments. While RADV is an essential tool, its effectiveness can be influenced by sampling methodologies, the quality of data submitted by plans, and the resources dedicated to the validation process. Continuous improvement and adaptation of RADV strategies are necessary to maintain program integrity and ensure fair payments based on actual enrollee health status.

What is the historical spending trend for RADV or similar data validation services at CMS?

Historical spending trends for Risk Adjustment Data Validation (RADV) and similar data integrity services at CMS have generally shown a consistent and often increasing investment. As federal healthcare programs like Medicare Advantage and the ACA marketplaces have grown in enrollment and complexity, so has the need for robust validation processes to ensure accurate payments and program integrity. CMS has historically allocated significant resources to combatting fraud, waste, and abuse, with data validation being a key component. While specific annual spending figures for RADV fluctuate based on program priorities, contract vehicles, and audit cycles, the overall trend indicates a sustained commitment to these functions. This is driven by regulatory requirements, the financial stakes involved, and the ongoing evolution of healthcare data and analytics capabilities.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte Financial Advisory Services LLP

Address: 1919 N LYNN ST, ARLINGTON, VA, 22209

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $89,422,866

Exercised Options: $89,422,866

Current Obligation: $89,422,865

Actual Outlays: $50,076,336

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $3,704,350

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QRAA18D001P

IDV Type: FSS

Timeline