Durable Medical Equipment contract awarded to CGS Administrators, LLC for over $42M, spanning 303 days
Contract Overview
Contract Amount: $42,141,503 ($42.1M)
Contractor: CGS Administrators, LLC
Awarding Agency: Department of Health and Human Services
Start Date: 2012-07-01
End Date: 2013-04-30
Contract Duration: 303 days
Daily Burn Rate: $139.1K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Healthcare
Official Description: DURABLE MEDICAL EQUIPMENT MAC JURISDICTION C
Place of Performance
Location: NASHVILLE, DAVIDSON County, TENNESSEE, 37228
Plain-Language Summary
Department of Health and Human Services obligated $42.1 million to CGS ADMINISTRATORS, LLC for work described as: DURABLE MEDICAL EQUIPMENT MAC JURISDICTION C Key points: 1. Contract value of $42.1M for a 10-month period suggests a significant investment in durable medical equipment services. 2. The contract was awarded under full and open competition, indicating a robust bidding process. 3. The use of a Cost Plus Fixed Fee (CPFF) pricing structure requires careful monitoring to ensure cost control. 4. The contract's duration of 303 days is relatively short for a program of this scale, potentially indicating a bridge or interim solution. 5. The award to CGS Administrators, LLC, a known entity in health insurance carriers, suggests a focus on established expertise. 6. The geographic focus on Tennessee (ST: TN, SN: TENNESSEE) highlights a specific regional need for these services.
Value Assessment
Rating: fair
The contract value of $42.1M over 303 days averages approximately $139,000 per day. Benchmarking this against similar large-scale durable medical equipment contracts is challenging without more specific service details. However, the Cost Plus Fixed Fee (CPFF) structure necessitates close oversight to ensure the fixed fee remains reasonable and that costs are managed effectively. The relatively short duration for such a substantial award might indicate a higher per-diem cost than a longer-term, more optimized contract.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while the competition was open, specific sources may have been excluded prior to the main bidding process. This suggests a potentially competitive environment, but the exclusion criteria warrant further investigation to understand their impact on the breadth of competition and potential price discovery. The number of bidders is not specified, which limits a full assessment of the competitive landscape.
Taxpayer Impact: The full and open competition, despite potential source exclusions, generally benefits taxpayers by encouraging multiple vendors to offer competitive pricing. However, the specifics of any exclusions could have limited the ultimate number of competitive bids received.
Public Impact
Beneficiaries include Medicare beneficiaries in Tennessee requiring durable medical equipment. Services delivered likely encompass the provision, maintenance, and potentially distribution of durable medical equipment. The geographic impact is concentrated within the state of Tennessee. Workforce implications may include roles in logistics, customer service, and medical equipment support within the region.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The CPFF structure can incentivize cost overruns if not rigorously managed.
- The 'exclusion of sources' in the competition method raises questions about the full extent of market participation.
- The short contract duration for a large sum may indicate inefficiencies or a temporary need that could be costly.
- Lack of specific performance metrics or outcomes makes it difficult to assess the true value delivered.
Positive Signals
- Awarded through full and open competition, suggesting a structured procurement process.
- Contractor CGS Administrators, LLC has experience in health insurance and carrier services.
- The contract addresses a clear need for durable medical equipment services in a specific region.
Sector Analysis
The durable medical equipment (DME) sector is a critical component of healthcare services, providing essential devices for patient care outside of clinical settings. This contract falls within the broader healthcare services industry, specifically focusing on the administration and provision of DME. The market for DME is substantial, driven by an aging population and increasing prevalence of chronic conditions. Comparable spending benchmarks would typically be assessed against national averages for DME contracts or regional Medicare/Medicaid reimbursement rates for specific equipment types.
Small Business Impact
The provided data does not indicate any small business set-asides (sb: false) for this contract. Therefore, the primary focus was likely on large, established providers capable of handling the scale of this requirement. There is no information on subcontracting plans, so the direct impact on the small business ecosystem is likely minimal unless CGS Administrators, LLC voluntarily engages small businesses for support services.
Oversight & Accountability
Oversight for this contract would primarily fall under the Centers for Medicare and Medicaid Services (CMS), an agency within the Department of Health and Human Services. As a Cost Plus Fixed Fee contract, CMS would be responsible for monitoring expenditures, ensuring the fixed fee is justified, and verifying that the contractor meets the defined scope of work. Transparency would be enhanced by public contract databases and potential audits by the HHS Office of Inspector General (OIG).
Related Government Programs
- Medicare Durable Medical Equipment Services
- Healthcare Provider Contracts
- Medical Insurance Administration
- Regional Health Services Contracts
Risk Flags
- Cost Plus Fixed Fee structure requires diligent cost monitoring.
- Potential for limited competition due to 'exclusion of sources'.
- Short contract duration for a large value may indicate risk.
- Lack of detailed performance metrics in summary data.
Tags
healthcare, durable-medical-equipment, medicare, cms, department-of-health-and-human-services, definitive-contract, cost-plus-fixed-fee, full-and-open-competition, tennessee, regional-contract, insurance-carriers
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $42.1 million to CGS ADMINISTRATORS, LLC. DURABLE MEDICAL EQUIPMENT MAC JURISDICTION C
Who is the contractor on this award?
The obligated recipient is CGS ADMINISTRATORS, 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 $42.1 million.
What is the period of performance?
Start: 2012-07-01. End: 2013-04-30.
What is the specific nature of the durable medical equipment services provided under this contract?
The contract identifies the subject as 'DURABLE MEDICAL EQUIPMENT MAC JURISDICTION C' and the awarding agency as the Centers for Medicare and Medicaid Services (CMS). While the contract number (524114) and contractor (CGS Administrators, LLC) are known, the specific services are not detailed in the provided data. CGS Administrators, LLC is a Medicare Administrative Contractor (MAC) responsible for claims processing and other administrative functions for Medicare Part A and Part B services in Jurisdiction C, which includes Tennessee. Therefore, this contract likely pertains to the administrative oversight, claims processing, and potentially the management of provider networks related to durable medical equipment within that jurisdiction, rather than the direct supply of equipment itself.
How does the $42.1M contract value compare to typical spending for similar durable medical equipment contracts?
Directly comparing the $42.1M value to 'similar' contracts is difficult without knowing the precise scope and duration. This contract spans 303 days, making the daily expenditure approximately $139,000. Medicare Administrative Contracts (MACs) often involve significant budgets for processing claims and managing provider networks across large geographic areas. The value suggests a substantial operational scope within Jurisdiction C for DME. To benchmark effectively, one would need to compare it to other MAC contracts for DME administration in different jurisdictions or analyze historical spending trends for DME oversight by CMS, considering factors like beneficiary population size and complexity of services managed.
What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude?
The primary risk with a CPFF contract, especially one valued at over $42M, is the potential for cost overruns. While the 'fixed fee' component provides some predictability for the contractor's profit, the 'cost plus' element means the government reimburses the contractor's allowable costs. If costs escalate beyond initial projections due to inefficiencies, poor management, or unforeseen circumstances, the total contract value could increase significantly, even if the fixed fee remains constant. Robust oversight by CMS is crucial to scrutinize all claimed costs, ensure they are reasonable and allocable to the contract, and prevent scope creep that inflates expenses. The relatively short duration (303 days) might also indicate a higher risk if the scope is complex and underestimated.
What does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation imply for the procurement process?
This designation indicates that the procurement was initially intended for full and open competition, meaning all responsible sources were permitted to submit offers. However, 'after exclusion of sources' suggests that certain potential bidders were disqualified or excluded from the competition based on specific criteria defined in the solicitation or pre-qualification stages. The reasons for exclusion could range from failure to meet minimum qualifications, past performance issues, or specific regulatory requirements. While it still implies competition, the exclusion of sources might limit the number of bidders and potentially reduce the overall competitive pressure on pricing compared to a truly unrestricted full and open competition.
What is the track record of CGS Administrators, LLC in managing large federal healthcare contracts?
CGS Administrators, LLC is a well-established entity within the federal healthcare landscape, primarily known for its role as a Medicare Administrative Contractor (MAC). They have a history of managing significant contracts for CMS, processing claims, and providing customer service for Medicare beneficiaries and providers. Their experience in administering complex healthcare programs suggests a degree of reliability and familiarity with federal regulations and operational requirements. However, the specific performance metrics and outcomes for this particular $42.1M contract over its 303-day duration would require deeper analysis of performance reports and any associated audits or reviews.
How does the contract's geographic focus on Tennessee impact the delivery and oversight of durable medical equipment services?
Focusing the contract on Tennessee (Jurisdiction C) allows for tailored service delivery and oversight specific to the needs and provider landscape of that state. It enables CMS, through CGS Administrators, LLC, to concentrate resources on a defined region, potentially leading to more efficient claims processing and better provider support. However, it also means that beneficiaries in other states requiring similar services would not be covered under this specific contract. Oversight can be more localized, allowing for a better understanding of regional market dynamics and potential fraud, waste, or abuse patterns unique to Tennessee's healthcare environment.
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 AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Blue Cross & Blue Shield of South Carolina
Address: 2 VANTAGE WAY, NASHVILLE, TN, 37228
Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $42,141,503
Exercised Options: $42,141,503
Current Obligation: $42,141,503
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-07-01
Current End Date: 2013-04-30
Potential End Date: 2013-06-30 00:00:00
Last Modified: 2023-03-29
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