VA's $254M PCCC Contract with Health Net Federal Services Faces Scrutiny for Value and Competition

Contract Overview

Contract Amount: $254,265,477 ($254.3M)

Contractor: Health NET Federal Services, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2016-10-01

End Date: 2021-03-29

Contract Duration: 1,640 days

Daily Burn Rate: $155.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC).

Place of Performance

Location: GOLDEN, JEFFERSON County, COLORADO, 80401

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $254.3 million to HEALTH NET FEDERAL SERVICES, LLC for work described as: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). Key points: 1. The contract awarded to Health Net Federal Services, LLC for PCCC services represents a significant investment by the VA. 2. While awarded under full and open competition, the effectiveness of price discovery and potential for overpayment warrant review. 3. The sector for physician offices is broad, making direct cost comparisons challenging without more granular data. 4. Potential risks include cost overruns and whether the fixed-price incentive structure adequately controls expenses.

Value Assessment

Rating: questionable

The total award of $254M over nearly 5 years suggests a substantial per-year cost. Without specific unit metrics or service levels, it's difficult to benchmark against similar physician office contracts. The fixed-price incentive structure implies a target cost, but the final price could vary, raising concerns about overall value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, which is a positive sign for price discovery. However, the nature of healthcare services can make direct comparisons difficult, and the incentive structure's effectiveness in driving down costs needs further examination.

Taxpayer Impact: The significant expenditure of $254M impacts taxpayers. Ensuring the contract delivers necessary patient-centered care efficiently and at a reasonable cost is crucial for responsible use of public funds.

Public Impact

Veterans may experience improved access to community-based healthcare services. The contract's success hinges on effective management of healthcare providers and patient outcomes. Transparency in how the incentive structure impacts final costs is important for public trust.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to incentive structure
Difficulty in benchmarking healthcare service costs
Limited insight into specific performance metrics driving incentives

Positive Signals

Awarded through full and open competition
Aims to improve patient-centered care delivery

Sector Analysis

This contract falls within the broad 'Offices of Physicians' sector, which includes a wide range of medical services. Benchmarking is difficult without knowing the specific types of care provided and the patient population served. The VA's spending in this area is significant, reflecting the demand for healthcare services.

Small Business Impact

There is no indication in the provided data whether small businesses were involved as subcontractors or partners in this contract. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Ensuring robust oversight is critical to monitor performance, manage costs, and verify that the services meet the needs of veterans effectively.

Related Government Programs

Offices of Physicians (except Mental Health Specialists)
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Lack of specific performance metrics for incentive payments.
Difficulty in establishing clear cost benchmarks for healthcare services.
Potential for costs to escalate under the fixed-price incentive structure.
Need for robust oversight to ensure 'patient-centered' care delivery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $254.3 million to HEALTH NET FEDERAL SERVICES, LLC. IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC).

Who is the contractor on this award?

The obligated recipient is HEALTH NET FEDERAL SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $254.3 million.

What is the period of performance?

Start: 2016-10-01. End: 2021-03-29.

What specific performance metrics were used to trigger the incentive payments, and how effectively did they align with desired patient outcomes and cost controls?

The provided data does not detail the specific performance metrics tied to the incentive payments. Understanding these metrics is crucial to assess if they genuinely encouraged efficiency and quality care, or if they potentially allowed for increased costs without proportional benefit. Further investigation into the contract's performance reports is needed.

How does the per-unit cost of services under this contract compare to similar VA community care contracts or private sector benchmarks, adjusting for service complexity?

Benchmarking is challenging without granular data on the specific services rendered and patient acuity. The $254M total award over 1640 days averages roughly $155K per day. A detailed cost-benefit analysis comparing this to similar contracts, accounting for variations in service scope and patient needs, is necessary to determine true value.

What mechanisms are in place to ensure the 'patient-centered' aspect of the care is consistently delivered and measured, beyond just cost and basic service provision?

The contract's success relies heavily on the VA's ability to monitor and enforce the 'patient-centered' quality. This requires robust feedback mechanisms from veterans, regular quality assessments of providers, and clear protocols for addressing patient concerns. The effectiveness of these oversight measures directly impacts the contract's overall value and impact.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Centene Corporation (UEI: 809245525)

Address: 2025 AEROJET RD, RANCHO CORDOVA, CA, 95742

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $254,265,477

Exercised Options: $254,265,477

Current Obligation: $254,265,477

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0053

IDV Type: IDC

Timeline