HHS awarded Mathematica Inc. a $24M contract for alternative payment model analysis, raising value-for-money questions

Contract Overview

Contract Amount: $24,023,200 ($24.0M)

Contractor: Mathematica Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2016-06-23

End Date: 2021-12-22

Contract Duration: 2,008 days

Daily Burn Rate: $12.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF MACRA SECTION 101(E) ALTERNATIVE PAYMENT MODEL PROGRAM ANALYSIS CONTRACTOR (PAC)

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $24.0 million to MATHEMATICA INC. for work described as: IGF::OT::IGF MACRA SECTION 101(E) ALTERNATIVE PAYMENT MODEL PROGRAM ANALYSIS CONTRACTOR (PAC) Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher costs without guaranteed performance. 2. Limited competition data makes it difficult to assess if the pricing reflects market value. 3. The contract duration of over 5 years suggests a significant, long-term investment. 4. Performance context is unclear, lacking specific metrics for success in analyzing payment models. 5. This contract falls within the broader R&D sector, focusing on healthcare policy analysis.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to cost overruns if not tightly managed. Without detailed performance data or benchmarks against similar analyses, it's challenging to definitively assess value for money. The total award of $24 million over five years suggests a substantial investment, but the return on this investment in terms of improved payment models is not explicitly detailed. Comparing this to other contracts for similar analytical services would provide better context on pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders likely had the opportunity to submit proposals. However, the number of actual bidders is not specified, which limits a deeper analysis of the competitive landscape. A robust competition typically drives down prices and encourages innovation. The fact that it was fully competed is a positive signal, but the intensity of that competition is unknown.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a more competitive bidding environment, which can lead to better pricing and service quality. However, without knowing the number of bidders, the extent of this benefit is uncertain.

Public Impact

Beneficiaries include Medicare and Medicaid beneficiaries who may experience improved healthcare delivery through better payment models. Services delivered involve in-depth analysis and research to support the development and evaluation of alternative payment models. The geographic impact is national, affecting healthcare providers and patients across the United States. Workforce implications may include the need for specialized analytical and healthcare policy expertise within CMS and its contractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may not incentivize cost efficiency.
Lack of specific performance metrics makes value assessment difficult.
Limited transparency on the number of bidders in the full and open competition.

Positive Signals

Awarded through full and open competition, suggesting a broad search for qualified contractors.
Contract addresses a critical area of healthcare reform (alternative payment models).
Long-term contract duration allows for sustained focus on complex policy issues.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on social sciences and humanities related to healthcare policy. The market for healthcare analytics and policy consulting is substantial, driven by the continuous need for evidence-based improvements in healthcare delivery and payment systems. Comparable spending benchmarks would involve other government contracts for policy analysis, economic modeling, and program evaluation within HHS and other agencies.

Small Business Impact

The contract does not indicate any specific small business set-asides. Given the specialized nature of the research and development required for analyzing complex healthcare payment models, it is less likely that small businesses would be the primary awardees unless they possess highly specialized expertise. Subcontracting opportunities for small businesses may exist, but this would depend on the prime contractor's strategy.

Oversight & Accountability

Oversight is likely conducted by the Centers for Medicare and Medicaid Services (CMS) program officials and contracting officers. Accountability measures would be tied to the contract's performance work statement and deliverables. Transparency is facilitated through contract award databases, but detailed programmatic oversight information is typically internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Medicare Access and CHIP Reauthorization Act (MACRA)
Center for Medicare and Medicaid Innovation (CMMI) initiatives
Healthcare policy research contracts
Health economics analysis
Value-based care program evaluation

Risk Flags

Cost-plus-fixed-fee structure
Lack of specific performance metrics
Limited transparency on competition intensity

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $24.0 million to MATHEMATICA INC.. IGF::OT::IGF MACRA SECTION 101(E) ALTERNATIVE PAYMENT MODEL PROGRAM ANALYSIS CONTRACTOR (PAC)

Who is the contractor on this award?

The obligated recipient is MATHEMATICA 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 $24.0 million.

What is the period of performance?

Start: 2016-06-23. End: 2021-12-22.

What specific deliverables were expected under this contract, and how was Mathematica's performance measured against them?

The contract focused on supporting the Center for Medicare and Medicaid Innovation (CMMI) in analyzing and developing alternative payment models (APMs). Specific deliverables likely included research reports, data analysis, model design recommendations, and evaluation frameworks for various APMs. Performance measurement would typically involve adherence to timelines, quality of analysis, clarity of recommendations, and the extent to which the contractor's work informed CMMI's decision-making processes. However, without access to the contract's Performance Work Statement (PWS) and subsequent performance reviews, a detailed assessment of how Mathematica's performance was measured and its success against these metrics remains internal to HHS.

How does the $24 million cost compare to similar contracts for healthcare policy analysis and R&D?

Benchmarking the $24 million cost requires comparing it to contracts with similar scope, duration, and complexity. Contracts awarded by CMMI or other HHS divisions for developing or evaluating payment models, conducting health economic analyses, or performing policy research can serve as comparators. Factors like the number of bidders, the specific analytical methodologies required, and the level of expertise needed influence pricing. While $24 million over five years is substantial, it may be within the expected range for a full and open competition on a critical, long-term policy initiative. A detailed comparison would necessitate analyzing the PWS of comparable contracts and their awarded values.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of research and development?

The primary risk with a CPFF contract for R&D is that the contractor may have less incentive to control costs, as their fee is fixed regardless of the final project cost. This can potentially lead to cost overruns if the contractor does not manage resources efficiently or if unforeseen technical challenges arise. For the government, the risk is paying a higher total cost than necessary. Mitigation strategies include robust oversight, clearly defined milestones, and strong negotiation of the fixed fee based on realistic cost estimates. The government also bears the risk of the contractor not delivering the expected quality or scope within the fixed fee.

What is Mathematica's track record in performing similar government contracts, particularly within healthcare policy?

Mathematica Policy Research, Inc. has a long-standing and generally strong track record of performing government contracts, particularly within the healthcare and social policy domains. They are a well-established research firm frequently awarded contracts by agencies like HHS, CMS, and other federal bodies for program evaluation, policy analysis, and data analytics. Their expertise often lies in areas such as Medicare, Medicaid, health insurance marketplaces, and economic modeling. While specific performance details for individual contracts are often not public, their consistent success in winning competitive bids for complex analytical work suggests a high level of capability and reliability in delivering on government requirements.

How has spending on alternative payment model analysis evolved within CMS over time?

Spending on alternative payment model (APM) analysis within CMS has significantly increased over the past decade, driven by legislative mandates like the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. MACRA established the Center for Medicare and Medicaid Innovation (CMMI) with a mandate to test innovative payment and service delivery models. Consequently, CMS has allocated substantial resources towards research, development, and evaluation of various APMs, including bundled payments, accountable care organizations (ACOs), and patient-centered medical homes. This has led to a rise in contracts awarded for analytical support, data infrastructure, and technical assistance related to APMs, reflecting a strategic shift towards value-based care.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Social Sciences and Humanities

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: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1100 1ST ST NE FL 12, WASHINGTON, DC, 20024

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

Financial Breakdown

Contract Ceiling: $24,128,689

Exercised Options: $24,023,200

Current Obligation: $24,023,200

Actual Outlays: $1,432,155

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSM500201400034I

IDV Type: IDC

Timeline