HHS Spends $169M on Uninsured Healthcare Services via OptumServe, a Non-Competed Contract

Contract Overview

Contract Amount: $169,066,307 ($169.1M)

Contractor: Optumserve Technology Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2021-04-17

End Date: 2024-10-16

Contract Duration: 1,278 days

Daily Burn Rate: $132.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: CLAIMS REIMBURSEMENT TO HEALTH CARE PROVIDERS AND FACILITIES FOR TESTING, TREATMENT AND VACCINE ADMINISTRATION FOR THE UNINSURED.

Place of Performance

Location: COLUMBIA, HOWARD County, MARYLAND, 21044

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $169.1 million to OPTUMSERVE TECHNOLOGY SERVICES, INC. for work described as: CLAIMS REIMBURSEMENT TO HEALTH CARE PROVIDERS AND FACILITIES FOR TESTING, TREATMENT AND VACCINE ADMINISTRATION FOR THE UNINSURED. Key points: 1. Significant federal investment in uninsured healthcare, covering testing, treatment, and vaccines. 2. Sole-source award to OptumServe raises questions about competition and potential cost savings. 3. Contract duration extends to October 2024, indicating ongoing program support. 4. Pharmacy Benefit Management is a key service area, impacting drug costs for the uninsured.

Value Assessment

Rating: questionable

The contract's value of $169 million for pharmacy benefit management and related services is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded sole-source, meaning there was no open competition. This limits price discovery and may result in higher costs for taxpayers compared to a fully competed contract.

Taxpayer Impact: The lack of competition on this large contract could lead to suboptimal pricing, potentially increasing the financial burden on taxpayers for uninsured healthcare services.

Public Impact

Ensures access to essential healthcare services for uninsured individuals. Supports public health initiatives by covering testing, treatment, and vaccine administration. Potential for increased healthcare costs due to sole-source award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition
Lack of price benchmark for comparison
Extended contract duration

Positive Signals

Addresses critical need for uninsured healthcare
Supports vaccine administration

Sector Analysis

The healthcare sector, particularly services for vulnerable populations like the uninsured, often involves significant federal spending. Benchmarks for pharmacy benefit management and third-party administration can vary widely based on scope and complexity.

Small Business Impact

The contract does not indicate any specific provisions or set-asides for small businesses. The sole-source nature of the award further limits opportunities for small business participation.

Oversight & Accountability

Oversight is crucial for sole-source contracts to ensure the government receives fair value and that the services provided meet the intended objectives. Regular performance reviews and cost audits would be essential.

Related Government Programs

Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds
Department of Health and Human Services Contracting
Health Resources and Services Administration Programs

Risk Flags

Sole-source award
Lack of competitive bidding
No clear price benchmark
Extended contract duration without re-competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $169.1 million to OPTUMSERVE TECHNOLOGY SERVICES, INC.. CLAIMS REIMBURSEMENT TO HEALTH CARE PROVIDERS AND FACILITIES FOR TESTING, TREATMENT AND VACCINE ADMINISTRATION FOR THE UNINSURED.

Who is the contractor on this award?

The obligated recipient is OPTUMSERVE TECHNOLOGY SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Health Resources and Services Administration).

What is the total obligated amount?

The obligated amount is $169.1 million.

What is the period of performance?

Start: 2021-04-17. End: 2024-10-16.

What was the justification for awarding this contract sole-source, and what steps were taken to ensure fair pricing?

The justification for a sole-source award typically involves specific circumstances, such as a unique capability or urgent need. Without detailed documentation, it's difficult to ascertain the exact reasoning. To ensure fair pricing, agencies often rely on independent cost estimates, historical pricing data, or benchmark analysis, though these are less effective without competitive pressure.

What are the potential risks associated with a sole-source contract of this magnitude in the healthcare sector?

The primary risks include inflated costs due to lack of competition, potential for reduced service quality if the contractor faces no pressure to innovate or improve, and missed opportunities for leveraging market competition to achieve better value. There's also a risk of vendor lock-in, making it difficult to switch providers even if performance is unsatisfactory.

How effectively does this contract address the healthcare needs of the uninsured, and what is the long-term outlook?

The contract appears to effectively address the immediate need for testing, treatment, and vaccine administration for the uninsured. However, the long-term effectiveness and sustainability are questionable without a competitive strategy to ensure ongoing value and potentially explore more cost-efficient service delivery models in the future.

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 › SPECIALIZED TECHNICAL/ MEDICAL SUPPORT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75R60221R00012

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated

Address: 10480 LITTLE PATUXENT PKWY SUITE 310, COLUMBIA, MD, 21044

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

Financial Breakdown

Contract Ceiling: $199,599,824

Exercised Options: $169,066,307

Current Obligation: $169,066,307

Actual Outlays: $164,290,225

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline