HHS awarded $97.4M for Medicare services, with 3 bidders competing for a cost-plus contract

Contract Overview

Contract Amount: $97,403,622 ($97.4M)

Contractor: National Government Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2006-01-06

End Date: 2014-10-29

Contract Duration: 3,218 days

Daily Burn Rate: $30.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: TAS::75 0511::TAS DEPENDENT MEDICARE SERVICES

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46250

State: Indiana Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $97.4 million to NATIONAL GOVERNMENT SERVICES, INC. for work described as: TAS::75 0511::TAS DEPENDENT MEDICARE SERVICES Key points: 1. Contract value of $97.4M over 8.6 years suggests a significant investment in Medicare services. 2. The contract was awarded under full and open competition, indicating a potentially competitive bidding process. 3. With 3 bidders, the competition level appears moderate, which could influence pricing and innovation. 4. The cost-plus award fee structure incentivizes cost control while allowing for performance-based adjustments. 5. The contract's duration of over 8 years suggests a long-term need for these Medicare services. 6. The geographic focus on Indiana (IN) for these services is noted.

Value Assessment

Rating: good

The contract's total value of $97.4 million over approximately 8.6 years averages to about $11.3 million annually. Benchmarking this against similar large-scale Medicare service contracts is challenging without more specific service details. However, the cost-plus award fee structure implies that the government aims to control costs while rewarding performance, which can be a good value proposition if managed effectively. The presence of 3 bidders suggests a degree of market interest and potential for competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. With three bidders participating, the competition level was moderate. This level of competition generally allows for price discovery and can lead to more favorable pricing for the government compared to sole-source or limited competition scenarios. The government likely received a range of proposals to evaluate.

Taxpayer Impact: A competitive bidding process for this contract helps ensure that taxpayer dollars are used efficiently by driving down costs and encouraging the submission of high-quality proposals.

Public Impact

Beneficiaries of Medicare services, particularly those within Indiana, are the primary recipients of the services delivered under this contract. The contract supports the administration and delivery of essential health and medical insurance services, crucial for public health. The geographic impact is concentrated in Indiana, ensuring local access to Medicare-related administrative functions. While specific workforce implications are not detailed, such contracts typically support administrative, analytical, and potentially IT roles within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The cost-plus award fee structure, while allowing for performance incentives, can sometimes lead to higher costs if not rigorously managed and audited.
The long duration of the contract (over 8 years) might present risks related to evolving healthcare needs and technological advancements that could make the initial scope outdated.
Limited information on specific performance metrics makes it difficult to fully assess the 'award fee' component and its effectiveness in driving superior performance.

Positive Signals

The contract was awarded through full and open competition, indicating a robust and fair bidding process.
The presence of multiple bidders (3) suggests market interest and a degree of vendor capability in providing these services.
The cost-plus award fee structure, when properly managed, can align contractor incentives with government objectives for both cost efficiency and performance quality.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on health and medical insurance carriers. The Centers for Medicare and Medicaid Services (CMS) is a major federal agency that procures a vast array of services to manage these critical public programs. Spending in this area is substantial, reflecting the scale of the US healthcare system. Comparable contracts often involve claims processing, data management, beneficiary services, and program integrity functions, with values ranging from millions to billions of dollars depending on scope and duration.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, the primary focus was likely on larger, established entities capable of handling the scope and complexity of Medicare services. While there's no explicit subcontracting requirement mentioned, large prime contractors often engage small businesses for specialized support, though the extent of this contract's impact on the small business ecosystem is not directly evident from the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Centers for Medicare and Medicaid Services (CMS), a division of HHS. CMS has established program integrity and contract management offices responsible for monitoring contractor performance, ensuring compliance with terms and conditions, and auditing expenditures. The Inspector General's office within HHS also provides an independent layer of oversight, investigating fraud, waste, and abuse related to federal healthcare programs. Transparency is generally maintained through contract awards databases and reporting requirements.

Related Government Programs

Medicare Administrative Contractors (MACs)
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program
Health Insurance Marketplace Plans
Medicaid Information Technology Architecture (MITA)

Risk Flags

Long contract duration may lead to outdated services or technology.
Cost-plus structures require diligent oversight to prevent cost overruns.
Performance metrics for award fee need clear definition and consistent evaluation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $97.4 million to NATIONAL GOVERNMENT SERVICES, INC.. TAS::75 0511::TAS DEPENDENT MEDICARE SERVICES

Who is the contractor on this award?

The obligated recipient is NATIONAL GOVERNMENT SERVICES, INC..

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 $97.4 million.

What is the period of performance?

Start: 2006-01-06. End: 2014-10-29.

What is the track record of National Government Services, Inc. with HHS contracts?

National Government Services, Inc. (NGS) has a substantial history of working with the Centers for Medicare and Medicaid Services (CMS), a part of HHS. They have served as a Medicare Administrative Contractor (MAC) for various jurisdictions, handling claims processing, provider enrollment, and customer service functions. Their experience includes managing large-scale operations and complex data systems critical to Medicare's functioning. While this specific contract (awarded in 2006) is a significant example, NGS has held numerous other contracts with CMS over the years, demonstrating a consistent relationship and presumed capability in fulfilling government healthcare administration requirements. Their performance on these contracts would be documented through past performance evaluations and potentially subject to review by oversight bodies.

How does the $97.4 million contract value compare to similar Medicare service contracts?

The $97.4 million total contract value over approximately 8.6 years equates to an average annual value of roughly $11.3 million. This figure places it as a significant, but not exceptionally large, contract within the broader landscape of Medicare administration. CMS procures services through various mechanisms, including Medicare Administrative Contractors (MACs), which can manage portfolios worth hundreds of millions or even billions annually depending on the geographic region and scope of services. Contracts for specific IT systems, data analytics, or specialized program support can also vary widely. Therefore, while substantial, this contract's value appears moderate when considered against the full spectrum of CMS's procurement activities for managing the Medicare program.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract structure for Medicare services?

The primary risks with a CPAF structure for Medicare services revolve around cost control and performance definition. While the 'cost plus' element covers allowable costs, there's a risk of cost overruns if the contractor's efficiency is low or if unforeseen issues arise. The 'award fee' component introduces subjectivity; defining clear, objective, and measurable criteria for earning the award fee is crucial. If these criteria are poorly defined or if the government's evaluation process is inconsistent, it can lead to disputes or the contractor not being adequately incentivized for superior performance. Furthermore, the government must maintain robust oversight to ensure costs are reasonable and allocable, and that the performance being rewarded truly aligns with program objectives and taxpayer value.

How effective is full and open competition in ensuring value for money in healthcare administration contracts?

Full and open competition is generally considered the most effective method for ensuring value for money in healthcare administration contracts. By allowing all responsible sources to compete, the government maximizes the pool of potential offerors, increasing the likelihood of receiving competitive pricing and innovative solutions. The process encourages bidders to offer their best terms and pricing to win the contract. However, the effectiveness hinges on the clarity of the solicitation, the fairness of the evaluation criteria, and the government's ability to accurately assess technical capabilities and price. In complex areas like Medicare services, where technical expertise is paramount, simply having many bidders does not guarantee value if the evaluation process doesn't adequately weigh performance and capability against cost.

What are the historical spending patterns for direct health and medical insurance carriers by HHS?

HHS, primarily through CMS, consistently spends billions of dollars annually on direct health and medical insurance carrier services. This spending encompasses a wide range of functions, including claims processing, provider payments, beneficiary services, program integrity, and IT infrastructure support. Historical data shows a trend of increasing expenditure driven by factors such as the growing Medicare and Medicaid populations, rising healthcare costs, and the expansion of government healthcare initiatives (e.g., the Affordable Care Act). Spending is often distributed across numerous contracts, including large Medicare Administrative Contractor (MAC) agreements, state-level Medicaid IT procurements, and specialized support services. The specific category 'Direct Health and Medical Insurance Carriers' (NAICS 524114) reflects a significant portion of this overall outlay.

What are the implications of a 3218-day contract duration for Medicare services?

A contract duration of 3218 days, approximately 8.8 years, for Medicare services signifies a long-term commitment by the government to the contractor. This extended period allows for stability and continuity in service delivery, which is crucial for complex programs like Medicare where disruptions can impact millions of beneficiaries and healthcare providers. It also provides the contractor with the certainty needed to make significant investments in infrastructure, technology, and personnel. However, such long durations also carry risks. The healthcare landscape evolves rapidly; a contract awarded today might not fully align with future needs or technological advancements by its end date. This necessitates careful contract management, including potential modifications or reviews, to ensure the services remain relevant and cost-effective throughout its term.

Industry Classification

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

Product/Service Code: MEDICAL SERVICES › DEPENDENT MEDICARE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Elevance Health, Inc. (UEI: 037955940)

Address: 8115 KNUE RD, INDIANAPOLIS, IN, 46250

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $97,892,336

Exercised Options: $97,403,622

Current Obligation: $97,403,622

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline