Noridian Healthcare Solutions contract for data analysis and coding valued at over $25 million

Contract Overview

Contract Amount: $25,490,148 ($25.5M)

Contractor: Noridian Healthcare Solutions, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2008-06-16

End Date: 2013-12-15

Contract Duration: 2,008 days

Daily Burn Rate: $12.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Official Description: PRICING, DATA ANALYSIS, AND CODING

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 $25.5 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC for work described as: PRICING, DATA ANALYSIS, AND CODING Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. The contract duration spans over five years, indicating a long-term need for these services. 4. The agency's significant spending in this area highlights the importance of data analysis and coding for healthcare operations. 5. The North Dakota location for the contractor may indicate a specific regional focus or operational base.

Value Assessment

Rating: fair

The total contract value of $25.5 million over five years averages to approximately $5.1 million annually. Benchmarking this against similar contracts for data analysis and coding services within the federal government is challenging without more specific service details. However, the Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk for cost control, as the government reimburses allowable costs plus a fixed fee. This structure can sometimes lead to higher final costs compared to fixed-price contracts if cost efficiencies are not rigorously pursued by the contractor and monitored by the agency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of 4 bidders suggests a reasonable level of competition for this requirement. A competitive process is generally expected to drive prices down and encourage innovation, leading to better value for the government.

Taxpayer Impact: Taxpayers benefit from a competitive award process, as it increases the likelihood of securing services at a fair market price and reduces the risk of paying inflated costs due to a lack of alternatives.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially healthcare providers and patients who rely on accurate data processing. Services delivered involve data analysis and coding, crucial for healthcare program administration, billing, and statistical reporting. The geographic impact is primarily national, given CMS's scope, though the contractor's base is in North Dakota. Workforce implications include employment opportunities for data analysts, coders, and administrative staff within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee structure can incentivize higher spending if not tightly managed.
Long contract duration may reduce flexibility to adapt to changing technological needs or market prices.
Limited information on specific performance metrics makes it difficult to assess the quality of services delivered.
Potential for cost overruns inherent in CPFF contracts requires diligent oversight.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Significant contract value suggests a critical and ongoing need for these services.
The contractor, Noridian Healthcare Solutions, LLC, likely possesses specialized expertise in healthcare data.

Sector Analysis

This contract falls within the broader healthcare IT and services sector, specifically focusing on data management and coding. The federal government, particularly agencies like CMS, relies heavily on sophisticated data analysis and coding to manage massive healthcare programs like Medicare and Medicaid. Spending in this area is substantial across government, driven by the need for accurate record-keeping, fraud detection, policy analysis, and operational efficiency. Comparable spending benchmarks would typically be found within IT services and healthcare support categories, often involving large-scale data processing and analytics platforms.

Small Business Impact

There is no indication that this contract included a small business set-aside. The award to Noridian Healthcare Solutions, LLC, a potentially larger entity, suggests it was not specifically targeted for small businesses. Subcontracting opportunities for small businesses are not explicitly detailed but could exist if Noridian utilizes external support for specialized tasks. The overall impact on the small business ecosystem is likely neutral to minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures are typically embedded within the contract's terms and conditions, including performance standards, reporting requirements, and payment schedules tied to deliverables. Transparency is facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Medicare Administrative Contractor (MAC) services
Healthcare Data Analytics Services
Medical Coding and Billing Services
Federal Health IT Spending
CMS IT Modernization Efforts

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Long contract duration may lead to technological obsolescence if not managed.
Limited transparency on specific performance metrics hinders full value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $25.5 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC. PRICING, DATA ANALYSIS, AND CODING

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 $25.5 million.

What is the period of performance?

Start: 2008-06-16. End: 2013-12-15.

What is Noridian Healthcare Solutions' track record with federal contracts, particularly with HHS and CMS?

Noridian Healthcare Solutions, LLC has a significant history of federal contracting, primarily with the Department of Health and Human Services (HHS) and its sub-agency, the Centers for Medicare and Medicaid Services (CMS). They have often served as Medicare Administrative Contractors (MACs), responsible for processing Medicare claims and managing provider services in specific geographic regions. Their experience typically involves extensive data management, customer service, and adherence to complex healthcare regulations. Reviewing their past performance on similar large-scale contracts, including any documented issues or successes, would provide further insight into their capabilities and reliability for this specific data analysis and coding requirement. Data from contract databases often shows a pattern of renewals and awards, indicating a generally accepted level of performance, though specific quality metrics are usually contract-dependent.

How does the $25.5 million contract value compare to similar data analysis and coding contracts within HHS?

The $25.5 million contract value for data analysis and coding over approximately five years represents a substantial investment. To benchmark this effectively, one would need to compare it against other contracts awarded by HHS or CMS for similar services, considering factors like the scope of work, duration, and complexity. Contracts for large-scale data processing, analytics platforms, and specialized coding services within federal health agencies can range from a few million to tens or even hundreds of millions of dollars. Given that Noridian has historically been involved in significant Medicare administrative functions, this contract value appears consistent with the scale of operations required for managing and analyzing vast amounts of healthcare data. However, without specific details on the exact deliverables and the number of data sources involved, a precise comparison is difficult.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for data services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Noridian, is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This can incentivize the contractor to incur higher costs, as their profit margin (the fixed fee) remains constant regardless of the actual expenses. For the government, this means the total cost can exceed initial estimates if costs are not meticulously controlled and audited. Effective risk mitigation requires robust government oversight, detailed cost accounting standards, and clear definitions of allowable costs. Without stringent monitoring, the government may end up paying significantly more than anticipated, diminishing the overall value for money.

How effective are the competition dynamics (4 bidders) in ensuring value for money for this contract?

Having four bidders for this contract suggests a moderate level of competition. While more bidders generally lead to better price discovery and potentially lower costs, four offers indicate that the requirement was attractive enough to draw multiple capable companies. This level of competition is often considered adequate to prevent a sole-source situation and encourage competitive pricing. The effectiveness in ensuring value for money will depend on the rigor of the evaluation process, the clarity of the solicitation's requirements, and the specific pricing structures proposed by each bidder. If the evaluation criteria heavily favored technical approach over price, or if the fixed fee was set too high, the value for money might be compromised despite the number of bidders.

What are the implications of the contract's duration (over 5 years) on technological relevance and cost?

A contract duration exceeding five years, especially in the rapidly evolving field of data analysis and coding, carries implications for both technological relevance and cost. On the one hand, a longer duration provides stability and allows the contractor to make investments in infrastructure and personnel, potentially leading to efficiencies and deeper expertise. It also reduces the administrative burden and cost associated with frequent re-competition. However, it also risks locking the government into potentially outdated technologies or methodologies if the contract doesn't include mechanisms for adaptation and modernization. Furthermore, market prices for data services and technology can fluctuate significantly over five years; a longer-term fixed fee might not reflect future cost reductions, potentially leading to overpayment if market rates decrease.

Industry Classification

NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › All Other Insurance Related Activities

Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Noridian Mutual Insurance Company

Address: 900 42TH ST S, FARGO, ND, 58108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $25,588,733

Exercised Options: $25,490,148

Current Obligation: $25,490,148

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline