HHS awards $18.6M contract for quality improvement services to Michigan Peer Review Organization

Contract Overview

Contract Amount: $18,612,768 ($18.6M)

Contractor: Michigan Peer Review Organization

Awarding Agency: Department of Health and Human Services

Start Date: 2011-08-01

End Date: 2014-07-31

Contract Duration: 1,095 days

Daily Burn Rate: $17.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Official Description: QIO 10TH SOW AWARD

Place of Performance

Location: FARMINGTON HILLS, OAKLAND County, MICHIGAN, 48335

State: Michigan Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $18.6 million to MICHIGAN PEER REVIEW ORGANIZATION for work described as: QIO 10TH SOW AWARD Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can incentivize cost overruns. 2. The contract duration of 1095 days (3 years) is standard for this type of service. 3. Awarded as a definitive contract, suggesting a need for immediate or specific services. 4. The North American Industry Classification System (NAICS) code 541618 indicates 'Other Management Consulting Services'. 5. The contract was not competitively procured, raising questions about potential value for money. 6. The small business set-aside status is false, indicating no specific provisions for small businesses. 7. The contract value of $18.6 million falls within a moderate spending range for consulting services.

Value Assessment

Rating: fair

The contract value of $18.6 million for three years of management consulting services appears to be within a reasonable range for specialized quality improvement work. However, without specific benchmarks for comparable 'Other Management Consulting Services' for the Centers for Medicare and Medicaid Services (CMS), a precise value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) pricing structure, while common, carries inherent risks of cost escalation if not closely monitored. Further analysis would require comparing the specific deliverables and outcomes against industry standards and other CMS contracts for similar services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This means that the agency identified only one responsible source capable of fulfilling the requirement. While sole-source awards can be justified in certain circumstances, such as unique capabilities or urgent needs, they limit price discovery and potentially reduce competitive pressure, which could lead to higher costs for the government. The lack of competition means that taxpayers do not benefit from the potential cost savings that can arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price due to the absence of competitive bidding.

Public Impact

Beneficiaries include Medicare and Medicaid enrollees who will experience improved quality of care. Services delivered are focused on quality improvement initiatives within healthcare programs. Geographic impact is likely national, given the scope of CMS operations. Workforce implications may include the need for specialized consultants and healthcare professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost overruns if not managed effectively.
Limited transparency on the justification for sole-source award.

Positive Signals

Focus on quality improvement in healthcare can lead to better patient outcomes.
Established contractor with potential expertise in Medicare/Medicaid quality initiatives.
Definitive contract suggests a clear scope of work for the awarded period.

Sector Analysis

This contract falls within the 'Other Management Consulting Services' sector, specifically tailored for healthcare quality improvement. The market for healthcare consulting is substantial, driven by the complexity of regulations, the need for operational efficiency, and the continuous push for better patient outcomes. Contracts like this are crucial for government agencies like CMS to manage and enhance the effectiveness of large-scale healthcare programs. Benchmarking would involve comparing the cost and scope of this contract to other CMS or similar federal agency contracts for quality improvement and management consulting.

Small Business Impact

The contract was not awarded as a small business set-aside (ss=false, sb=false). This means there were no specific provisions to ensure a portion of the work was directed towards small businesses. Consequently, the prime contractor, Michigan Peer Review Organization, will likely perform the majority of the work. There is no explicit information provided regarding subcontracting plans or goals for small businesses within this award. This could limit opportunities for small businesses to participate in this federal contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS). As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. The cost-plus-fixed-fee structure necessitates diligent monitoring of costs and performance to ensure value for money. While specific Inspector General (IG) jurisdiction is not detailed, the HHS IG typically oversees programs within the department, including those managed by CMS, to detect and prevent waste, fraud, and abuse.

Related Government Programs

Medicare Quality Improvement Programs
Medicaid Quality Improvement Initiatives
Healthcare Consulting Services
Federal Healthcare Spending

Risk Flags

Sole-source award limits competition and potential cost savings.
Cost-plus-fixed-fee contract type carries risk of cost overruns.
Lack of small business subcontracting goals may limit opportunities for small businesses.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $18.6 million to MICHIGAN PEER REVIEW ORGANIZATION. QIO 10TH SOW AWARD

Who is the contractor on this award?

The obligated recipient is MICHIGAN PEER REVIEW ORGANIZATION.

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 $18.6 million.

What is the period of performance?

Start: 2011-08-01. End: 2014-07-31.

What is the track record of Michigan Peer Review Organization (MPRO) in performing similar federal contracts?

Information regarding MPRO's specific track record on federal contracts is not detailed in the provided data. However, as a Peer Review Organization (PRO), MPRO is designated by CMS to review the quality and appropriateness of care provided to Medicare beneficiaries. Their experience is likely focused on quality assessment, utilization review, and healthcare data analysis within the Medicare program. To fully assess their track record for this specific contract, a review of past performance evaluations, contract history with federal agencies, and any documented successes or failures in similar engagements would be necessary. This would provide insight into their capability to deliver on the objectives of this $18.6 million award.

How does the $18.6 million contract value compare to similar quality improvement contracts awarded by CMS?

The $18.6 million contract value for a three-year period ($6.2 million annually) for 'Other Management Consulting Services' focused on quality improvement is a moderate amount for CMS. CMS manages vast healthcare programs, and the cost of quality improvement initiatives can vary significantly based on scope, complexity, and the specific services required. Without access to a comprehensive database of comparable CMS contracts for quality improvement consulting, it's difficult to provide a precise benchmark. However, this figure suggests a substantial engagement, likely involving significant analytical work, program evaluation, and potentially the development of new quality metrics or strategies for Medicare and Medicaid.

What are the primary risks associated with a 'Cost Plus Fixed Fee' (CPFF) contract for management consulting?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract 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. While the fee is fixed, the total cost is not. This can incentivize contractors to incur higher costs, as their profit margin (the fixed fee) remains constant regardless of the total expenditure. For the government, this means the final cost could exceed initial estimates if costs are not rigorously controlled and monitored. Effective oversight, clear performance metrics, and stringent cost accounting standards are crucial to mitigate these risks.

What specific quality improvement services are expected under this contract?

The contract is categorized under NAICS code 541618 ('Other Management Consulting Services') and awarded to the Michigan Peer Review Organization. While the specific services are not detailed in the provided data, typical quality improvement services for CMS include activities such as: analyzing healthcare data to identify areas for improvement, developing and implementing quality improvement projects, evaluating the effectiveness of healthcare interventions, providing technical assistance to healthcare providers, and reporting on quality metrics. Given MPRO's designation as a PRO, the services likely focus on enhancing the quality, efficiency, and effectiveness of care delivered under Medicare and Medicaid programs.

What is the historical spending trend for 'Other Management Consulting Services' by HHS or CMS?

Historical spending data for 'Other Management Consulting Services' (NAICS 541618) by the Department of Health and Human Services (HHS) and its sub-agency, the Centers for Medicare and Medicaid Services (CMS), would typically show a consistent need for external expertise. These agencies manage complex healthcare programs and often require specialized consulting for areas like policy analysis, program evaluation, operational efficiency, and quality improvement. While specific figures are not provided, it's reasonable to assume that spending in this category has been significant and potentially growing, reflecting the increasing complexity of the healthcare landscape and the government's efforts to improve healthcare delivery and outcomes.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Other Management Consulting Services

Product/Service Code: MEDICAL SERVICES › DEPENDENT MEDICARE SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: CMS10THSOW

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 22670 HAGGERTY ROAD STE 100, FARMINGTON HILLS, MI, 48335

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

Financial Breakdown

Contract Ceiling: $18,612,768

Exercised Options: $18,612,768

Current Obligation: $18,612,768

Actual Outlays: $7,490

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline