DoD's TRICARE contract awarded to Wisconsin Physicians Service Insurance Corp. for $55.7M shows strong competition
Contract Overview
Contract Amount: $55,675,108 ($55.7M)
Contractor: Wisconsin Physicians Service Insurance Corp.
Awarding Agency: Department of Defense
Start Date: 2021-06-30
End Date: 2022-04-30
Contract Duration: 304 days
Daily Burn Rate: $183.1K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: TRICARE DUAL-ELIGIBLE FISCAL INTERMEDIARY CONTRACT (TDEFIC) PROVIDES CLAIMS PROCESSING AND ASSOCIATED CUSTOMER SUPPORT SERVICES.
Place of Performance
Location: MONONA, DANE County, WISCONSIN, 53713
Plain-Language Summary
Department of Defense obligated $55.7 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP. for work described as: TRICARE DUAL-ELIGIBLE FISCAL INTERMEDIARY CONTRACT (TDEFIC) PROVIDES CLAIMS PROCESSING AND ASSOCIATED CUSTOMER SUPPORT SERVICES. Key points: 1. The contract leverages a firm-fixed-price structure, aligning contractor incentives with cost control. 2. Awarded under full and open competition, this suggests a robust marketplace for these services. 3. The duration of 304 days indicates a focused scope, potentially reducing long-term risk. 4. The contract's focus on claims processing and customer support is critical for beneficiary access to care. 5. Benchmarking against similar contracts will be key to assessing true value for money. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.
Value Assessment
Rating: good
The contract's firm-fixed-price nature is a positive indicator for cost predictability. While specific value-for-money metrics are not provided, the competitive award process suggests a reasonable price was achieved. Benchmarking against other TRICARE intermediary contracts or similar large-scale health claims processing contracts would provide a clearer picture of its cost-effectiveness. The relatively short duration might also imply a more efficient operational model for this specific task.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This level of competition is generally favorable for price discovery and ensures that the government can select from a wide range of qualified contractors. The specific number of bids received is not detailed, but the designation implies a competitive process that should have driven down costs.
Taxpayer Impact: Full and open competition typically benefits taxpayers by fostering a competitive environment that can lead to lower prices and higher quality services, maximizing the value of federal dollars spent.
Public Impact
Beneficiaries of the TRICARE program, particularly dual-eligible individuals, benefit from efficient claims processing and customer support. The contract ensures the continuity of essential healthcare administrative services for military personnel and their families. The geographic impact is national, covering all TRICARE beneficiaries requiring claims processing. Workforce implications may include the direct employment by Wisconsin Physicians Service Insurance Corp. and potential indirect employment in related support services.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of transparency on the number of bidders in the full and open competition.
- Potential for cost overruns if scope creep occurs despite firm-fixed-price.
- Dependence on a single contractor for critical claims processing functions.
- Limited visibility into the contractor's operational efficiency and quality metrics.
Positive Signals
- Awarded under full and open competition, suggesting competitive pricing.
- Firm-fixed-price contract type helps control costs.
- Clear definition of services (claims processing and customer support).
- Experienced contractor likely possesses established processes.
Sector Analysis
This contract falls within the broader sector of healthcare administration and insurance services, specifically focusing on third-party administration of insurance funds. The market for such services is large and highly competitive, with numerous established players managing complex claims processing for government and private entities. Benchmarks for similar large-scale government health contracts often involve multi-billion dollar figures over longer durations, making this $55.7 million contract for a defined period a specific, albeit significant, component of the overall defense health budget.
Small Business Impact
The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. This suggests that the primary award went to a large business. Further analysis would be needed to determine if subcontracting opportunities exist within Wisconsin Physicians Service Insurance Corp. to engage small businesses in fulfilling parts of this contract, which could impact the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically fall under the Defense Health Agency (DHA) within the Department of Defense. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency is generally facilitated through contract award databases and reporting requirements, though specific performance metrics and oversight activities may not always be publicly detailed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- TRICARE Health Care Program
- Defense Health Agency Contracts
- Pharmacy Benefit Management Services
- Health Insurance Administration Contracts
Risk Flags
- Potential for service disruption impacting beneficiaries.
- Risk of data security breaches.
- Contract performance below expected quality standards.
- Lack of detailed public information on competition specifics.
Tags
healthcare, defense, claims-processing, fiscal-intermediary, tricare, department-of-defense, defense-health-agency, firm-fixed-price, full-and-open-competition, wisconsin, delivery-order
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $55.7 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP.. TRICARE DUAL-ELIGIBLE FISCAL INTERMEDIARY CONTRACT (TDEFIC) PROVIDES CLAIMS PROCESSING AND ASSOCIATED CUSTOMER SUPPORT SERVICES.
Who is the contractor on this award?
The obligated recipient is WISCONSIN PHYSICIANS SERVICE INSURANCE CORP..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $55.7 million.
What is the period of performance?
Start: 2021-06-30. End: 2022-04-30.
What is the track record of Wisconsin Physicians Service Insurance Corp. in managing large federal healthcare contracts, particularly those involving TRICARE?
Wisconsin Physicians Service Insurance Corp. (WPS) has a significant history of managing federal contracts, including extensive experience with TRICARE programs. They have previously served as a TRICARE West Region contractor and have managed other large-scale health insurance and claims processing operations for government entities. Their long-standing presence in the healthcare administration sector suggests a deep understanding of the complexities involved in serving military beneficiaries and adhering to stringent federal requirements. This experience likely positions them well to handle the claims processing and customer support services outlined in the TDEFIC contract, minimizing risks associated with contractor inexperience.
How does the awarded amount of $55.7 million compare to similar TRICARE claims processing contracts?
The $55.7 million awarded amount for the TRICARE Dual-Eligible Fiscal Intermediary Contract (TDEFIC) over its 304-day duration represents a significant investment, averaging approximately $183,000 per day. Comparing this directly to other TRICARE contracts requires careful consideration of scope, duration, and specific services. Historically, TRICARE contracts, especially those covering large regions or specific populations like dual-eligibles, can range from tens of millions to hundreds of millions of dollars annually. Given the TDEFIC's focused scope on claims processing and customer support for a specific beneficiary group over less than a year, the $55.7 million appears to be within a reasonable range for such specialized, time-bound federal health administration tasks, assuming efficient service delivery.
What are the primary risks associated with this contract, and how are they mitigated?
The primary risks associated with this contract include potential service disruptions, data security breaches, and cost overruns if not managed effectively. Service disruptions could impact beneficiary access to care, while data breaches pose significant privacy and security concerns. Although a firm-fixed-price contract is in place, scope creep or unforeseen operational challenges could still lead to cost issues. Mitigation strategies likely involve robust performance monitoring by the Defense Health Agency (DHA), strict adherence to security protocols, contingency planning by Wisconsin Physicians Service Insurance Corp., and clear contractual clauses defining deliverables and penalties for non-performance. The relatively short duration may also limit the exposure to long-term risks.
How effective is the firm-fixed-price contract type in ensuring value for money for this specific service?
The firm-fixed-price (FFP) contract type is generally effective in ensuring value for money for services with well-defined scopes, such as claims processing and customer support. This structure places the risk of cost overruns on the contractor, incentivizing Wisconsin Physicians Service Insurance Corp. to manage its operations efficiently and control expenses. For taxpayers, FFP provides cost certainty, as the total price is established upfront. However, the effectiveness hinges on the accuracy of the initial cost estimates and the clarity of the statement of work. If the scope is underestimated or unforeseen complexities arise, the contractor might cut corners on quality to maintain profitability, necessitating vigilant oversight from the Defense Health Agency to ensure both cost control and service quality are maintained.
What are the historical spending patterns for TRICARE claims processing and fiscal intermediary services?
Historical spending on TRICARE claims processing and fiscal intermediary services has been substantial, reflecting the complexity and scale of managing healthcare for millions of military personnel and their families. Over the years, the Department of Defense has awarded numerous contracts for these functions, often through competitive bidding processes. Spending has fluctuated based on contract awards, scope changes, and healthcare utilization trends. While specific figures vary annually, these services consistently represent a significant portion of the Defense Health Agency's budget. The trend has been towards consolidating services where possible to achieve economies of scale, but also to ensure specialized support for distinct beneficiary groups, as seen with the TDEFIC contract.
Industry Classification
NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds
Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1717 W BROADWAY, MADISON, WI, 53713
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $55,675,108
Exercised Options: $55,675,108
Current Obligation: $55,675,108
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HT940214D0003
IDV Type: IDC
Timeline
Start Date: 2021-06-30
Current End Date: 2022-04-30
Potential End Date: 2025-01-10 00:00:00
Last Modified: 2025-01-10
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