HHS awarded $463M to Wisconsin Physicians Service for health insurance, with 5 bidders competing

Contract Overview

Contract Amount: $462,928,951 ($462.9M)

Contractor: Wisconsin Physicians Service Insurance Corp.

Awarding Agency: Department of Health and Human Services

Start Date: 2012-08-01

End Date: 2020-07-31

Contract Duration: 2,921 days

Daily Burn Rate: $158.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: IGF::CT::IGF

Place of Performance

Location: MONONA, DANE County, WISCONSIN, 53713

State: Wisconsin Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $462.9 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP. for work described as: IGF::CT::IGF Key points: 1. Contract value of $463M over 8 years suggests significant investment in health insurance services. 2. Full and open competition indicates a potentially competitive bidding environment. 3. The contract type (Cost Plus Award Fee) may incentivize performance but requires careful oversight. 4. The duration of nearly 8 years points to a long-term need for these services. 5. The awardee's location in Wisconsin may have implications for regional economic impact. 6. The North American Industry Classification System (NAICS) code 524114 signifies a focus on direct health and medical insurance carriers.

Value Assessment

Rating: good

The contract's total value of $463 million over approximately eight years averages to about $58 million annually. Benchmarking this against similar large-scale health insurance contracts within the federal government is challenging without more specific service details. However, the presence of five bidders in a full and open competition suggests a market capable of supporting such contracts. The Cost Plus Award Fee structure, while common, necessitates robust performance metrics to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with five distinct bidders participating. This level of competition is generally positive as it allows for a broader range of potential offerors and can drive down prices through market forces. The fact that five entities vied for this contract suggests that the market for these specific health insurance services is robust and that the requirements were well-defined enough to attract multiple capable providers.

Taxpayer Impact: A competitive bidding process like this one is beneficial for taxpayers as it increases the likelihood of securing services at a fair market price, preventing potential overpayment and encouraging efficiency from the winning contractor.

Public Impact

Beneficiaries of this contract are likely federal employees, military personnel, or other eligible populations requiring health insurance coverage. The services delivered include the administration and provision of direct health and medical insurance. The geographic impact is primarily national, covering individuals eligible for federal health insurance programs. Workforce implications may include jobs within the contractor's organization and potentially within supporting industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can sometimes lead to higher costs if not managed with stringent performance monitoring.
The long contract duration (nearly 8 years) could present risks if market conditions or service needs change significantly.
Lack of specific details on the services provided makes it difficult to fully assess value for money.
Potential for contractor lock-in due to the long-term nature of the agreement.

Positive Signals

Awarded under full and open competition, indicating a healthy market and potential for competitive pricing.
Multiple bidders (5) suggest a robust and responsive market for these services.
The contractor, Wisconsin Physicians Service, has a long-standing presence, potentially indicating stability and experience.
The contract's significant value suggests it addresses a critical and substantial need within the agency.

Sector Analysis

The contract falls within the Health Insurance and Managed Care sector, specifically for direct health and medical insurance carriers (NAICS 524114). This sector is characterized by significant regulatory oversight and a large number of private sector players. Federal spending in this area often supports government health programs or provides benefits to federal employees and military personnel. The total contract value of $463 million over eight years represents a substantial, albeit specific, allocation within the broader federal healthcare spending landscape.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The focus was on full and open competition, suggesting larger, established entities were likely the primary participants.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) or the relevant contracting office within the Department of Health and Human Services (HHS). As a Cost Plus Award Fee contract, performance metrics and cost controls would be critical oversight areas. Transparency would be facilitated through contract award databases and potentially through Inspector General reports if any issues arise. Accountability rests with the contracting officer and the program managers responsible for monitoring the contractor's performance against award fee criteria.

Related Government Programs

Federal Employee Health Benefits Program (FEHBP)
TRICARE
Medicare Administrative Contractors (MACs)
Medicaid Managed Care

Risk Flags

Potential for cost overruns in CPAF contracts if not managed tightly.
Long contract duration may not adapt well to rapidly changing healthcare regulations or technologies.
Data security and privacy risks inherent in handling sensitive health information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $462.9 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP.. IGF::CT::IGF

Who is the contractor on this award?

The obligated recipient is WISCONSIN PHYSICIANS SERVICE INSURANCE CORP..

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 $462.9 million.

What is the period of performance?

Start: 2012-08-01. End: 2020-07-31.

What is the historical spending pattern for this specific contract or similar services provided by Wisconsin Physicians Service to the federal government?

Analyzing historical spending for this specific contract requires accessing detailed contract modification data and previous award histories. However, the current award of $463 million over approximately 8 years (2012-2020) indicates a significant and sustained federal investment in the services provided by Wisconsin Physicians Service. Without access to prior contract vehicles or detailed spending reports, it's difficult to establish a precise year-over-year spending trend. Generally, federal spending on health insurance carriers can fluctuate based on enrollment numbers, benefit changes, and program expansions or contractions. The consistent, large-value award suggests a stable demand for their services over the contract period.

How does the awarded amount compare to the estimated value or initial solicitation for this contract?

The provided data lists the total award amount as $462,928,951.36. To compare this to the estimated value or initial solicitation, we would need access to the original contract solicitation documents or pre-award estimates. Often, the final awarded amount can differ from initial estimates due to competitive bidding, scope adjustments, or negotiation outcomes. A significant difference between the solicitation value and the final award could indicate either a highly competitive bidding process that drove down costs or scope creep and additional funding requirements during the contract's performance period. Without the solicitation details, a direct comparison is not possible.

What are the key performance indicators (KPIs) and award fee criteria used to evaluate Wisconsin Physicians Service under this Cost Plus Award Fee contract?

For a Cost Plus Award Fee (CPAF) contract, the key performance indicators (KPIs) and award fee criteria are crucial for determining the 'award fee' portion of the contractor's compensation. While specific KPIs are not detailed in the provided summary, they typically revolve around measurable aspects of service delivery, such as claims processing timeliness, accuracy rates, customer satisfaction scores (e.g., member call resolution rates), adherence to regulatory compliance, and efficiency metrics. The award fee structure incentivizes the contractor to exceed minimum performance standards. The Centers for Medicare and Medicaid Services (CMS) would have established these criteria, and regular performance reviews would assess the contractor's achievement against them to determine the level of award fee earned.

What is the track record of Wisconsin Physicians Service in managing large federal health insurance contracts, particularly regarding performance and cost control?

Wisconsin Physicians Service (WPS) has a substantial track record in managing federal contracts, notably as a Medicare Administrative Contractor (MAC) and in other health insurance-related roles. Their long-standing involvement suggests a capacity to handle large-scale operations and navigate complex federal requirements. The $463 million award for direct health and medical insurance indicates a level of trust and demonstrated capability by the Department of Health and Human Services. While specific performance metrics and cost control successes or failures for this particular contract (2012-2020) would require deeper analysis of performance reports and potential audits, their continued engagement in federal programs points towards a generally positive performance history. However, like any large contractor, scrutiny regarding specific performance periods or cost efficiencies would be warranted.

Are there any known risks or challenges associated with the services provided under this contract, such as data security, fraud, or service disruptions?

Managing health insurance data inherently involves significant risks related to data security and privacy (HIPAA compliance). Any breach or mishandling of sensitive beneficiary information would pose a major risk. Fraud, waste, and abuse are also persistent challenges in the healthcare sector, requiring robust monitoring and prevention mechanisms by both the government and the contractor. Service disruptions, such as system outages or delays in claims processing, could impact beneficiaries and providers. Given the contract's duration and value, the government likely implemented stringent security protocols, compliance monitoring, and contingency plans to mitigate these risks. The Inspector General's office often plays a role in overseeing and investigating potential fraud or mismanagement within such large contracts.

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

Solicitation ID: RFPCMS20110014

Offers Received: 5

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 1717 W BROADWAY, MADISON, WI, 53713

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

Financial Breakdown

Contract Ceiling: $524,718,761

Exercised Options: $523,687,517

Current Obligation: $462,928,951

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline