HHS awarded $100M+ to AdvanceMed for Zone Program Integrity services over 9 years

Contract Overview

Contract Amount: $100,176,976 ($100.2M)

Contractor: Advancemed Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2009-02-02

End Date: 2018-07-31

Contract Duration: 3,466 days

Daily Burn Rate: $28.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: ZONE PROGRAM INTEGRITY CONTRACTOR - ZONE 5

Place of Performance

Location: NASHVILLE, DAVIDSON County, TENNESSEE, 37214

State: Tennessee Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $100.2 million to ADVANCEMED CORPORATION for work described as: ZONE PROGRAM INTEGRITY CONTRACTOR - ZONE 5 Key points: 1. Contract value suggests a significant, long-term need for program integrity services. 2. The contract's duration and cost indicate a substantial investment in preventing healthcare fraud and abuse. 3. The 'All Other Professional, Scientific, and Technical Services' NAICS code is broad, potentially encompassing diverse program integrity functions. 4. The Cost Plus Award Fee (CPAF) structure incentivizes performance but can lead to higher costs if not managed carefully. 5. The contract was awarded via full and open competition, suggesting a robust market for these services. 6. The absence of small business set-aside indicates the scale and nature of the services may not have been suitable for smaller entities. 7. The contract's completion date in 2018 suggests the services are either ongoing under a new award or have been transitioned.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific deliverables and performance metrics. The Cost Plus Award Fee (CPAF) structure, while common for complex services, can lead to cost overruns if award fees are consistently maximized without corresponding exceptional performance. Comparing it to similar large-scale program integrity contracts would require detailed analysis of scope and outcomes. The total award amount of over $100 million over nine years averages to approximately $11 million annually, which appears reasonable for a federal program integrity contract of this duration and scope, but requires further scrutiny of the specific services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple vendors were likely invited to bid. This process generally promotes competitive pricing and allows the government to select the best value offer. The presence of multiple bidders suggests a healthy market for program integrity services, which is beneficial for price discovery and innovation. The specific number of bidders is not provided, but the 'full and open' designation is a positive indicator of competitive sourcing.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and higher quality services as contractors vie for the award. This process helps ensure that federal funds are used efficiently by selecting the most cost-effective and capable provider.

Public Impact

Beneficiaries include Medicare and Medicaid beneficiaries, who are protected from fraudulent billing practices. Services delivered aim to ensure the integrity of federal healthcare programs, safeguarding taxpayer dollars. The geographic impact is national, as CMS oversees programs across the entire United States. Workforce implications include employment for professionals in healthcare fraud detection, data analysis, and program auditing. The contract supports the Centers for Medicare and Medicaid Services (CMS) in its mission to administer federal healthcare programs effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The broad NAICS code (541990) could obscure the specific nature and complexity of services performed, making detailed performance assessment difficult.
Cost Plus Award Fee contracts carry inherent risks of cost escalation if award criteria are not strictly managed and performance is not demonstrably exceptional.
The long contract duration (9 years) may reduce flexibility to adapt to evolving program integrity needs or incorporate newer technologies without contract modifications.
Lack of specific performance metrics or outcome data makes it difficult to definitively assess the 'value for money' achieved.
The absence of small business participation raises questions about opportunities for smaller, specialized firms in this critical area.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that should yield good value.
The significant investment indicates a high priority placed on program integrity by HHS/CMS.
The long-term nature of the contract suggests a stable and ongoing need for these essential services.
The Cost Plus Award Fee structure, if managed well, can incentivize high performance and achieve desired outcomes.
The contract's focus on program integrity directly supports the government's efforts to combat healthcare fraud and abuse.

Sector Analysis

The healthcare sector, particularly federal healthcare programs like Medicare and Medicaid, faces significant challenges from fraud, waste, and abuse. Program integrity services are crucial for CMS to protect the financial solvency of these programs and ensure that funds are used appropriately. This contract falls within the professional, scientific, and technical services sub-sector, specifically focusing on specialized analytical and investigative functions. Comparable spending in this area can vary widely based on the scope of services, but multi-million dollar annual contracts are common for large federal agencies with complex program oversight responsibilities.

Small Business Impact

This contract was not awarded as a small business set-aside, nor is there an indication of specific small business subcontracting goals. The scale and nature of the services, likely requiring extensive resources and specialized expertise, may have favored larger, established contractors. This approach could limit opportunities for smaller businesses to participate in critical federal program integrity work, potentially concentrating this market among a few large firms.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS), a division of HHS. As a Cost Plus Award Fee contract, performance monitoring and the determination of award fees would be critical oversight functions. Transparency would be enhanced through regular reporting requirements and potential audits. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract's performance or the services provided.

Related Government Programs

Medicare Fraud Strike Force
Medicaid Integrity Program
Program Support Center (PSC) Contracts
Healthcare Fraud Prevention Partnership
Centers for Medicare & Medicaid Services (CMS) Operations

Risk Flags

Long contract duration may limit adaptability.
CPAF structure carries potential for cost overruns.
Broad NAICS code lacks specificity.
Limited public data on performance outcomes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $100.2 million to ADVANCEMED CORPORATION. ZONE PROGRAM INTEGRITY CONTRACTOR - ZONE 5

Who is the contractor on this award?

The obligated recipient is ADVANCEMED 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 $100.2 million.

What is the period of performance?

Start: 2009-02-02. End: 2018-07-31.

What specific types of program integrity services were performed under this contract?

The contract's NAICS code, 541990 (All Other Professional, Scientific, and Technical Services), is very broad. However, given the context of CMS and 'Zone Program Integrity,' the services likely encompassed a range of activities aimed at preventing, detecting, and investigating fraud, waste, and abuse within Medicare and Medicaid programs. This could include data analysis to identify aberrant billing patterns, provider audits, investigations into potential fraudulent claims, development of fraud detection algorithms, and support for enforcement actions. The 'Cost Plus Award Fee' structure suggests that performance metrics related to these activities were established, and the contractor's success in meeting or exceeding these metrics influenced the final payment, including an award fee component.

How does the $100M+ award amount compare to similar federal program integrity contracts?

Comparing this $100M+ award to similar contracts requires access to detailed data on other federal program integrity efforts. However, for a contract spanning nearly a decade (2009-2018) and covering 'Zone Program Integrity' for CMS, this figure appears substantial but not necessarily out of line. Large federal agencies often award multi-year, multi-million dollar contracts for critical functions like program integrity, which are essential for safeguarding billions in taxpayer funds. Annual spending would average over $11 million, which is a significant but plausible amount for comprehensive services supporting national healthcare programs. Benchmarking would ideally involve comparing the scope of services, number of beneficiaries covered, and specific performance outcomes against other large-scale contracts.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract of this magnitude?

The primary risks with a CPAF contract of this magnitude include potential cost overruns and the difficulty in objectively measuring performance to justify award fees. While CPAF aims to incentivize performance, if the award criteria are not clearly defined, measurable, and rigorously assessed, contractors may receive substantial award fees without delivering truly exceptional value. There's also a risk that the focus shifts towards meeting award fee targets rather than achieving the most impactful program integrity outcomes. For a contract of this size and duration, effective government oversight is paramount to ensure that costs remain reasonable and that award fees are earned based on demonstrable, superior performance that directly benefits the program.

What was the contractor's track record prior to or during this contract?

AdvanceMed Corporation, the contractor, has a history of providing healthcare-related services, including program integrity and claims processing, to government agencies. Information regarding their specific track record leading up to or during this particular $100M+ contract would typically be found in past performance evaluations submitted as part of the bidding process for subsequent contracts, or within government performance management systems. Without access to these internal evaluations, it's difficult to provide a detailed assessment of their performance on this specific contract. However, securing a contract of this size and duration suggests they met the government's requirements at the time of award.

How effective were the program integrity services in preventing fraud, waste, and abuse?

Assessing the precise effectiveness of the program integrity services rendered under this contract is challenging without specific performance metrics and outcome data. The contract's value and duration suggest a significant effort was undertaken. However, the ultimate measure of success would be the quantifiable reduction in fraud, waste, and abuse within the Medicare and Medicaid programs attributable to AdvanceMed's efforts. This would typically be measured through metrics like dollars saved, fraudulent claims detected and prevented, and successful enforcement actions supported. Publicly available data on the specific impact of this contract is limited, making a definitive effectiveness assessment difficult.

What is the historical spending trend for Zone Program Integrity services at CMS?

Historical spending trends for Zone Program Integrity services at CMS would reveal the agency's commitment and evolving investment in combating healthcare fraud. This $100M+ contract, awarded in 2009 and ending in 2018, represents a significant portion of spending during that period. Analyzing trends would involve looking at prior contracts for similar services, the number of zones covered, and the annual funding levels. Increased spending over time might indicate a growing recognition of the threat of healthcare fraud or an expansion of CMS's program integrity efforts. Conversely, fluctuating or decreasing spending could suggest shifts in priorities or budget constraints. Detailed historical data would be needed for a comprehensive trend analysis.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 15245 SHADY GROVE RD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $100,176,976

Exercised Options: $100,176,976

Current Obligation: $100,176,976

Actual Outlays: $72,690

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200900001I

IDV Type: IDC

Timeline