HHS Awards Noridian Healthcare Solutions $28.7M for DME MAC Services

Contract Overview

Contract Amount: $28,713,735 ($28.7M)

Contractor: Noridian Healthcare Solutions, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2025-03-01

End Date: 2026-11-30

Contract Duration: 639 days

Daily Burn Rate: $44.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: JURISDICTION A DME MAC

Place of Performance

Location: FARGO, CASS County, NORTH DAKOTA, 58103

State: North Dakota Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $28.7 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC for work described as: JURISDICTION A DME MAC Key points: 1. Contract awarded to Noridian Healthcare Solutions, LLC for Durable Medical Equipment Medicare Administrative Contractor (DME MAC) services. 2. The contract has a base period and option periods, with a total value of $28,713,735. 3. The contract was awarded under full and open competition, suggesting a competitive bidding process. 4. The contract type is Cost Plus Award Fee (CPAF), which incentivizes contractor performance. 5. This spending falls within the Direct Health and Medical Insurance Carriers sector.

Value Assessment

Rating: good

The contract value of $28.7 million for DME MAC services appears reasonable given the scope of work. Benchmarking against similar multi-year contracts for large-scale insurance carrier services would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple vendors had the opportunity to bid. This process generally leads to better price discovery and potentially more favorable pricing for the government.

Taxpayer Impact: The competitive nature of this award is expected to yield fair pricing, ensuring taxpayer funds are used efficiently for essential healthcare administrative services.

Public Impact

Ensures continued administration of Medicare benefits for Durable Medical Equipment. Impacts beneficiaries in Jurisdiction A who rely on DME MAC services. Supports the operational efficiency of the Centers for Medicare and Medicaid Services (CMS). Potential for improved service delivery through performance incentives in the CPAF structure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Award Fee contracts.
Dependence on a single contractor for a critical administrative function.
Complexity of managing award fee criteria effectively.

Positive Signals

Awarded through full and open competition.
Performance incentives designed to encourage efficiency.
Long-term contract provides stability for service delivery.

Sector Analysis

This contract falls under the Direct Health and Medical Insurance Carriers sector, which is crucial for the administration of government healthcare programs. Spending in this sector is generally stable, driven by healthcare needs and regulatory requirements.

Small Business Impact

The data provided does not indicate any specific set-asides for small businesses. The contract was awarded under full and open competition, suggesting that large businesses were likely the primary bidders.

Oversight & Accountability

The Centers for Medicare and Medicaid Services (CMS) is responsible for overseeing this contract. The Cost Plus Award Fee structure includes performance metrics that should be rigorously monitored to ensure accountability and value for money.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Cost Plus Award Fee (CPAF) can lead to higher costs if not managed tightly.
Potential for contractor performance issues impacting beneficiary services.
Dependence on a single entity for critical administrative functions.
Lack of specific small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $28.7 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC. JURISDICTION A DME MAC

Who is the contractor on this award?

The obligated recipient is NORIDIAN HEALTHCARE SOLUTIONS, LLC.

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 $28.7 million.

What is the period of performance?

Start: 2025-03-01. End: 2026-11-30.

What specific performance metrics are tied to the award fee, and how are they measured to ensure contractor accountability?

The award fee structure likely includes metrics related to claims processing timeliness, accuracy, beneficiary satisfaction, and compliance with program integrity requirements. CMS would establish specific targets and measurement methodologies for each metric. Regular performance reviews and audits would be conducted to assess Noridian's adherence to these targets, directly influencing the 'award fee' component of their compensation and ensuring accountability.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types in managing risk and ensuring cost-effectiveness for this type of service?

CPAF balances cost reimbursement with performance incentives. Unlike fixed-price contracts, it allows for flexibility in costs but includes an award fee tied to performance, encouraging efficiency and quality. This can be more effective than cost-plus-fixed-fee (CPFF) by directly motivating better outcomes, but it requires robust oversight to prevent potential cost escalation if award criteria are not strictly managed.

What is the potential impact on Medicare beneficiaries if Noridian Healthcare Solutions fails to meet performance expectations under this contract?

Failure to meet performance expectations could lead to delays in DME approvals, incorrect claim adjudications, or reduced beneficiary support, negatively impacting access to essential medical equipment. This could result in increased beneficiary frustration, potential financial burdens, and a decline in overall satisfaction with Medicare services. CMS would likely have remedies within the contract to address such performance failures.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 75FCMC23R0013

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 4510 13TH AVE S STE 1, FARGO, ND, 58103

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $150,419,282

Exercised Options: $32,354,976

Current Obligation: $28,713,735

Actual Outlays: $8,421,866

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline