HHS awards $23.7M contract for Risk Adjustment Data Validation services to KPMG LLP

Contract Overview

Contract Amount: $23,694,521 ($23.7M)

Contractor: Kpmg LLP

Awarding Agency: Department of Health and Human Services

Start Date: 2023-08-19

End Date: 2026-08-18

Contract Duration: 1,095 days

Daily Burn Rate: $21.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: TIME AND MATERIALS

Sector: Healthcare

Official Description: HHS-RISK ADJUSTMENT DATA VALIDATION (RADV)

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $23.7 million to KPMG LLP for work described as: HHS-RISK ADJUSTMENT DATA VALIDATION (RADV) Key points: 1. Contract awarded to a single, established vendor, raising questions about competitive pricing. 2. The contract's duration of 1095 days suggests a need for sustained support in data validation. 3. Focus on accounting services indicates a critical function for financial integrity within CMS. 4. The award type, a delivery order, implies it's part of a larger contracting vehicle. 5. No small business set-aside was utilized, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: fair

The contract value of $23.7 million over three years for Risk Adjustment Data Validation (RADV) services appears reasonable given the specialized nature of the work. However, without direct comparisons to similar RADV contracts or detailed cost breakdowns, a definitive value-for-money assessment is challenging. The use of Time and Materials pricing could lead to cost overruns if not closely monitored. Benchmarking against industry standards for accounting and data validation services would provide a clearer picture of pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The fact that it resulted in a single delivery order suggests that either only one proposal was deemed acceptable, or this specific order was placed against an existing contract vehicle. The level of competition for the underlying contract vehicle is not detailed here, but the initial full and open competition is a positive sign for price discovery.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging a wider range of offers and potentially driving down prices through market forces.

Public Impact

Beneficiaries of Medicare and Medicaid programs indirectly benefit from accurate risk adjustment, which ensures fair payment to healthcare providers. The services delivered are crucial for validating the accuracy of healthcare data used in payment calculations. The geographic impact is national, as CMS operates across the United States. This contract supports the operational workforce within CMS and potentially the contractor's accounting and data analysis teams.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost escalation due to Time and Materials pricing structure.
Lack of specific performance metrics in the provided data makes it difficult to assess effectiveness.
Limited insight into the specific data validation methodologies employed.

Positive Signals

Awarded through full and open competition, suggesting a robust bidding process.
Contractor (KPMG LLP) is a well-established firm with expertise in accounting and auditing.
The contract addresses a critical function for CMS's financial operations.

Sector Analysis

The healthcare sector, particularly within government programs like Medicare and Medicaid, relies heavily on accurate data validation to ensure appropriate financial reimbursements. Risk Adjustment Data Validation (RADV) is a key process for CMS to verify the accuracy of diagnoses submitted by healthcare providers, which directly impacts payment calculations. This contract fits within the broader IT and professional services spending categories for government agencies, with comparable spending benchmarks often found in contracts for auditing, consulting, and data analytics services.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract are limited. The focus is on a large, established firm, which may not directly benefit the small business ecosystem unless KPMG has its own robust small business subcontracting program.

Oversight & Accountability

Oversight for this contract would typically fall under the Centers for Medicare and Medicaid Services (CMS) program officials and contracting officers. Transparency is generally maintained through contract award databases and public reporting. Accountability measures would be defined in the contract's statement of work and performance standards. The Inspector General for the Department of Health and Human Services (HHS) would have jurisdiction over any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Medicare Advantage Program
Medicaid Program
Healthcare Fraud and Abuse Control Program
Centers for Medicare & Medicaid Services (CMS) IT Modernization

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Reliance on a single vendor for a critical function.
Data security and privacy concerns with sensitive healthcare information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $23.7 million to KPMG LLP. HHS-RISK ADJUSTMENT DATA VALIDATION (RADV)

Who is the contractor on this award?

The obligated recipient is KPMG 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 $23.7 million.

What is the period of performance?

Start: 2023-08-19. End: 2026-08-18.

What is KPMG LLP's track record with federal contracts, particularly with HHS or CMS?

KPMG LLP has a significant history of performing work for federal agencies, including the Department of Health and Human Services (HHS). Their expertise spans financial auditing, management consulting, and IT services. While specific details on past RADV contracts with CMS are not provided here, KPMG's extensive experience in the accounting and auditing domain suggests a strong capability to handle complex data validation tasks. Federal contract databases often show numerous awards to large consulting firms like KPMG across various agencies, indicating a consistent presence and ability to secure government work. Further analysis would involve reviewing their past performance evaluations and specific contract history related to healthcare data and financial integrity.

How does the $23.7 million contract value compare to similar RADV validation contracts?

Directly comparing the $23.7 million value for this specific 3-year RADV contract to identical contracts is challenging without access to a comprehensive database of all RADV awards. However, given that RADV is a critical and complex function for CMS, involving extensive data analysis and validation of healthcare provider claims, a multi-million dollar award over several years is not unexpected. The value is influenced by factors such as the volume of data processed, the complexity of the validation rules, and the required expertise. Benchmarking against contracts for similar data analytics, auditing, or program integrity services within HHS or other large federal agencies could provide a broader context for assessing whether this award represents a competitive price point.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks for this contract include potential cost overruns due to the Time and Materials (T&M) pricing structure, which can be less predictable than fixed-price contracts. Another risk is the contractor's performance; if KPMG fails to accurately validate data, it could lead to incorrect payments to healthcare providers, impacting program integrity and financial stability. Data security and privacy are also significant risks, given the sensitive nature of healthcare data. Mitigation strategies likely include robust oversight by CMS contracting officers, clearly defined performance standards and deliverables in the contract, regular progress reviews, and strict adherence to data security protocols and federal regulations like HIPAA. The use of a well-established contractor like KPMG may also mitigate performance risk.

How effective is the Risk Adjustment Data Validation (RADV) program in ensuring accurate payments to healthcare providers?

The RADV program is a crucial component of CMS's efforts to ensure accurate payments within Medicare Advantage and other risk-adjusted programs. Its primary goal is to detect and correct payment errors resulting from inaccurate or unsupported diagnosis codes submitted by healthcare plans. By validating a sample of medical records against submitted diagnoses, RADV helps to prevent overpayments or underpayments, thereby promoting program integrity and financial solvency. While the program is essential, its effectiveness can be influenced by the sampling methodologies used, the thoroughness of the validation process, and the responsiveness of healthcare plans to findings. Continuous improvement and adaptation of RADV processes are necessary to keep pace with evolving healthcare data and payment models.

What has been the historical spending trend for RADV services at HHS?

Historical spending on RADV services by HHS has likely seen fluctuations and increases over time, driven by the expansion of Medicare Advantage and the increasing complexity of healthcare payment models. As government agencies face greater scrutiny over program integrity and financial stewardship, investments in data validation and program integrity functions like RADV tend to grow. Specific historical spending data for RADV services would require detailed analysis of HHS's budget allocations and contract awards over multiple fiscal years. It's reasonable to assume that spending has been substantial, reflecting the critical nature of ensuring accurate payments in multi-billion dollar healthcare programs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Offices of Certified Public Accountants

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 8350 BROAD ST STE 900, MC LEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $27,085,019

Exercised Options: $23,694,521

Current Obligation: $23,694,521

Actual Outlays: $16,772,994

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $1,600,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00F275CA

IDV Type: FSS

Timeline