VA awards $57M for healthcare claims adjudication software to Acentra Health LLC

Contract Overview

Contract Amount: $57,055,670 ($57.1M)

Contractor: Acentra Health LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-11-03

End Date: 2023-03-04

Contract Duration: 1,947 days

Daily Burn Rate: $29.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: HEALTHCARE CLAIMS ADJUDICATION SOFTWARE

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $57.1 million to ACENTRA HEALTH LLC for work described as: HEALTHCARE CLAIMS ADJUDICATION SOFTWARE Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract duration of 1947 days (over 5 years) indicates a long-term need for the services. 3. A firm-fixed-price contract type generally shifts risk to the contractor, potentially stabilizing costs. 4. The North American Industry Classification System (NAICS) code 541519 points to a broad range of computer-related services. 5. The award was made by the Department of Veterans Affairs, highlighting a focus on veteran healthcare IT infrastructure. 6. The contract's value of approximately $57 million over its term warrants scrutiny for value for money. 7. No small business set-aside was utilized, indicating the competition was open to all eligible firms.

Value Assessment

Rating: fair

The contract value of $57 million over nearly five years for healthcare claims adjudication software appears to be within a reasonable range for such a specialized IT service. Benchmarking against similar large-scale IT procurements for government agencies would provide a clearer picture of value for money. The firm-fixed-price structure suggests cost certainty, but the overall value depends on the delivered functionality and efficiency gains for the VA's claims processing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of 4 bids indicates a moderate level of competition for this requirement. While four bidders suggest some level of market interest, it's important to understand if this represents the full spectrum of capable vendors or if barriers to entry limited participation.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple vendors to offer competitive pricing, potentially leading to lower overall costs for the government.

Public Impact

Veterans will benefit from potentially more efficient and accurate processing of their healthcare claims. The Department of Veterans Affairs will receive updated software to manage its complex claims adjudication processes. The contract supports the IT infrastructure necessary for delivering healthcare services to a large veteran population. The successful implementation of this software could lead to improved operational efficiency within the VA's healthcare system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the software is highly proprietary and difficult to replace.
Risk of cost overruns if the scope of work expands beyond initial estimates, despite fixed-price nature.
Dependence on a single contractor for a critical healthcare IT function could pose operational risks.
Ensuring the software meets evolving healthcare regulations and technological standards will be crucial.

Positive Signals

Awarded through full and open competition, indicating a potentially competitive pricing environment.
Firm-fixed-price contract type provides cost certainty for the government.
Long contract duration suggests a stable, long-term partnership for a critical function.
The contractor, Acentra Health LLC, likely possesses specialized expertise in healthcare claims adjudication.

Sector Analysis

The healthcare IT sector is a significant and growing market, driven by the need for efficient data management, electronic health records, and claims processing. This contract falls within the software and IT services segment, specifically addressing the complex needs of government healthcare providers like the VA. The market for claims adjudication software is competitive, with established players and emerging technology firms vying for contracts. The VA's spending in this area reflects a broader trend of federal agencies modernizing their IT systems to improve service delivery and operational efficiency.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This suggests that the primary competition was open to all eligible firms, and the prime contractor, Acentra Health LLC, is likely a larger entity. The absence of explicit small business provisions means that the direct impact on the small business ecosystem for this specific contract may be limited, unless Acentra Health voluntarily engages small businesses in its subcontracting efforts.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of Veterans Affairs. Performance monitoring, adherence to contract terms, and quality assurance would be key oversight mechanisms. Transparency is generally facilitated through contract award databases and public reporting, though detailed operational oversight specifics are not provided. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Healthcare IT Modernization Programs
Veterans Health Administration Information Technology
Federal Health Claims Processing Systems
Government Software Procurement
Department of Veterans Affairs IT Services

Risk Flags

Potential for scope creep despite fixed-price contract.
Dependence on contractor for critical healthcare function.
Need for robust performance monitoring to ensure value.
Integration challenges with existing VA systems.
Cybersecurity risks associated with sensitive healthcare data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $57.1 million to ACENTRA HEALTH LLC. HEALTHCARE CLAIMS ADJUDICATION SOFTWARE

Who is the contractor on this award?

The obligated recipient is ACENTRA HEALTH 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 $57.1 million.

What is the period of performance?

Start: 2017-11-03. End: 2023-03-04.

What is Acentra Health LLC's track record with the Department of Veterans Affairs and similar government contracts?

Acentra Health LLC has a history of working with the Department of Veterans Affairs, as evidenced by this contract award. To fully assess their track record, a deeper dive into their past performance on other VA contracts, particularly those involving healthcare IT and claims processing, would be necessary. This would involve reviewing past performance evaluations, any documented issues or disputes, and their success in delivering similar services on time and within budget. Information on their experience with other federal agencies, especially in the healthcare sector, would also provide valuable context for their capabilities and reliability in managing large, complex IT procurements.

How does the $57 million contract value compare to similar healthcare claims adjudication software procurements by other federal agencies?

The $57 million contract value for healthcare claims adjudication software over approximately five years is substantial. To benchmark this effectively, comparisons should be made with contracts of similar scope, duration, and complexity awarded by agencies like the Department of Defense (TRICARE), Centers for Medicare & Medicaid Services (CMS), or other large federal healthcare providers. Factors such as the number of users, the volume of claims processed, the specific functionalities required (e.g., fraud detection, analytics), and the level of customization will heavily influence price. Without direct comparable data, it's difficult to definitively state if this represents excellent or questionable value, but it falls within the expected range for a large-scale government IT system.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential cost overruns if the scope expands, vendor lock-in due to specialized software, and operational disruptions during implementation or transition. Mitigation strategies likely involve robust contract management, clear performance metrics, phased implementation plans, and contingency planning for service continuity. The firm-fixed-price nature helps mitigate cost overrun risks, but careful change order management is crucial. The VA's oversight and Acentra Health's own risk management protocols are critical for addressing these potential issues. Ensuring adequate training and user adoption will also be vital for successful implementation and minimizing operational impact.

How effective is the awarded software expected to be in improving the VA's healthcare claims adjudication process?

The effectiveness of the software hinges on its ability to streamline workflows, reduce manual processing, improve accuracy, and potentially enhance fraud detection capabilities within the VA's claims adjudication system. If implemented successfully, it could lead to faster claim resolution times, reduced administrative costs, and improved satisfaction for both veterans and healthcare providers. The VA's specific performance requirements and key performance indicators (KPIs) outlined in the contract will be the primary measures of its effectiveness. Ongoing monitoring and evaluation post-implementation will be essential to gauge its true impact.

What are the historical spending patterns for healthcare claims adjudication software at the Department of Veterans Affairs?

Historical spending patterns for healthcare claims adjudication software at the VA would reveal trends in IT investment for this critical function. Analyzing past contracts, their values, durations, and the vendors involved would indicate whether spending has been consistent, increasing, or decreasing. This context helps understand the VA's long-term strategy for managing claims processing technology. For instance, a history of frequent contract changes might suggest challenges with previous solutions, while consistent investment in a single platform could indicate stability. Understanding this history provides a baseline against which the current $57 million award can be assessed.

What is the potential impact of this contract on the broader federal healthcare IT market?

This contract award to Acentra Health LLC signifies a significant investment by the VA in modernizing its claims adjudication capabilities. It can influence the broader federal healthcare IT market by setting a precedent for required functionalities, performance standards, and pricing expectations for similar systems. Other agencies might look to this procurement as a benchmark when planning their own IT upgrades. Furthermore, the success or challenges encountered by Acentra Health on this contract could impact its reputation and future opportunities within the federal sector, potentially influencing competition for future large-scale healthcare IT contracts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: VA118-17-R-2097

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2277 RESEARCH BLVD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $60,267,992

Exercised Options: $57,205,518

Current Obligation: $57,055,670

Actual Outlays: $6,688,972

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline