CNCS awarded $68.6M for Pharmacy Benefit Management, with Seven Corners Inc. as the contractor

Contract Overview

Contract Amount: $68,569,207 ($68.6M)

Contractor: Seven Corners Inc

Awarding Agency: Corporation for National and Community Service

Start Date: 2008-09-25

End Date: 2013-09-27

Contract Duration: 1,828 days

Daily Burn Rate: $37.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST NO FEE

Sector: Healthcare

Official Description: ADMINISTRATION OF HEALTH CARE BENEFITS SERVICES

Place of Performance

Location: CARMEL, HAMILTON County, INDIANA, 46032

State: Indiana Government Spending

Plain-Language Summary

Corporation for National and Community Service obligated $68.6 million to SEVEN CORNERS INC for work described as: ADMINISTRATION OF HEALTH CARE BENEFITS SERVICES Key points: 1. Contract value appears reasonable given the 5-year duration and scope of pharmacy benefit management. 2. Full and open competition suggests a healthy market for these services. 3. Contract duration and type warrant monitoring for potential cost overruns or scope creep. 4. Performance context is limited without specific metrics on service delivery. 5. This contract falls within the broader healthcare administration sector.

Value Assessment

Rating: good

The contract value of $68.6 million over approximately five years for pharmacy benefit management services appears to be within a reasonable range for the scope of work. Benchmarking against similar contracts for third-party administration of insurance and pension funds would provide a more precise value-for-money assessment. However, the absence of specific performance metrics makes a definitive judgment on efficiency challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete for this requirement. The presence of three bidders suggests a competitive environment, which typically leads to better pricing and service offerings for the government. This level of competition is generally favorable for price discovery.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down costs through market forces and encourages innovation among service providers.

Public Impact

Beneficiaries of this contract include individuals covered by the Corporation for National and Community Service's health plans, ensuring access to prescription medications. The services delivered include pharmacy benefit management and third-party administration of insurance and pension funds. The contract's geographic impact is national, covering beneficiaries across the United States. Workforce implications are primarily related to the administrative and operational staff required by the contractor to manage these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased administrative costs if not managed efficiently.
Reliance on a single contractor for critical pharmacy benefit services.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Contract duration of five years provides stability for service delivery.
Contractor has experience in managing health care benefits.

Sector Analysis

This contract operates within the healthcare administration sector, specifically focusing on pharmacy benefit management (PBM) and third-party administration. The PBM market is a significant segment of the healthcare industry, responsible for managing prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, and other payers. Spending in this area is driven by the need to control drug costs and ensure efficient distribution of medications.

Small Business Impact

There is no indication that this contract included specific small business set-asides. The contractor, Seven Corners Inc., is a large business. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in the provided data. The primary impact is on the large business ecosystem for health benefit administration.

Oversight & Accountability

Oversight mechanisms would typically involve contract performance reviews, financial audits, and adherence to service level agreements. Accountability measures are embedded in the contract terms and conditions, with potential penalties for non-performance. Transparency is facilitated through contract award databases and reporting requirements, though specific operational oversight details are not provided.

Related Government Programs

Pharmacy Benefit Management Services
Health Insurance Administration
Third-Party Administration of Insurance Funds
Employee Benefits Administration

Risk Flags

Contract duration may lead to vendor lock-in.
Performance metrics not readily available for effectiveness assessment.

Frequently Asked Questions

What is this federal contract paying for?

Corporation for National and Community Service awarded $68.6 million to SEVEN CORNERS INC. ADMINISTRATION OF HEALTH CARE BENEFITS SERVICES

Who is the contractor on this award?

The obligated recipient is SEVEN CORNERS INC.

Which agency awarded this contract?

Awarding agency: Corporation for National and Community Service (Corporation for National and Community Service).

What is the total obligated amount?

The obligated amount is $68.6 million.

What is the period of performance?

Start: 2008-09-25. End: 2013-09-27.

What is the track record of Seven Corners Inc. in managing federal contracts for pharmacy benefit management?

Seven Corners Inc. has a history of managing health insurance and travel insurance programs, often including pharmacy benefit components. While this specific contract with the Corporation for National and Community Service (CNCS) is a significant award, their broader experience lies in providing comprehensive insurance solutions. Assessing their track record specifically for large-scale federal PBM contracts would require a deeper dive into past performance evaluations and any reported issues or successes on similar government engagements. Their ability to handle the volume and regulatory requirements of federal programs is a key consideration.

How does the awarded amount of $68.6 million compare to similar pharmacy benefit management contracts?

The awarded amount of $68.6 million over approximately five years translates to an average annual value of roughly $13.7 million. This figure needs to be contextualized against the specific services provided, the number of beneficiaries covered, and the complexity of the formulary and network management. Benchmarking against other federal contracts for PBM services, such as those awarded by the Department of Defense or the Veterans Health Administration, would be necessary for a precise comparison. Factors like the scope of mail-order pharmacy services, specialty drug management, and rebate negotiation strategies significantly influence contract values in this space.

What are the primary risks associated with this contract for the Corporation for National and Community Service?

Key risks include potential disruptions in pharmacy services if the contractor underperforms, leading to beneficiary dissatisfaction and access issues. There's also a financial risk if costs escalate beyond projections due to inefficient management or unforeseen market changes in drug pricing. Reputational risk could arise from negative publicity related to service quality or beneficiary complaints. Ensuring robust oversight and performance monitoring is crucial to mitigate these risks. The reliance on a single entity for critical PBM functions also presents a concentration risk.

How effective has Seven Corners Inc. been in delivering pharmacy benefit management services under this contract?

The provided data does not include specific performance metrics or effectiveness evaluations for this contract. A thorough assessment of effectiveness would require analyzing data on prescription fill rates, cost savings achieved through formulary management and negotiations, beneficiary satisfaction surveys, and adherence to service level agreements. Without such performance indicators, it is difficult to definitively gauge the effectiveness of Seven Corners Inc.'s service delivery under this specific award.

What are the historical spending patterns for pharmacy benefit management services by the Corporation for National and Community Service?

This contract, awarded in 2008 and ending in 2013, represents a specific period of spending for PBM services by CNCS. To understand historical patterns, one would need to examine spending data for PBM services both before and after this contract's period. This would involve looking at previous contracts awarded by CNCS for similar services, as well as any subsequent awards. Analyzing trends in spending volume, contract values, and contractor choices over time would reveal the agency's historical approach to managing these essential benefits.

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 › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 303 CONGRESSIONAL BLVD, CARMEL, IN, 46032

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

Financial Breakdown

Contract Ceiling: $78,042,081

Exercised Options: $78,042,081

Current Obligation: $68,569,207

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline