HHS awards $67.8M contract for Medicare reconsideration services, highlighting administrative management needs

Contract Overview

Contract Amount: $67,823,319 ($67.8M)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2011-09-14

End Date: 2017-03-31

Contract Duration: 2,025 days

Daily Burn Rate: $33.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: QUALIFIED INDEPENDENT CONTRACTOR PART A WEST RECONSIDERATIONS

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $67.8 million to MAXIMUS FEDERAL SERVICES, INC. for work described as: QUALIFIED INDEPENDENT CONTRACTOR PART A WEST RECONSIDERATIONS Key points: 1. Contract value of $67.8M over its period of performance indicates significant investment in administrative support. 2. Full and open competition suggests a robust market for these services, potentially driving competitive pricing. 3. The contract's duration of over 2000 days points to a long-term need for these specialized administrative functions. 4. Fixed-price contract type aims to control costs and provide predictability for the agency. 5. The award to a single contractor, MAXIMUS FEDERAL SERVICES, INC., warrants scrutiny for potential performance and value. 6. This contract falls within the Administrative Management and General Management Consulting Services NAICS code, a common area for federal outsourcing.

Value Assessment

Rating: fair

The total award amount of $67.8 million for administrative management services over approximately five years suggests a substantial investment. Benchmarking this against similar contracts for Medicare reconsideration services is challenging without more granular data on the scope of work and specific deliverables. However, the fixed-price nature of the contract provides some cost control. The value proposition hinges on the contractor's ability to efficiently and effectively manage the reconsideration process, which directly impacts beneficiary access to services and program integrity.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were eligible to bid. This process is designed to foster a competitive environment, theoretically leading to better pricing and service quality. The fact that it resulted in a single award to MAXIMUS FEDERAL SERVICES, INC. suggests they were the most advantageous offer, but the number of actual bidders is not specified. A high level of competition generally benefits the government by providing a wider range of options and driving down costs.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining services at a fair market price through a rigorous evaluation process.

Public Impact

Beneficiaries of Medicare services who require reconsiderations of coverage decisions are the primary recipients of the services delivered under this contract. The contract supports the Centers for Medicare and Medicaid Services (CMS) in its administrative functions related to appeals and reconsiderations. Geographic impact is nationwide, as Medicare serves beneficiaries across the United States. Workforce implications include the employment of individuals by MAXIMUS FEDERAL SERVICES, INC. to perform these administrative tasks, potentially including case reviewers, administrative staff, and management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for contractor lock-in due to the long duration and specialized nature of the services.
Risk of service degradation if performance monitoring is not robust.
Dependence on a single contractor for a critical administrative function.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
Fixed-price contract type helps manage cost certainty.
Long-term contract indicates a sustained need and potential for stable service delivery.

Sector Analysis

This contract falls within the Administrative Management and General Management Consulting Services sector, specifically supporting government healthcare administration. The market for such services is substantial, driven by the complexity of federal programs like Medicare and Medicaid. Comparable spending benchmarks would involve analyzing other large-scale administrative support contracts within HHS and other agencies managing complex entitlement programs. The trend in government is often to outsource specialized administrative functions to contractors to leverage expertise and manage workload.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities, which are not detailed here. Without specific subcontracting plans or goals, it's difficult to assess the direct benefit to the small business ecosystem from this particular award. Large prime contractors are often encouraged to utilize small businesses, but this is not guaranteed.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures are typically embedded within the contract terms, including performance standards, reporting requirements, and potential penalties for non-compliance. Transparency is facilitated through contract award databases and public reporting, though detailed operational performance data may be limited. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Medicare Administrative Contractor (MAC) program
Medicaid IT modernization efforts
Healthcare eligibility and enrollment services
Federal civilian administrative support services

Risk Flags

Long-term contract duration may limit flexibility.
Single award could indicate limited competition or contractor dependency.
Performance data not publicly available for detailed assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $67.8 million to MAXIMUS FEDERAL SERVICES, INC.. QUALIFIED INDEPENDENT CONTRACTOR PART A WEST RECONSIDERATIONS

Who is the contractor on this award?

The obligated recipient is MAXIMUS FEDERAL SERVICES, INC..

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 $67.8 million.

What is the period of performance?

Start: 2011-09-14. End: 2017-03-31.

What is the specific scope of work for the 'WEST RECONSIDERATIONS' part of this contract?

The 'WEST RECONSIDERATIONS' designation likely refers to a specific geographic region or functional area within the Medicare appeals process that MAXIMUS FEDERAL SERVICES, INC. is responsible for managing. This would typically involve reviewing and adjudicating appeals from beneficiaries or providers who disagree with coverage or payment decisions made by Medicare. The scope would encompass tasks such as gathering case documentation, applying relevant Medicare laws and regulations, conducting independent reviews, and issuing formal decisions. The exact geographic coverage or specific types of reconsiderations handled would be detailed in the contract's Statement of Work (SOW), which is not provided here but is crucial for understanding the full value and performance expectations.

How does the $67.8M award compare to historical spending on similar Medicare reconsideration services?

Comparing the $67.8 million award to historical spending requires access to historical contract data for similar Medicare reconsideration services, ideally from the same agency (CMS) and covering comparable periods. Without that specific comparative data, it's difficult to definitively state whether this award represents an increase, decrease, or stable level of spending. However, the trend in healthcare administration often involves significant, multi-year contracts for managing complex processes like appeals. Factors influencing historical spending include changes in healthcare policy, beneficiary enrollment, and the volume of claims requiring reconsideration. A detailed analysis would involve tracking spending trends for Medicare's administrative functions over several fiscal years.

What are the key performance indicators (KPIs) used to evaluate MAXIMUS FEDERAL SERVICES, INC.'s performance on this contract?

Key Performance Indicators (KPIs) for a contract like this would typically focus on efficiency, accuracy, timeliness, and beneficiary satisfaction. Examples could include: average processing time for reconsiderations, accuracy rate of decisions (measured by overturn rates at subsequent appeal levels), adherence to regulatory timelines for issuing decisions, and potentially metrics related to the clarity and helpfulness of communication with beneficiaries. The contract's SOW would explicitly define these KPIs, along with acceptable performance levels and any associated incentives or penalties. Robust KPI tracking is essential for CMS to ensure the contractor is delivering value and meeting program objectives.

What is the track record of MAXIMUS FEDERAL SERVICES, INC. in managing large federal healthcare administrative contracts?

MAXIMUS FEDERAL SERVICES, INC. has a significant track record in managing large federal and state healthcare contracts, including those related to eligibility, enrollment, call centers, and claims processing for programs like Medicaid and Medicare. They are a well-established player in the government health IT and administrative services space. Their experience often includes managing complex, high-volume operations. However, like any large contractor, they may have faced scrutiny or challenges on specific contracts related to performance, cost overruns, or data security incidents. A thorough assessment would involve reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) and any publicly reported issues.

Are there any specific risks associated with outsourcing Medicare reconsideration services?

Yes, there are several risks associated with outsourcing Medicare reconsideration services. These include: 1) **Data Security and Privacy:** Handling sensitive beneficiary health information requires stringent security measures; a breach could have severe consequences. 2) **Quality Control:** Ensuring consistent quality and adherence to complex regulations across all cases can be challenging for a third-party contractor. 3) **Loss of Institutional Knowledge:** Over-reliance on contractors can lead to a decline in in-house expertise within the agency. 4) **Contractor Performance:** The agency is dependent on the contractor meeting performance standards; failure can disrupt beneficiary access to services. 5) **Cost Overruns:** While fixed-price contracts aim to mitigate this, scope creep or unforeseen issues can still lead to increased costs. 6) **Beneficiary Experience:** The contractor's interaction with beneficiaries significantly impacts their perception of the Medicare program.

How does the fixed-price contract type influence the government's risk exposure compared to other contract types?

A Firm Fixed Price (FFP) contract type, as indicated for this award, generally places the most risk on the contractor regarding cost overruns. The government agrees to pay a set price regardless of the contractor's actual costs incurred. This provides the government with significant cost certainty and predictability, making it easier to budget. The primary risk for the government shifts from cost to performance; if the contractor fails to deliver the required goods or services adequately, the government may not receive the expected value, even if the contractor incurs higher costs. In contrast, cost-reimbursement contracts shift more cost risk to the government but offer greater flexibility and are often used for research and development or when cost estimates are highly uncertain.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Maximus Inc (UEI: 082347477)

Address: 11419 SUNSET HILLS ROAD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $67,823,319

Exercised Options: $67,823,319

Current Obligation: $67,823,319

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HHSM500200400007I

IDV Type: IDC

Timeline