HHS awards IBM $39.9M for Medicare risk adjustment data processing system
Contract Overview
Contract Amount: $39,968,115 ($40.0M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of Health and Human Services
Start Date: 2015-11-01
End Date: 2021-08-31
Contract Duration: 2,130 days
Daily Burn Rate: $18.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: IGF::OT::IGF THE RASS WAS ESTABLISHED TO RECEIVE, PROCESS, STORE, AND ANALYZE DATA USED TO RISK-ADJUST PAYMENTS BASED ON HEALTH STATUS. THE RASS IS THE CRITICAL SOURCE SYSTEM THAT PROVIDES BENEFICIARY-SPECIFIC RISK SCORES TO THE MEDICARE ADVANTAGE AND PRESCRIPTION DRUG (MARX) SYSTEM, WHICH IN TURN CALCULATES PAYMENTS FOR THE PART C MEDICARE ADVANTAGE, PART D PRESCRIPTION DRUG, PACE PROGRAMS, AND FOR MA AND FEE-FOR-SERVICE (FFS) PROGRAM DEMONSTRATIONS SUCH AS ACCOUNTABLE CARE ORGANIZATIONS (ACOS).
Place of Performance
Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $40.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF THE RASS WAS ESTABLISHED TO RECEIVE, PROCESS, STORE, AND ANALYZE DATA USED TO RISK-ADJUST PAYMENTS BASED ON HEALTH STATUS. THE RASS IS THE CRITICAL SOURCE SYSTEM THAT PROVIDES BENEFICIARY-SPECIFIC RISK SCORES TO THE MEDICARE ADVANTAGE AND PRESCRIPTION DRUG (MARX) SYS… Key points: 1. The RASS system is critical for Medicare payment calculations across multiple programs. 2. IBM is a major IT contractor with significant government experience. 3. The contract's duration and cost-plus award fee structure warrant scrutiny. 4. The sector is Computer Systems Design Services, a key area for government IT.
Value Assessment
Rating: fair
The contract's Cost Plus Award Fee (CPAF) structure can incentivize performance but may also lead to higher costs if not managed tightly. Benchmarking against similar complex data processing and analysis systems is difficult without more granular cost data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific pricing discovery mechanisms and the impact of the CPAF structure on the final price are not detailed.
Taxpayer Impact: Taxpayer funds are used to ensure accurate risk adjustment for Medicare payments, which is crucial for program integrity and equitable distribution of funds.
Public Impact
Ensures accurate payments for Medicare Advantage and Prescription Drug programs. Supports risk adjustment for various demonstration programs like Accountable Care Organizations. Impacts millions of beneficiaries by influencing the financial stability of healthcare plans. Data processed is vital for understanding population health trends and resource allocation.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure
- Long contract duration (2130 days)
- Potential for scope creep in data analysis requirements
Positive Signals
- Critical system for Medicare operations
- Awarded via full and open competition
- IBM's established presence in government IT
Sector Analysis
This contract falls within the Computer Systems Design Services sector, which is a significant area of federal IT spending. Benchmarks for similar large-scale data processing and analysis systems are highly variable based on complexity and scope.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as IBM is a large corporation. There is no information provided on subcontracting opportunities for small businesses.
Oversight & Accountability
The contract was awarded by the Centers for Medicare and Medicaid Services (CMS), a major agency within HHS. Oversight would typically involve program managers and contracting officers ensuring performance and cost control, especially with a CPAF structure.
Related Government Programs
- Computer Systems Design Services
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Cost Plus Award Fee structure may lead to higher costs.
- Long contract duration could indicate potential for cost overruns or scope creep.
- Lack of detailed performance metrics makes value assessment difficult.
- No information on small business subcontracting.
Tags
computer-systems-design-services, department-of-health-and-human-services, md, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $40.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF THE RASS WAS ESTABLISHED TO RECEIVE, PROCESS, STORE, AND ANALYZE DATA USED TO RISK-ADJUST PAYMENTS BASED ON HEALTH STATUS. THE RASS IS THE CRITICAL SOURCE SYSTEM THAT PROVIDES BENEFICIARY-SPECIFIC RISK SCORES TO THE MEDICARE ADVANTAGE AND PRESCRIPTION DRUG (MARX) SYSTEM, WHICH IN TURN CALCULATES PAYMENTS FOR THE PART C MEDICARE ADVANTAGE, PART D PRESCRIPTION DRUG, PACE PROGRAMS, AND FOR MA AND FEE-FOR-SERVICE (FFS) PROGRAM DEMONSTRATIONS SUCH AS ACCOUNTABLE CARE ORGANIZATIONS (ACOS)
Who is the contractor on this award?
The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.
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 $40.0 million.
What is the period of performance?
Start: 2015-11-01. End: 2021-08-31.
What is the total value of the award fee paid to IBM over the life of the contract, and how does it compare to the base cost?
The provided data does not specify the total award fee paid. The total award value is $39.9M. To assess the value, one would need to compare the actual award fee payments against the base cost and the performance metrics achieved. Without this breakdown, it's impossible to determine if the award fee represented good value or excessive payment for performance.
What specific risks were identified during the full and open competition process that might have influenced the Cost Plus Award Fee structure?
The data does not detail specific risks identified during the competition. However, CPAF contracts are often used when the scope of work is not fully defined or when performance outcomes are critical and potentially difficult to predict. Risks could include technical challenges in data processing, evolving regulatory requirements, or the need for innovative solutions, justifying a fee structure tied to successful outcomes.
How effectively has the RASS system, managed under this contract, improved the accuracy and efficiency of Medicare payment risk adjustments?
The effectiveness of the RASS system is implied by its critical role in Medicare payments. However, the provided data does not offer metrics on accuracy improvements or efficiency gains directly attributable to this specific contract. Evaluating effectiveness would require analyzing CMS reports on payment accuracy rates, fraud detection, and administrative cost reductions post-implementation.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: NIHJT2010001
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $42,652,297
Exercised Options: $39,968,115
Current Obligation: $39,968,115
Actual Outlays: $602,718
Subaward Activity
Number of Subawards: 52
Total Subaward Amount: $16,303,969
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: HHSN316201200030W
IDV Type: GWAC
Timeline
Start Date: 2015-11-01
Current End Date: 2021-08-31
Potential End Date: 2021-08-31 00:00:00
Last Modified: 2026-02-05
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