HHS awards $361M to CGS Administrators for Health Insurance Carriers, ending Dec 2020
Contract Overview
Contract Amount: $361,089,992 ($361.1M)
Contractor: CGS Administrators, LLC
Awarding Agency: Department of Health and Human Services
Start Date: 2012-09-01
End Date: 2020-12-31
Contract Duration: 3,043 days
Daily Burn Rate: $118.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 5
Pricing Type: COST PLUS AWARD FEE
Sector: Healthcare
Official Description: IGF::OT::IGF
Place of Performance
Location: NASHVILLE, DAVIDSON County, TENNESSEE, 37228
Plain-Language Summary
Department of Health and Human Services obligated $361.1 million to CGS ADMINISTRATORS, LLC for work described as: IGF::OT::IGF Key points: 1. Contract awarded to CGS Administrators, LLC, a single entity. 2. The contract type is Cost Plus Award Fee, indicating performance-based incentives. 3. Significant duration of 3043 days suggests a long-term, critical service. 4. The sector is Health Insurance Carriers, a vital part of healthcare delivery.
Value Assessment
Rating: fair
The Cost Plus Award Fee structure allows for performance-based adjustments, but the final cost is heavily dependent on achieved award fees. Without specific award fee criteria and outcomes, a precise value assessment is difficult. The total award amount of $361M over 8+ years suggests a substantial but potentially variable cost.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the specific awardee and contract type (Cost Plus Award Fee) mean the final price is influenced by performance metrics and negotiated award fees, not solely the lowest bid.
Taxpayer Impact: The use of full and open competition aims to ensure taxpayer funds are used efficiently. The Cost Plus Award Fee structure, if well-managed, can incentivize better performance, potentially leading to better value for taxpayers.
Public Impact
Impacts beneficiaries of Medicare and other health insurance programs administered by CMS. Ensures continued operation of critical health insurance carrier services. Potential for improved service delivery through performance-based incentives. Government's ability to manage healthcare costs and program integrity is supported.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee can lead to higher costs if not tightly managed.
- Long contract duration may reduce flexibility to adapt to changing needs.
- Lack of specific performance metrics makes value assessment challenging.
Positive Signals
- Awarded via full and open competition.
- Performance incentives are built into the contract structure.
- Long-term contract provides stability for essential services.
Sector Analysis
This contract falls within the Health Insurance Carriers sector, which is crucial for the administration and delivery of health benefits. Spending in this area is significant due to the scale of government health programs like Medicare and Medicaid. Benchmarks would typically focus on administrative costs as a percentage of total program spending.
Small Business Impact
The provided data does not indicate whether small businesses were involved as subcontractors or prime contractors. Further analysis would be needed to determine the extent of small business participation.
Oversight & Accountability
The contract's long duration and Cost Plus Award Fee structure necessitate robust oversight from the Centers for Medicare and Medicaid Services (CMS) to ensure performance targets are met and costs are controlled. Regular reviews of award fees and contractor performance are critical.
Related Government Programs
- Direct Health and Medical Insurance Carriers
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Potential for cost overruns due to Cost Plus Award Fee structure.
- Long contract duration may limit adaptability.
- Lack of detailed performance data hinders comprehensive value assessment.
- Dependence on contractor performance for achieving optimal outcomes.
Tags
direct-health-and-medical-insurance-carr, department-of-health-and-human-services, tn, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $361.1 million to CGS ADMINISTRATORS, LLC. IGF::OT::IGF
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 $361.1 million.
What is the period of performance?
Start: 2012-09-01. End: 2020-12-31.
What were the specific award fee criteria and how did CGS Administrators perform against them?
The specific award fee criteria are not detailed in the provided data. Understanding these criteria (e.g., timeliness, accuracy, customer satisfaction, cost control) and the contractor's performance against them is crucial for assessing the true value and effectiveness of the Cost Plus Award Fee structure. Without this, it's difficult to determine if the incentives led to optimal outcomes or simply increased costs.
How does the per-unit cost of administering insurance claims compare to industry benchmarks for similar government contracts?
A direct per-unit cost benchmark is not available without knowing the specific services rendered and the volume of units processed (e.g., claims, inquiries). However, the total award of $361M over approximately 8 years suggests an average annual spend of over $45M. Comparing this to the administrative cost ratios of other large government health programs or private insurers would be necessary for a meaningful benchmark.
What mechanisms were in place to ensure the Cost Plus Award Fee structure did not lead to excessive spending?
The primary mechanism is the 'Award Fee' component itself, designed to incentivize performance. Robust government oversight, including regular performance evaluations against pre-defined metrics, is essential. The contracting officer must diligently manage the award fee determination process to ensure it reflects actual performance and does not become a de facto cost increase without commensurate value.
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: RFPCMS20110006
Offers Received: 5
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
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: $395,288,708
Exercised Options: $379,265,714
Current Obligation: $361,089,992
Actual Outlays: $-762,014
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2012-09-01
Current End Date: 2020-12-31
Potential End Date: 2021-03-31 00:00:00
Last Modified: 2024-04-10
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