HHS awards $407.6M Medicare Administrative Contract to First Coast Service Options, Inc. for MAC Jurisdiction 9

Contract Overview

Contract Amount: $407,588,625 ($407.6M)

Contractor: First Coast Service Options, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2008-09-16

End Date: 2014-03-15

Contract Duration: 2,006 days

Daily Burn Rate: $203.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: JURISDICTION 9 PART A & B MEDICARE ADMINISTRATIVE CONTRACTOR

Place of Performance

Location: JACKSONVILLE, DUVAL County, FLORIDA, 32202

State: Florida Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $407.6 million to FIRST COAST SERVICE OPTIONS, INC. for work described as: JURISDICTION 9 PART A & B MEDICARE ADMINISTRATIVE CONTRACTOR Key points: 1. Contract awarded through full and open competition, suggesting a robust market evaluation. 2. The contract type, Cost Plus Award Fee, incentivizes performance but requires careful oversight of costs. 3. A duration of over 5 years indicates a significant, long-term commitment for essential Medicare services. 4. The contract's value places it among substantial federal procurements in the healthcare sector. 5. Performance is benchmarked against similar Medicare Administrative Contractor (MAC) contracts. 6. Potential for cost overruns exists given the Cost Plus Award Fee structure, necessitating vigilant monitoring.

Value Assessment

Rating: good

The contract value of $407.6 million over approximately 5.5 years for Medicare Administrative Contractor services in Jurisdiction 9 appears reasonable when benchmarked against similar large-scale federal healthcare contracts. While specific per-unit cost data is not readily available for this type of service, the competitive award process likely contributed to achieving a fair price. The Cost Plus Award Fee structure allows for flexibility and performance incentives, but it also necessitates rigorous oversight to ensure costs remain aligned with value delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of two bidders suggests a competitive environment, which typically benefits the government by driving down prices and improving service quality. The competitive process allows for a thorough evaluation of technical capabilities and pricing, ensuring the selected contractor offers the best value.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the most cost-effective solution for administering Medicare services, reducing the risk of overpayment and ensuring efficient program operations.

Public Impact

Beneficiaries of Medicare Part A and Part B services within Jurisdiction 9 will continue to receive administrative support. The contract ensures the continued operation of essential Medicare administrative functions, including claims processing and provider services. Geographic impact is concentrated in Florida, where First Coast Service Options, Inc. is based and will administer services. The contract supports a workforce involved in healthcare administration and claims processing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee structure requires diligent monitoring to prevent potential cost overruns and ensure value for money.
The long-term nature of the contract could lead to contractor complacency if performance metrics are not strictly enforced.
Reliance on a single contractor for a large jurisdiction raises concerns about service continuity and potential single points of failure.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
The contractor has a established presence and experience in administering Medicare services.
Performance incentives within the contract structure can drive high-quality service delivery.

Sector Analysis

This contract falls within the Healthcare sector, specifically the administration of government health insurance programs. The Medicare Administrative Contractor (MAC) program is a critical component of the Centers for Medicare and Medicaid Services' (CMS) operations, responsible for processing claims and serving beneficiaries and providers. The total federal spending on MAC contracts is substantial, reflecting the scale of Medicare operations. This specific contract represents a significant portion of the spending allocated to managing Medicare operations in a particular geographic region.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As a large-scale administrative service contract, it is likely that the prime contractor, First Coast Service Options, Inc., manages the majority of the work internally. Further investigation would be needed to determine if any subcontracting opportunities exist for small businesses within the scope of this agreement.

Oversight & Accountability

Oversight for this contract is primarily managed by the Centers for Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services. CMS is responsible for monitoring contractor performance, ensuring compliance with program regulations, and managing financial aspects. The Cost Plus Award Fee structure implies performance-based oversight, where the contractor's ability to meet specific metrics influences their final payment. Transparency is facilitated through contract awards databases and agency reporting, though detailed operational oversight specifics are typically internal.

Related Government Programs

Medicare Administrative Contractor Program
Medicare Part A and Part B Services
Federal Health Insurance Administration
Centers for Medicare and Medicaid Services Contracts

Risk Flags

Cost Plus Award Fee structure requires diligent oversight.
Long contract duration may reduce competitive pressure over time.
Potential for scope creep or unmanaged cost increases.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $407.6 million to FIRST COAST SERVICE OPTIONS, INC.. JURISDICTION 9 PART A & B MEDICARE ADMINISTRATIVE CONTRACTOR

Who is the contractor on this award?

The obligated recipient is FIRST COAST SERVICE OPTIONS, 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 $407.6 million.

What is the period of performance?

Start: 2008-09-16. End: 2014-03-15.

What is the historical spending trend for Medicare Administrative Contractor services in Jurisdiction 9?

Historical spending data for Jurisdiction 9's Medicare Administrative Contractor services prior to this $407.6 million award is not explicitly detailed in the provided data. However, the contract's start date of September 16, 2008, and end date of March 15, 2014, indicate a period of approximately 5.5 years. The total award value suggests an average annual spending of roughly $74 million. To understand the trend, one would need to examine prior contract awards for this jurisdiction, potentially from earlier MAC consolidation phases or predecessor contracts, to identify increases or decreases in spending and the factors driving them, such as changes in beneficiary populations, service complexity, or inflation.

How does the performance of First Coast Service Options, Inc. on this contract compare to other MAC contractors?

The provided data does not include specific performance metrics or ratings for First Coast Service Options, Inc. on this contract, nor does it offer comparative data against other Medicare Administrative Contractors (MACs). The contract type, Cost Plus Award Fee (CPAF), implies that performance is evaluated against defined criteria, and the 'award fee' portion of the payment is contingent on achieving these standards. To assess comparative performance, one would need access to CMS's internal performance evaluations, contractor scorecards, or public reports that might detail key performance indicators such as claims processing timeliness, accuracy rates, customer service satisfaction, and fraud detection effectiveness across different MAC jurisdictions.

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

The primary risks associated with a Cost Plus Award Fee (CPAF) contract for Medicare administration revolve around cost control and the potential for contractor inefficiency. While CPAF incentivizes performance through award fees, the 'cost plus' component means the government reimburses the contractor's allowable costs. This structure can create less pressure on the contractor to minimize costs compared to fixed-price contracts. Key risks include potential for cost overruns if allowable costs are not meticulously scrutinized, 'gold-plating' of services to increase billable costs, and the administrative burden on the government to effectively monitor and evaluate performance to determine appropriate award fees. Ensuring robust oversight and clearly defined performance metrics are crucial to mitigate these risks and ensure value for taxpayer money.

What is the significance of 'Jurisdiction 9' in the context of Medicare administration?

Jurisdiction 9 represents a specific geographic region defined by the Centers for Medicare and Medicaid Services (CMS) for the administration of Medicare Part A and Part B services. CMS divides the country into various jurisdictions, assigning different contractors to manage claims processing, provider enrollment, and other administrative functions within each. Jurisdiction 9, in this case, encompasses Florida. The designation is significant because it dictates the scope of the contractor's responsibilities and the population of beneficiaries and healthcare providers they serve. Efficient administration within each jurisdiction is crucial for the overall functioning and integrity of the Medicare program.

How does the $407.6 million contract value compare to the overall CMS budget or IT/Healthcare spending?

The $407.6 million contract value for Jurisdiction 9's Medicare Administrative Contractor services represents a significant, but not overwhelming, portion of the Centers for Medicare and Medicaid Services' (CMS) overall budget. CMS manages hundreds of billions of dollars annually. For context, the total Medicare spending alone is in the hundreds of billions. Within CMS's procurement landscape, contracts of this magnitude are common for major administrative functions. Compared to broader federal IT or healthcare spending, this contract is a substantial investment in healthcare administration but is one among many large contracts supporting the vast Medicare program. It highlights the significant resources required to manage the nation's largest health insurance program effectively.

Industry Classification

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

Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: First Coast Service Options Inc.

Address: 532 RIVERSIDE AVE, JACKSONVILLE, FL, 32202

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

Financial Breakdown

Contract Ceiling: $494,451,866

Exercised Options: $494,451,866

Current Obligation: $407,588,625

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline