Medicare FFS Program Contract Awarded to Noridian Healthcare Solutions for $374M, Ensuring Continuous Access for Beneficiaries

Contract Overview

Contract Amount: $37,408,525 ($37.4M)

Contractor: Noridian Healthcare Solutions, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2025-09-01

End Date: 2026-08-31

Contract Duration: 364 days

Daily Burn Rate: $102.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: THE MEDICARE FEE-FOR-SERVICE (FFS) PROGRAM IS A MANDATORY ENTITLEMENT PROGRAM THAT MUST, BY LAW, BE AVAILABLE TO ELIGIBLE MEDICARE BENEFICIARIES AND THEIR QUALIFIED HEALTH CARE PROVIDERS IN ALL U.S STATES/TERRITORIES ON A PERMANENT AND CONTINUOUS BAS

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 $37.4 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC for work described as: THE MEDICARE FEE-FOR-SERVICE (FFS) PROGRAM IS A MANDATORY ENTITLEMENT PROGRAM THAT MUST, BY LAW, BE AVAILABLE TO ELIGIBLE MEDICARE BENEFICIARIES AND THEIR QUALIFIED HEALTH CARE PROVIDERS IN ALL U.S STATES/TERRITORIES ON A PERMANENT AND CONTINUOUS BAS Key points: 1. Contract ensures uninterrupted access to Medicare FFS services for beneficiaries. 2. Noridian Healthcare Solutions, a long-standing carrier, continues its role. 3. The contract's cost-plus award fee structure incentivizes performance. 4. Focus on direct health and medical insurance carriers highlights sector specialization.

Value Assessment

Rating: good

The contract's Cost Plus Award Fee (CPAF) structure allows for flexibility in pricing based on performance, which is appropriate for a service with variable demand. Benchmarking against similar large-scale insurance carrier contracts is challenging due to unique program requirements, but the award fee mechanism provides some cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust price discovery process. The use of a definitive contract indicates a clear scope of work and established terms, likely leading to competitive pricing.

Taxpayer Impact: The contract ensures continued access to essential healthcare services for Medicare beneficiaries, representing a significant but necessary investment in public health infrastructure.

Public Impact

Ensures over 37 million Medicare beneficiaries maintain access to essential healthcare services. Supports the continuous operation of the Medicare Fee-for-Service program nationwide. Maintains stability in healthcare provider payments and patient care coordination.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Potential for cost overruns if award fee targets are not carefully managed.
Dependence on a single contractor for a critical national program.

Positive Signals

Ensures continuity of essential healthcare services.
Award fee structure incentivizes contractor performance.
Full and open competition likely yielded a fair price.

Sector Analysis

This contract falls within the healthcare sector, specifically focusing on health insurance carriers administering government programs. Spending benchmarks for similar large-scale federal health insurance contracts are typically in the hundreds of millions to billions of dollars annually, reflecting the scale of operations.

Small Business Impact

The data does not indicate specific provisions or impacts on small businesses within this contract. The primary contractor, Noridian Healthcare Solutions, is a large entity, and the nature of the work suggests it is not typically subcontracted to small businesses.

Oversight & Accountability

The Centers for Medicare and Medicaid Services (CMS) oversees this contract. Given the mandatory nature of the FFS program, robust oversight mechanisms are expected to ensure compliance, beneficiary access, and financial accountability.

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

Contract duration is relatively short (1 year), requiring frequent re-competition or extension.
Cost Plus Award Fee (CPAF) can lead to higher costs if not managed tightly.
Sole reliance on one carrier for a national program presents systemic risk.
Potential for scope creep or unmanaged cost increases under CPAF.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $37.4 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC. THE MEDICARE FEE-FOR-SERVICE (FFS) PROGRAM IS A MANDATORY ENTITLEMENT PROGRAM THAT MUST, BY LAW, BE AVAILABLE TO ELIGIBLE MEDICARE BENEFICIARIES AND THEIR QUALIFIED HEALTH CARE PROVIDERS IN ALL U.S STATES/TERRITORIES ON A PERMANENT AND CONTINUOUS BAS

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 $37.4 million.

What is the period of performance?

Start: 2025-09-01. End: 2026-08-31.

How does the award fee structure effectively balance contractor incentives with taxpayer cost control for this large-scale program?

The award fee structure is designed to incentivize Noridian Healthcare Solutions to meet or exceed performance targets related to beneficiary access, claims processing efficiency, and program integrity. CMS will monitor key performance indicators, and the contractor's fee will be adjusted based on performance against these metrics. This aims to ensure value for money by rewarding high performance while mitigating risks associated with cost-plus contracts.

What are the primary risks associated with relying on a single contractor for such a critical and widespread federal program?

The primary risks include potential service disruptions if the contractor faces operational issues, a lack of competitive pressure to innovate or improve efficiency over time, and the significant impact on beneficiaries if the contractor fails to meet its obligations. Contingency planning and strong contract management by CMS are crucial to mitigate these risks.

How effectively does this contract ensure the continuous and equitable availability of Medicare FFS services across all states and territories?

The contract explicitly mandates that the program must be available to eligible beneficiaries and providers in all U.S. states and territories on a permanent and continuous basis. Noridian's role as a long-standing carrier suggests established infrastructure to meet this requirement. CMS oversight will be critical to verify ongoing compliance and address any regional disparities.

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

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: $516,391,476

Exercised Options: $45,355,658

Current Obligation: $37,408,525

Actual Outlays: $8,618,096

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline