DoD's $512M Tricare Pharmacy Benefit Management contract awarded to Wisconsin Physicians Service Insurance Corp

Contract Overview

Contract Amount: $511,975,642 ($512.0M)

Contractor: Wisconsin Physicians Service Insurance Corp.

Awarding Agency: Department of Defense

Start Date: 2003-07-07

End Date: 2008-06-30

Contract Duration: 1,820 days

Daily Burn Rate: $281.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Place of Performance

Location: MONONA, DANE County, WISCONSIN, 53713

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $512.0 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP. for work described as: Key points: 1. The contract value of over $512 million represents a significant investment in pharmacy benefit management. 2. Awarded under full and open competition, this suggests a robust market with potential for competitive pricing. 3. The duration of the contract (1820 days) indicates a long-term commitment to the chosen provider. 4. The fixed-price nature of the contract shifts performance risk to the contractor. 5. The contract's focus on pharmacy benefit management is critical for healthcare cost containment. 6. The geographic scope appears national, given the nature of Tricare services.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contracts from the same period. However, a $512 million award over approximately five years for pharmacy benefit management suggests a substantial per-year cost. The fixed-price structure implies that the contractor is expected to manage costs effectively within the awarded amount. Further analysis would require understanding the scope of services and the number of beneficiaries covered to assess true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit offers. The presence of 3 bidders (as indicated by 'no': 3) suggests a moderate level of competition for this significant contract. While not a vast number, it implies that the government sought multiple proposals, which typically aids in price discovery and ensures a degree of market responsiveness.

Taxpayer Impact: A competitive award process generally benefits taxpayers by driving down prices and encouraging efficient service delivery from contractors seeking to win and retain business.

Public Impact

Military personnel, retirees, and their families enrolled in Tricare benefit from managed prescription drug services. The contract ensures the administration and management of pharmacy benefits, including claims processing and formulary management. The geographic impact is nationwide, covering all eligible Tricare beneficiaries. This contract supports the healthcare infrastructure for the U.S. armed forces and their dependents.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if not managed tightly due to the large scale.
Dependence on a single contractor for critical pharmacy services.
Risk of service disruptions if contractor performance falters.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
Fixed-price contract structure aligns contractor incentives with cost control.
Long contract duration provides stability for service delivery.

Sector Analysis

This contract falls within the broader healthcare services sector, specifically focusing on pharmacy benefit management (PBM). The PBM market is a significant segment of the healthcare industry, responsible for negotiating drug prices, managing formularies, and processing prescription claims. The Department of Defense's spending in this area is substantial, reflecting the healthcare needs of a large beneficiary population. Comparable spending benchmarks would typically involve other large government healthcare contracts or major private sector PBM contracts.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. Given the scale and specialized nature of pharmacy benefit management for a large federal program like Tricare, it is less likely to be directly awarded to small businesses without subcontracting opportunities. Further investigation would be needed to determine if small businesses were involved as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, potentially involving the Defense Contract Management Agency (DCMA). Accountability measures would be defined in the contract's performance work statement and terms. Transparency is generally facilitated through contract award databases, though detailed performance reports may be less publicly accessible. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Tricare Pharmacy Operations
DoD Healthcare Services
Federal Health Insurance Programs
Pharmacy Benefit Management Services

Risk Flags

Contract Value
Competition Level
Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $512.0 million to WISCONSIN PHYSICIANS SERVICE INSURANCE CORP.. See the official description on USAspending.

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 (Tricare Management Activity).

What is the total obligated amount?

The obligated amount is $512.0 million.

What is the period of performance?

Start: 2003-07-07. End: 2008-06-30.

What was the specific scope of pharmacy benefit management services required under this contract?

The contract, awarded to Wisconsin Physicians Service Insurance Corp. (WPS), was for Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds under the Tricare program. This typically encompasses a wide range of services including claims processing, formulary management, drug utilization review, network pharmacy management, and potentially mail-order pharmacy services. The objective is to ensure cost-effective and efficient delivery of prescription medications to Tricare beneficiaries while maintaining quality of care. The 'other third party administration' aspect suggests potential broader responsibilities beyond just pharmacy benefits, possibly related to other aspects of insurance or pension fund administration for the covered population.

How does the $512 million contract value compare to other federal PBM contracts or historical Tricare pharmacy spending?

Without access to a comprehensive database of historical Tricare pharmacy spending or direct comparisons to other federal PBM contracts from the same era (2003-2008), a precise benchmark is difficult. However, $512 million over approximately five years translates to an average annual spend of roughly $100 million. This figure is substantial and reflects the significant volume of prescription drugs utilized by the Tricare population. Federal healthcare spending, particularly for large programs like Tricare, often involves multi-billion dollar annual expenditures, making this contract a notable component within the overall healthcare budget. The specific value would need to be contextualized against the number of beneficiaries served and the scope of services provided.

What were the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided data does not detail the specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, typical KPIs for a Pharmacy Benefit Management contract of this nature would likely include metrics related to claims processing accuracy and timeliness, formulary compliance rates, drug cost savings achieved through negotiations, network pharmacy accessibility and satisfaction, and patient safety measures. Service Level Agreements would define the expected performance standards for these KPIs, with potential penalties or incentives tied to meeting or exceeding them. These would be crucial for ensuring the contractor delivers efficient and effective pharmacy services to Tricare beneficiaries.

What is the track record of Wisconsin Physicians Service Insurance Corp. (WPS) in managing large federal healthcare contracts prior to or during this period?

Wisconsin Physicians Service Insurance Corp. (WPS) has a long history of administering health insurance programs, including significant work with federal contracts. Prior to and during the period of this Tricare contract (2003-2008), WPS was known for its role as a Medicare Administrative Contractor (MAC) and its involvement in other government health programs. Their experience in managing complex claims processing, provider networks, and regulatory compliance for large populations would have been a key factor in their ability to secure and manage a contract of this magnitude for Tricare pharmacy benefits. Their established infrastructure and expertise in federal healthcare administration likely contributed to their successful bid.

Were there any significant challenges or controversies related to this contract during its performance period?

Information regarding specific challenges or controversies directly linked to this particular Tricare Pharmacy Benefit Management contract (awarded in 2003) is not readily available in the provided data or general public contract databases. Large federal contracts, especially in healthcare, can sometimes face scrutiny regarding cost, performance, or contract modifications. However, without specific reports or news archives detailing issues, it's presumed the contract was managed to completion without major public controversies. The 'fair' rating for value suggests that while not exceptionally outstanding, it likely met the core requirements without significant performance failures.

How did the 'full and open competition' process influence the final contract price and terms?

The 'full and open competition' award basis is designed to foster a competitive environment, which typically exerts downward pressure on pricing. By allowing all eligible and responsible sources to bid, the government increases the pool of potential offerors, thereby enhancing the likelihood of receiving competitive proposals. In this case, with 3 bidders, the competition likely encouraged Wisconsin Physicians Service Insurance Corp. to offer a price and terms that were attractive relative to its competitors. This process aims to ensure that the government secures the best value, balancing cost with technical capabilities and performance expectations, ultimately benefiting taxpayers through potentially lower costs than a sole-source or limited competition award.

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 › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 1717 WEST BROADWAY, MADISON, WI, 02

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline