VA awards $57.8M contract to Optum for health insurance carrier services in Maryland

Contract Overview

Contract Amount: $57,833,872 ($57.8M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-03-01

End Date: 2024-03-31

Contract Duration: 30 days

Daily Burn Rate: $1.9M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R3 FY 24 2ND QTR MAR

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $57.8 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R3 FY 24 2ND QTR MAR Key points: 1. Contract awarded to a single, established provider in the health insurance sector. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract value is significant, indicating substantial healthcare service needs. 4. Focus on direct health and medical insurance carriers highlights a critical service area.

Value Assessment

Rating: good

The contract value of $57.8M for a 30-day period suggests a high per-diem cost. Benchmarking against similar large-scale health insurance contracts would be necessary to fully assess pricing, but the firm fixed-price structure provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically allows for the broadest range of potential bidders and can lead to competitive pricing. The use of a delivery order under a larger contract structure implies a pre-established framework for pricing and terms.

Taxpayer Impact: Taxpayer funds are being used to procure essential health insurance services for veterans, aiming for efficient and effective care delivery.

Public Impact

Ensures continued access to vital health and medical insurance services for beneficiaries. Supports the Department of Veterans Affairs' mission to provide comprehensive healthcare. Potential for improved health outcomes through consistent insurance coverage.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Short contract duration (30 days) may indicate a bridge contract or a need for rapid service.
Lack of specific performance metrics in the provided data.
Potential for price escalation in subsequent contract periods if not managed closely.

Positive Signals

Awarded under full and open competition.
Firm fixed-price contract type offers cost predictability.
Supports critical healthcare services for veterans.

Sector Analysis

This contract falls within the healthcare sector, specifically focusing on direct health and medical insurance carriers. Spending in this area is crucial for government healthcare programs, and benchmarks often relate to per-member-per-month costs or overall program administration expenses.

Small Business Impact

The provided data does not indicate any specific set-asides for small businesses. Given the nature of the service (direct health and medical insurance carriers), it is possible that larger, established companies are the primary competitors.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. Standard procurement regulations and contract management practices should be in place to ensure performance and accountability.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

High cost per day suggests potential for overspending.
Short contract duration may indicate a temporary or stop-gap measure, requiring further long-term planning.
Lack of detailed performance metrics in the summary data.
Potential for vendor lock-in if this is part of a larger, sole-source strategy.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $57.8 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R3 FY 24 2ND QTR MAR

Who is the contractor on this award?

The obligated recipient is OPTUM PUBLIC SECTOR SOLUTIONS, INC..

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 $57.8 million.

What is the period of performance?

Start: 2024-03-01. End: 2024-03-31.

What is the specific scope of services covered by this delivery order, and how does it align with the overall contract?

The provided data indicates the contract is for 'Direct Health and Medical Insurance Carriers' (NAICS 524114). This delivery order, valued at $57.8M over 30 days, likely covers a specific period of insurance administration or provision. Understanding the detailed service requirements is crucial to assess if the value aligns with the expected outcomes and if it effectively meets the VA's immediate needs.

How does the pricing of this contract compare to industry benchmarks for similar health insurance administration services, especially given the short duration?

The contract's value of $57.8M for just 30 days translates to a very high daily rate. Without specific details on the number of beneficiaries or the exact services rendered, direct comparison is difficult. However, this rate warrants scrutiny against industry benchmarks for health insurance carriers to ensure cost-effectiveness and prevent potential overpayment, especially if this is a recurring short-term award.

What mechanisms are in place to ensure the effectiveness and quality of the health insurance services provided by Optum under this contract?

While the contract is firm fixed-price, ensuring service quality is paramount. The VA should have performance standards, service level agreements (SLAs), and monitoring processes in place. Regular performance reviews and beneficiary feedback mechanisms are essential to gauge the effectiveness of Optum's services and ensure that veterans receive the intended benefits and quality of care.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE 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

Parent Company: Unitedhealth Group Incorporated

Address: 3237 AIRPORT RD, LA CROSSE, WI, 54603

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

Financial Breakdown

Contract Ceiling: $57,833,872

Exercised Options: $57,833,872

Current Obligation: $57,833,872

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0006

IDV Type: IDC

Timeline