HHS awards $51M contract for Medicare Part D quality improvement, facing limited competition

Contract Overview

Contract Amount: $50,969,792 ($51.0M)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2015-06-01

End Date: 2021-06-14

Contract Duration: 2,205 days

Daily Burn Rate: $23.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::CL::IGF QUALIFIED INDEPENDENT CONTRACTORS - PART D QIC

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $51.0 million to MAXIMUS FEDERAL SERVICES, INC. for work described as: IGF::CL::IGF QUALIFIED INDEPENDENT CONTRACTORS - PART D QIC Key points: 1. Contract value of $50.97M over 6 years suggests a significant investment in quality improvement initiatives. 2. The contract was awarded under full and open competition, indicating a broad search for qualified vendors. 3. The fixed-price contract type aims to control costs and provide predictability for the government. 4. The award to MAXIMUS FEDERAL SERVICES, INC. represents a substantial engagement with a single prime contractor. 5. The duration of over 6 years points to a long-term strategic objective for Medicare quality. 6. The contract falls under administrative management and general management consulting services, a broad category.

Value Assessment

Rating: good

The contract value of approximately $51 million over six years for Medicare Part D quality improvement services appears reasonable given the scope. Benchmarking against similar contracts for large-scale healthcare program management and consulting is challenging without more specific service details. However, the fixed-price nature of the contract suggests that the government has negotiated a set price for the defined services, which can be advantageous for cost control. The absence of detailed performance metrics in the provided data makes a definitive value-for-money assessment difficult, but the duration and total value indicate a significant commitment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning that all responsible sources were permitted to submit a bid. The data indicates there were three bidders, suggesting a moderate level of competition for this significant contract. While three bidders is not an exceptionally high number, it does provide a basis for price discovery and allows the agency to select from multiple qualified offers. The competition level is sufficient to ensure that the government is likely receiving a fair price, though a higher number of bidders could potentially drive prices lower.

Taxpayer Impact: The full and open competition, with three bidders, suggests that taxpayers are likely benefiting from a competitive price for these essential Medicare quality improvement services. This level of competition helps prevent excessive pricing and ensures that taxpayer funds are used efficiently.

Public Impact

Beneficiaries of Medicare Part D will indirectly benefit from improved quality of service and potentially better health outcomes due to the contractor's work. The services delivered are focused on enhancing the administration and quality of the Medicare Part D prescription drug program. The geographic impact is national, as Medicare Part D serves beneficiaries across the United States. Workforce implications may include the employment of consultants, analysts, and administrative staff by the prime contractor and potentially subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep given the broad nature of 'Administrative Management and General Management Consulting Services'.
Reliance on a single prime contractor for a significant duration could pose risks if performance falters.
The effectiveness of quality improvement initiatives can be difficult to measure and may take time to show tangible results.

Positive Signals

Awarded under full and open competition, indicating a robust selection process.
Firm fixed-price contract type provides cost certainty for the government.
Long contract duration suggests a strategic, long-term commitment to improving Medicare Part D.
The contractor, MAXIMUS FEDERAL SERVICES, INC., likely has experience in federal health program administration.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically management consulting. The federal government is a major consumer of these services, particularly within healthcare agencies like CMS, to manage complex programs, improve efficiency, and ensure quality. The market for healthcare consulting is substantial, with numerous firms competing for government contracts. This specific award represents a significant portion of spending within the niche of Medicare quality improvement consulting.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. However, the prime contractor, MAXIMUS FEDERAL SERVICES, INC., may choose to subcontract portions of this work to small businesses as part of their overall business strategy, which could provide opportunities within the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS), the awarding agency. As a federal contract, it is subject to standard government oversight mechanisms, including contract performance reviews, financial audits, and potentially reviews by the HHS Office of Inspector General (OIG). Transparency is generally maintained through contract databases like FPDS, which provide details on contract awards, values, and contractors. Specific performance metrics and reporting requirements would be detailed within the contract itself.

Related Government Programs

Medicare Quality Improvement Organization (QIO) Program
Medicare Part B Drug Pricing and Reimbursement
Healthcare Consulting Services
Federal Health IT Consulting
CMS Program Management Support

Risk Flags

Potential for cost overruns if scope is not well-defined.
Risk of contractor underperformance impacting quality improvement goals.
Dependence on a single contractor for a long duration.
Difficulty in measuring the direct impact of consulting services on health outcomes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $51.0 million to MAXIMUS FEDERAL SERVICES, INC.. IGF::CL::IGF QUALIFIED INDEPENDENT CONTRACTORS - PART D QIC

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 $51.0 million.

What is the period of performance?

Start: 2015-06-01. End: 2021-06-14.

What specific quality improvement activities are mandated under this contract for Medicare Part D?

The provided data does not specify the exact quality improvement activities. However, contracts of this nature typically involve tasks such as analyzing prescribing patterns, identifying areas for cost savings, developing best practice guidelines for pharmacies and prescribers, monitoring drug utilization, evaluating patient outcomes related to medication adherence, and providing recommendations for program enhancements to CMS. The contractor would likely be responsible for data analysis, reporting, and potentially developing educational materials for stakeholders involved in the Medicare Part D program.

How does the $51 million contract value compare to historical spending on Medicare Part D quality improvement initiatives?

Without access to historical spending data specifically for Medicare Part D quality improvement initiatives, a direct comparison is not possible. However, $51 million over approximately six years represents an average annual spend of roughly $8.5 million. This figure should be considered in the context of the overall Medicare Part D program's multi-billion dollar budget. The investment suggests a focused effort on enhancing the quality and efficiency of this critical component of healthcare delivery, indicating a sustained commitment rather than a one-off expenditure.

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

MAXIMUS FEDERAL SERVICES, INC. is a well-established government contractor with extensive experience in managing large-scale federal health and human services programs. They are known for their work with agencies like CMS, the Department of Defense, and state Medicaid agencies. Their portfolio often includes areas such as eligibility determination, claims processing, health IT solutions, and program integrity. While specific details of past Medicare Part D quality improvement contracts are not provided, their general track record suggests they possess the necessary infrastructure and expertise to handle complex federal health initiatives.

What are the key performance indicators (KPIs) used to measure the success of this contract?

The specific Key Performance Indicators (KPIs) for this contract are not detailed in the provided summary data. Typically, for a contract focused on Medicare Part D quality improvement, KPIs would likely include metrics related to drug cost containment, reduction in adverse drug events, improvements in medication adherence rates, efficiency of claims processing, accuracy of quality reporting, and stakeholder satisfaction (e.g., beneficiaries, pharmacies, prescribers). The contract document itself would outline these specific, measurable, achievable, relevant, and time-bound (SMART) goals.

What is the potential risk associated with the firm fixed-price contract type for this service?

The primary risk associated with a firm fixed-price (FFP) contract type for a service like quality improvement consulting is that the contractor may face challenges in accurately estimating all costs upfront, especially if the scope of work evolves or unforeseen complexities arise. If costs exceed the fixed price, the contractor absorbs the loss, potentially impacting their motivation or ability to deliver the highest quality services. Conversely, the government benefits from cost certainty. For the government, the risk is that the contractor might cut corners to maintain profitability if costs escalate, potentially compromising service quality. Robust performance monitoring is crucial to mitigate this.

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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Maximus Inc

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: $72,475,623

Exercised Options: $50,969,792

Current Obligation: $50,969,792

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HHSM500200400007I

IDV Type: IDC

Timeline