DoD's $3B TRICARE contract to Humana Government Business Inc. for healthcare services awarded in 1996
Contract Overview
Contract Amount: $2,994,634,992 ($3.0B)
Contractor: Humana Government Business Inc
Awarding Agency: Department of Defense
Start Date: 1996-01-23
End Date: 2004-07-31
Contract Duration: 3,112 days
Daily Burn Rate: $962.3K/day
Sector: Healthcare
Official Description: 199712!9700!0134!ZD06 !TRICARE SUPPORT OFFICE !MDA90696C0002 !A!*!P00065 !19970304!19971231!805349198!805349198!049944143!N!050S0!HUMANA MILITARY HEALTHCARE SER!500 W MAIN ST STE 300 !LOUISVILLE !KY!40202!48000!111!21!LOUISVILLE !JEFFERSON !KENTUCKY !0001!+000000711183!N!N!000000000000!Q201!GENERAL HEALTH CARE SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !8099!3!*!*!A!B!A!*!A !U!J!2!004!B!* !C!N!Z!* !* !N!C!*!C!C!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!
Place of Performance
Location: Kentucky, 40202
State: Kentucky Government Spending
Plain-Language Summary
Department of Defense obligated $2.99 billion to HUMANA GOVERNMENT BUSINESS INC for work described as: 199712!9700!0134!ZD06 !TRICARE SUPPORT OFFICE !MDA90696C0002 !A!*!P00065 !19970304!19971231!805349198!805349198!049944143!N!050S0!HUMANA MILITARY HEALTHCARE SER!500 W MAIN ST STE 300 !LOUISVILLE !KY!40202!48000!111!21!LOUISVILLE !JEFFER… Key points: 1. Contract awarded for general health care services, indicating a broad scope of support. 2. Significant duration of over 8 years suggests a long-term need for these services. 3. The contract was awarded by the Department of Defense, highlighting its role in military healthcare. 4. The geographic focus appears to be Louisville, Kentucky, based on contractor address. 5. The contract's value of approximately $3 billion over its life cycle represents substantial federal spending. 6. The contract was not set aside for small businesses, suggesting it was a large-scale requirement.
Value Assessment
Rating: fair
The total value of $3 billion over more than 8 years averages to roughly $375 million annually. This figure needs to be benchmarked against similar TRICARE contracts or other large-scale healthcare service procurements to assess value for money. Without comparable data, it's difficult to definitively state if this represented a good or poor price. The contract's duration suggests a stable, long-term need, which can sometimes lead to better pricing through economies of scale, but also carries the risk of price escalation over time.
Cost Per Unit: N/A
Competition Analysis
Competition Level: unknown
The provided data does not specify the competition level for this contract. It is unclear if it was competed fully and openly, through limited sources, or awarded as a sole-source. The method of competition significantly impacts price discovery and the potential for achieving the best value for the government. If it was a limited or sole-source award, it raises questions about whether competitive pressures were fully leveraged.
Taxpayer Impact: The level of competition directly impacts taxpayer dollars. Robust competition typically drives down prices, ensuring that the government is not overpaying for services. Conversely, limited competition can lead to higher costs for taxpayers.
Public Impact
Beneficiaries include military personnel and their families who rely on TRICARE for healthcare. Services delivered encompass general healthcare, likely including medical, surgical, and potentially pharmacy benefits. The geographic impact is centered around Louisville, Kentucky, where the contractor is based, but TRICARE serves a national population. Workforce implications include employment opportunities for healthcare professionals and administrative staff within Humana Government Business Inc. and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of clarity on competition level could indicate potential for suboptimal pricing.
- Long contract duration without clear performance metrics in the provided data raises concerns about ongoing value.
- The sheer scale of the contract ($3B) necessitates rigorous oversight to ensure funds are used effectively.
Positive Signals
- Award to a known entity like Humana suggests a level of established capability.
- The long duration implies a consistent and reliable service delivery over an extended period.
- The contract addresses a critical need for healthcare services within the military community.
Sector Analysis
This contract falls within the Healthcare sector, specifically focusing on managed care services for a government program (TRICARE). The market for government healthcare contracts is substantial, with significant spending allocated to programs like TRICARE, which serves millions of beneficiaries. Comparable spending benchmarks would involve analyzing other large TRICARE contracts or similar health insurance procurements by federal agencies.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false). This suggests the requirement was likely too large or specialized for small business capabilities alone, or that the contracting agency opted for a full and open competition. Consequently, there may be limited direct subcontracting opportunities for small businesses unless explicitly mandated or pursued by the prime contractor, Humana Government Business Inc.
Oversight & Accountability
Oversight mechanisms for a contract of this magnitude would typically involve the TRICARE Management Activity and potentially the Department of Defense's Inspector General. Accountability measures would be tied to contract performance clauses, service level agreements, and financial audits. Transparency is often managed through contract databases and reporting requirements, though the specifics of this 1996 contract's oversight are not detailed in the provided data.
Related Government Programs
- TRICARE Prime
- TRICARE Standard
- Military Health System
- Federal Health Insurance Programs
- Managed Care Contracts
Risk Flags
- Potential for suboptimal pricing due to unknown competition level.
- Lack of detailed performance metrics in summary data.
- Long contract duration may mask inefficiencies if not actively managed.
Tags
healthcare, dod, tricare, managed-care, large-contract, louisville, kentucky, humana-government-business-inc, services, indefinite-delivery-indefinite-quantity, cost-plus-award-fee, federal-spending
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.99 billion to HUMANA GOVERNMENT BUSINESS INC. 199712!9700!0134!ZD06 !TRICARE SUPPORT OFFICE !MDA90696C0002 !A!*!P00065 !19970304!19971231!805349198!805349198!049944143!N!050S0!HUMANA MILITARY HEALTHCARE SER!500 W MAIN ST STE 300 !LOUISVILLE !KY!40202!48000!111!21!LOUISVILLE !JEFFERSON !KENTUCKY !0001!+000000711183!N!N!000000000000!Q201!GENERAL HEALTH CARE SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !8099!3!*!*!A!B!A!*!A !U!J!2!0
Who is the contractor on this award?
The obligated recipient is HUMANA GOVERNMENT BUSINESS INC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Tricare Management Activity).
What is the total obligated amount?
The obligated amount is $2.99 billion.
What is the period of performance?
Start: 1996-01-23. End: 2004-07-31.
What was the specific nature of the 'General Health Care Services' provided under this contract?
The 'General Health Care Services' (PSC Q201) under contract MDA90696C0002 likely encompassed a broad range of medical services required by TRICARE beneficiaries. This could include physician services, hospital care, outpatient services, diagnostic testing, preventive care, and potentially specialized medical treatments. Given the scale and duration, it likely involved managing a network of providers and ensuring access to care within a defined geographic region or for a specific population segment. The exact scope would be detailed in the contract's Statement of Work (SOW), which is not provided here but would outline specific deliverables, performance standards, and service requirements.
How does the average annual spending of ~$375 million compare to other TRICARE contracts during the late 1990s and early 2000s?
Benchmarking the average annual spending of approximately $375 million for this TRICARE contract requires access to historical spending data for similar contracts during the late 1990s and early 2000s. TRICARE contracts vary significantly in scope, size, and geographic coverage. Large regional contracts, like the one potentially managed by Humana Government Business Inc., were common and represented substantial portions of the Military Health System's budget. Without direct comparative contract values from that era, it's challenging to definitively state if $375 million annually was high, low, or average. However, it signifies a major investment in healthcare services for military families.
What were the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?
The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for a large healthcare services contract like TRICARE, typical KPIs would likely include metrics related to access to care (e.g., appointment wait times), quality of care (e.g., patient outcomes, adherence to clinical guidelines), beneficiary satisfaction, cost containment, and network adequacy. SLAs would define the expected performance levels for these metrics, often with associated penalties for non-compliance and potential incentives for exceeding targets. These would have been crucial for ensuring the effective delivery of healthcare services to military personnel and their families.
What is the track record of Humana Government Business Inc. in managing large federal healthcare contracts, particularly TRICARE?
Humana Government Business Inc. (and its parent company Humana) has a long and extensive history of managing large federal healthcare contracts, including significant involvement with TRICARE. They have been a major player in the TRICARE program for many years, often awarded large regional contracts for managed care support. Their track record generally indicates substantial experience in handling the complexities of government healthcare administration, provider network management, claims processing, and beneficiary services. While specific performance details for this particular 1996-2004 contract are not detailed here, Humana's continued presence and success in securing subsequent TRICARE contracts suggest a generally positive performance history in this domain.
Were there any significant contract modifications or disputes during the life of this contract?
The provided summary data does not contain information regarding contract modifications or disputes for MDA90696C0002. Large, long-duration contracts like this often undergo modifications to adjust scope, funding, or terms based on changing requirements or market conditions. Disputes can also arise between the government and the contractor over contract interpretation, performance, or payment. To determine if modifications or disputes occurred, one would need to consult the contract's official modification history and any associated legal or administrative records, which are not included in this dataset.
What was the estimated cost savings or value proposition for the government in awarding this contract compared to alternative healthcare delivery models?
The value proposition for awarding large managed care contracts like this TRICARE contract typically centers on achieving cost efficiencies and improved healthcare delivery compared to direct government provision or less integrated models. By leveraging private sector expertise and networks, the government aims to control healthcare costs through negotiated provider rates, utilization management, and preventive care initiatives. The estimated cost savings would be realized through economies of scale, bulk purchasing power, and the contractor's ability to manage healthcare resources effectively. However, quantifying these savings requires detailed analysis of the contract's financial performance against baseline cost estimates and alternative scenarios.
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