HHS awards $120.7M for Dependent Medicare Services to Noridian Healthcare Solutions under full and open competition
Contract Overview
Contract Amount: $120,687,155 ($120.7M)
Contractor: Noridian Healthcare Solutions, LLC
Awarding Agency: Department of Health and Human Services
Start Date: 2006-01-06
End Date: 2011-03-31
Contract Duration: 1,910 days
Daily Burn Rate: $63.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 5
Pricing Type: COST PLUS AWARD FEE
Sector: Healthcare
Official Description: DEPENDENT MEDICARE SERVICES
Place of Performance
Location: FARGO, CASS County, NORTH DAKOTA, 58103
Plain-Language Summary
Department of Health and Human Services obligated $120.7 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC for work described as: DEPENDENT MEDICARE SERVICES Key points: 1. Noridian Healthcare Solutions secured a significant $120.7M contract for Dependent Medicare Services. 2. The contract was awarded under a full and open competition, suggesting a competitive bidding process. 3. The contract duration of 1910 days (approx. 5.2 years) indicates a long-term need for these services. 4. The primary sector appears to be healthcare insurance and administration. 5. The contract type is Cost Plus Award Fee, which incentivizes performance but requires careful oversight.
Value Assessment
Rating: good
The contract value of $120.7M over approximately 5.2 years suggests a substantial but potentially reasonable price for comprehensive Medicare services. Benchmarking against similar large-scale health insurance contracts would be necessary for a definitive assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The award was made under full and open competition, indicating that multiple bidders likely participated. This method generally promotes competitive pricing and allows the government to select the best value offer.
Taxpayer Impact: The competitive nature of the award suggests that taxpayers likely benefited from a fair price discovery process, although the Cost Plus Award Fee structure requires monitoring to ensure cost efficiency.
Public Impact
Ensures continued access to essential Medicare services for eligible dependents. Supports the operational continuity of the Centers for Medicare and Medicaid Services (CMS). Impacts beneficiaries in North Dakota, where Noridian is based. The contract's performance directly affects the quality and efficiency of healthcare administration for a specific population.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure can lead to cost overruns if not managed tightly.
- Long contract duration may not fully account for evolving healthcare needs or technological advancements.
- Potential for vendor lock-in if follow-on contracts are not competitively bid.
Positive Signals
- Awarded under full and open competition, indicating a robust selection process.
- Contract addresses a critical government function in healthcare administration.
- The awardee, Noridian Healthcare Solutions, is an established entity in the healthcare sector.
Sector Analysis
This contract falls within the Healthcare sector, specifically focusing on health insurance and administrative services for Medicare beneficiaries. Spending benchmarks for similar large-scale government health insurance contracts are typically in the hundreds of millions of dollars over several years.
Small Business Impact
The provided data does not indicate any specific set-asides for small businesses. The contract was awarded to Noridian Healthcare Solutions, LLC, which is likely a larger entity given the contract value.
Oversight & Accountability
The Cost Plus Award Fee (CPAF) contract type necessitates robust oversight from the Centers for Medicare and Medicaid Services (CMS) to ensure that costs are reasonable and that performance incentives align with government objectives and taxpayer interests.
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) structure requires diligent oversight.
- Long contract duration may not capture latest innovations.
- Potential for scope creep if not managed carefully.
- Dependence on a single contractor for critical services.
Tags
direct-health-and-medical-insurance-carr, department-of-health-and-human-services, nd, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $120.7 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC. DEPENDENT MEDICARE SERVICES
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 $120.7 million.
What is the period of performance?
Start: 2006-01-06. End: 2011-03-31.
How does the performance of Noridian Healthcare Solutions under this contract compare to industry benchmarks for dependent Medicare services in terms of efficiency and beneficiary satisfaction?
Assessing Noridian's performance requires analyzing key performance indicators (KPIs) outlined in the contract, such as claims processing times, error rates, and beneficiary complaint resolution. Comparing these metrics against industry averages for similar government contracts would reveal efficiency. Additionally, beneficiary satisfaction surveys and feedback mechanisms are crucial for understanding the qualitative impact of their services.
What specific risks are associated with the Cost Plus Award Fee (CPAF) structure in this contract, and what mitigation strategies are in place?
The primary risk of CPAF is the potential for cost escalation, as the contractor is reimbursed for allowable costs plus a fee that can be adjusted based on performance. Mitigation strategies typically include stringent cost accounting standards, detailed review of incurred costs, clearly defined performance objectives tied to the award fee, and regular audits by the contracting officer to ensure reasonableness and necessity of expenses.
To what extent does this contract ensure the long-term adaptability and cost-effectiveness of dependent Medicare services, given the 5-year duration?
The 5-year duration provides stability but may limit immediate adaptability to rapid changes in healthcare policy or technology. Cost-effectiveness is managed through the CPAF structure, incentivizing performance. However, long-term cost-effectiveness relies on CMS's ability to renegotiate or re-compete the contract effectively at its conclusion, ensuring future services remain competitive and aligned with evolving healthcare landscapes.
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: 5
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Noridian Mutual Insurance Company
Address: 901 40TH STREET SOUTH, STE 1, FARGO, ND, 58103
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $121,273,617
Exercised Options: $120,687,156
Current Obligation: $120,687,155
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Timeline
Start Date: 2006-01-06
Current End Date: 2011-03-31
Potential End Date: 2011-03-31 00:00:00
Last Modified: 2023-08-28
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