HHS awards $237M contract for health insurance carrier services to Noridian Healthcare Solutions, LLC

Contract Overview

Contract Amount: $237,241,867 ($237.2M)

Contractor: Noridian Healthcare Solutions, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2015-09-14

End Date: 2024-08-31

Contract Duration: 3,274 days

Daily Burn Rate: $72.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: IGF::CT::IGF JD PROCUREMENT

Place of Performance

Location: FARGO, CASS County, NORTH DAKOTA, 58103

State: North Dakota Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $237.2 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC for work described as: IGF::CT::IGF JD PROCUREMENT Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Award Fee, which incentivizes performance but can lead to higher costs. 3. Duration of over 3200 days indicates a long-term commitment to these services. 4. The contract is for Direct Health and Medical Insurance Carriers, a critical function within healthcare. 5. Awarded to a single contractor, Noridian Healthcare Solutions, LLC, for the entire duration. 6. The contract value of $237M over its term suggests significant resource allocation.

Value Assessment

Rating: fair

Benchmarking the value of this Cost Plus Award Fee contract is challenging without detailed performance metrics and award fee payouts. However, the significant duration and total value indicate a substantial investment. Comparing the per-unit cost of services rendered against similar contracts for Medicare/Medicaid administration would be necessary for a more precise value assessment. The Cost Plus Award Fee structure implies that the government aims to achieve good performance, but it also carries the risk of cost overruns if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of two bids suggests a moderate level of competition for this significant contract. While two bidders is better than one, a higher number of bidders typically leads to more robust price discovery and potentially lower costs for the government.

Taxpayer Impact: The full and open competition process is generally favorable for taxpayers as it aims to secure the best value through a competitive marketplace. However, the limited number of bidders in this instance may have constrained the full potential for cost savings.

Public Impact

Beneficiaries of Medicare and Medicaid programs in North Dakota will continue to receive essential health insurance carrier services. The contract ensures the continued operation of critical administrative functions for health insurance processing and claims management. Geographic impact is primarily focused on North Dakota, where Noridian Healthcare Solutions, LLC operates. The contract supports jobs within Noridian Healthcare Solutions, LLC, contributing to the healthcare administration workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can lead to higher final costs if performance incentives are aggressively met or if base costs are not well-controlled.
The long duration of the contract may reduce flexibility to adapt to changing healthcare regulations or market conditions.
Limited competition (two bidders) might not have driven the absolute lowest price possible.
Lack of specific performance metrics makes it difficult to assess if the 'award fee' component is truly driving exceptional value.

Positive Signals

Awarded through full and open competition, indicating a fair and transparent procurement process.
The Cost Plus Award Fee structure is designed to incentivize contractor performance and achieve desired outcomes.
The contract ensures continuity of essential healthcare services for beneficiaries.
Long-term contract provides stability for both the government and the contractor.

Sector Analysis

This contract falls within the Health Information and Services sector, specifically related to health insurance carriers and administrative services for government healthcare programs like Medicare and Medicaid. The market for such services is substantial, involving large, specialized firms capable of managing complex administrative and regulatory requirements. Comparable spending benchmarks would involve analyzing other contracts for similar administrative functions within HHS or other federal agencies managing large-scale insurance programs.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the nature of the services and the large contract value, it is likely that Noridian Healthcare Solutions, LLC is a large business. Subcontracting opportunities for small businesses may exist, but they are not explicitly detailed in the provided data. The primary impact on the small business ecosystem would be indirect, through potential competition for future, smaller contracts or through the supply chain.

Oversight & Accountability

Oversight for this contract would typically reside with the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures are built into the Cost Plus Award Fee structure, which links a portion of the payment to performance. Transparency is generally maintained through federal procurement databases, though detailed performance reports and award fee determinations may not be publicly accessible. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse related to the contract.

Related Government Programs

Medicare Administrative Contractors (MACs)
Medicaid Information Technology Architecture (MITA)
Healthcare.gov Marketplace Operations
Federal Employee Health Benefits Program (FEHBP) Administration

Risk Flags

Cost Plus Award Fee structure requires careful monitoring to ensure value for money.
Long contract duration may limit adaptability to future healthcare policy changes.
Limited competition (two bidders) could potentially lead to suboptimal pricing.
Performance metrics for award fee determination are not publicly detailed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $237.2 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC. IGF::CT::IGF JD PROCUREMENT

Who is the contractor on this award?

The obligated recipient is NORIDIAN HEALTHCARE SOLUTIONS, 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 $237.2 million.

What is the period of performance?

Start: 2015-09-14. End: 2024-08-31.

What is the historical spending trend for this specific contract or similar services provided by Noridian Healthcare Solutions, LLC to HHS?

Analyzing historical spending requires access to detailed contract databases beyond the provided summary. However, the current award of $237.2 million over approximately 9.5 years (from Sept 2015 to Aug 2024) suggests an average annual spending of roughly $25 million. To understand trends, one would need to examine prior contracts with Noridian for similar services, looking at the total value, duration, and any modifications or task orders issued. This would reveal if spending has been consistent, increasing, or decreasing, and whether the contract scope has evolved significantly over time. Without this historical data, it's difficult to ascertain if the current award represents a continuation of established spending patterns or a significant shift.

How does the awarded contract value compare to industry benchmarks for similar health insurance carrier services?

Directly comparing the $237.2 million contract value to industry benchmarks is complex without knowing the precise scope of services and performance levels required. However, for large-scale government health insurance administration, costs can vary significantly based on the number of beneficiaries served, the complexity of claims processing, and regulatory compliance demands. Typically, contracts of this magnitude are awarded to specialized firms with proven track records. To benchmark effectively, one would need to identify comparable contracts awarded by CMS or other federal agencies to different carriers for similar functions (e.g., Medicare Part D claims processing, Medicaid eligibility verification). Analyzing the cost per beneficiary or cost per claim processed across these contracts would provide a more accurate assessment of whether Noridian's contract represents good value for money.

What are the key performance indicators (KPIs) used to determine the 'award fee' component of this contract?

The provided data indicates the contract type is 'Cost Plus Award Fee' (CPAF), but it does not specify the Key Performance Indicators (KPIs) used to determine the award fee. In CPAF contracts, the government typically establishes a set of measurable performance objectives. These often include metrics related to timeliness of claims processing, accuracy rates, beneficiary satisfaction, compliance with regulations, and operational efficiency. The contractor earns a base fee plus an award fee, which is contingent upon meeting or exceeding these pre-defined KPIs. Without access to the contract's Performance Work Statement (PWS) or the specific award fee plan, the exact KPIs remain unknown. These KPIs are crucial for understanding how contractor performance is measured and incentivized.

What is Noridian Healthcare Solutions, LLC's track record with federal contracts, particularly within the Department of Health and Human Services?

Noridian Healthcare Solutions, LLC has a significant history of working with the federal government, particularly within the Department of Health and Human Services (HHS). They have served as a Medicare Administrative Contractor (MAC) for various jurisdictions, processing claims and managing services for Medicare beneficiaries. Their experience often involves managing large volumes of claims, ensuring compliance with complex regulations, and providing customer support. A review of federal procurement data would likely show multiple contracts awarded to Noridian over the years, indicating a sustained relationship and perceived capability by agencies like CMS. Assessing their track record would involve examining past performance evaluations, any contract disputes or terminations, and their success in meeting performance targets on previous agreements.

What are the potential risks associated with a long-duration contract (over 9 years) for health insurance carrier services?

Long-duration contracts, like this one spanning over 9 years, present several potential risks. Firstly, the healthcare landscape is dynamic, with evolving regulations, technological advancements, and changing beneficiary needs. A contract fixed for such a long period may struggle to adapt to these shifts, potentially becoming outdated or inefficient. Secondly, there's a risk of contractor complacency; with a guaranteed long-term engagement, the incentive to innovate or maintain peak performance might diminish over time, even with award fees. Thirdly, market conditions and the availability of alternative solutions can change, making the incumbent contractor potentially less competitive in the long run. Finally, unforeseen economic fluctuations or changes in government priorities could impact the contract's value or necessity, leading to potential renegotiations or early termination, although the latter is less common for established, essential services.

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: HHSM5002015RFP0101

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 900 42TH ST S, FARGO, ND, 58108

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $259,433,309

Exercised Options: $258,933,309

Current Obligation: $237,241,867

Actual Outlays: $86,937,417

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline