HHS awards $407M contract to Noridian Healthcare Solutions to reduce improper payments, with 5 bids received

Contract Overview

Contract Amount: $407,443,548 ($407.4M)

Contractor: Noridian Healthcare Solutions, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2018-02-23

End Date: 2027-05-09

Contract Duration: 3,362 days

Daily Burn Rate: $121.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: PERFORM AND PROVIDE SUPPORT FOR A VARIETY OF TASK AIMED TO LOWER IMPROPER PAYMENT RATES

Place of Performance

Location: FARGO, CASS County, NORTH DAKOTA, 58103

State: North Dakota Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $407.4 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC for work described as: PERFORM AND PROVIDE SUPPORT FOR A VARIETY OF TASK AIMED TO LOWER IMPROPER PAYMENT RATES Key points: 1. Contract aims to significantly lower improper payment rates within federal healthcare programs. 2. Full and open competition suggests a robust market for these specialized services. 3. Performance-based contract structure incentivizes measurable reductions in payment errors. 4. Long-term award (through 2027) indicates a sustained focus on payment integrity. 5. Geographic focus on North Dakota for specific task orders. 6. Contract type is Cost Plus Fixed Fee, requiring careful monitoring of costs.

Value Assessment

Rating: good

The contract's value of over $407 million over its duration suggests a significant investment in payment integrity. Benchmarking against similar contracts for improper payment reduction is challenging without more specific service details. However, the fixed fee component provides some cost control. The long duration implies a need for sustained effort in this complex area.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with five bids received. This indicates a healthy level of interest and capability within the market for services aimed at reducing improper payments. The presence of multiple bidders generally supports competitive pricing and a wider range of potential solutions.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down costs and encouraging innovative approaches to payment integrity.

Public Impact

Beneficiaries of reduced improper payments include taxpayers and the integrity of federal healthcare programs. Services delivered focus on identifying, preventing, and reducing payment errors in Medicare and Medicaid. Geographic impact is primarily within North Dakota for specific task orders, but the overall goal benefits national healthcare spending. Workforce implications include specialized roles in data analysis, auditing, and program integrity within Noridian Healthcare Solutions and potentially CMS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can lead to cost overruns if not managed tightly.
The long duration of the contract requires sustained oversight to ensure continued effectiveness.
Focus on specific geographic areas might limit broader applicability of solutions without adaptation.

Positive Signals

Awarded through full and open competition, indicating market readiness and competitive pricing.
Clear objective to reduce improper payments aligns with government efficiency goals.
Long-term nature of the contract suggests a strategic commitment to payment integrity.

Sector Analysis

This contract falls within the Professional, Scientific, and Technical Services sector, specifically under 'All Other Professional, Scientific, and Technical Services.' This broad category encompasses a wide range of specialized expertise. The market for payment integrity and improper payment reduction services is significant within federal healthcare, driven by the vast sums managed by agencies like CMS. Comparable spending benchmarks would likely be found within other contracts focused on audit, data analytics, and program integrity for large federal agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract likely requiring significant resources and expertise, it may involve subcontracting opportunities for small businesses, particularly in specialized areas of data analysis or regional support. However, the primary awardee is a large business, suggesting direct impact on the small business ecosystem might be limited unless significant subcontracting plans are in place.

Oversight & Accountability

Oversight will likely be managed by the Centers for Medicare and Medicaid Services (CMS) program officials. Accountability measures are tied to the contract's performance objectives, specifically the reduction of improper payment rates. Transparency is facilitated through federal contract databases and reporting requirements. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Medicare Improper Payments.
Medicaid Integrity Program.
Healthcare Fraud Prevention Partnership.
Centers for Medicare & Medicaid Services (CMS) Oversight.
Federal Payment Integrity Initiatives.

Risk Flags

Cost Overrun Risk (CPFF)
Performance Measurement Complexity
Scope Creep Potential

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $407.4 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC. PERFORM AND PROVIDE SUPPORT FOR A VARIETY OF TASK AIMED TO LOWER IMPROPER PAYMENT RATES

Who is the contractor on this award?

The obligated recipient is NORIDIAN HEALTHCARE SOLUTIONS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $407.4 million.

What is the period of performance?

Start: 2018-02-23. End: 2027-05-09.

What specific methodologies will Noridian Healthcare Solutions employ to identify and reduce improper payments?

While the provided data does not detail the specific methodologies, contracts of this nature typically involve a combination of data analytics, statistical sampling, audits, provider education, and process improvement recommendations. Noridian Healthcare Solutions, with its background in healthcare administration, likely leverages advanced data mining techniques to detect anomalies and patterns indicative of improper payments. This could include analyzing claims data for billing errors, potential fraud, or non-compliance with program rules. They may also conduct targeted reviews of provider claims and operations. The effectiveness of these methods will be crucial in meeting the contract's objective of lowering improper payment rates.

How does the $407 million contract value compare to historical spending on improper payment reduction efforts by CMS?

The $407 million contract value represents a substantial investment in addressing improper payments. To provide a precise comparison, historical spending data for similar CMS initiatives would be required. However, given the scale of federal healthcare spending and the persistent challenge of improper payments (often billions annually), this contract's value appears commensurate with the complexity and importance of the task. It suggests a strategic allocation of resources towards improving financial stewardship within critical healthcare programs. The long duration (ending in 2027) also indicates a sustained commitment rather than a short-term project.

What are the key performance indicators (KPIs) for this contract, and how will success be measured?

The primary success metric for this contract is the reduction in improper payment rates within the targeted federal healthcare programs. Key Performance Indicators (KPIs) would likely include specific percentage decreases in identified improper payments over defined periods, the accuracy and efficiency of payment error detection, and the successful implementation of preventative measures. The contract's structure, likely involving performance-based payments, means Noridian Healthcare Solutions' compensation is directly tied to achieving these measurable outcomes. CMS will monitor these KPIs through regular reporting and audits to ensure the contractor is meeting its obligations and delivering value.

What is Noridian Healthcare Solutions' track record in managing large federal contracts, particularly those focused on payment integrity?

Noridian Healthcare Solutions has a significant history of managing large federal contracts, particularly within the healthcare sector, often serving as a Medicare Administrative Contractor (MAC). Their experience includes claims processing, provider services, and program integrity functions for the Centers for Medicare & Medicaid Services (CMS). While specific details on past payment integrity contracts are not provided here, their long-standing relationship with CMS and their role in administering Medicare benefits suggest a substantial track record in handling complex healthcare administration tasks. This experience is likely a key factor in their selection for this contract.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract structure for this type of service?

The Cost Plus Fixed Fee (CPFF) structure presents specific risks. While the fixed fee provides the contractor with a defined profit margin, the 'cost-plus' element means the government reimburses the contractor's allowable costs. The primary risk is that the contractor may have less incentive to control costs rigorously compared to a fixed-price contract, as higher costs (within allowable limits) do not reduce their fee. This necessitates robust government oversight to ensure costs are reasonable, allocable, and necessary. For the government, the total cost can be unpredictable if initial cost estimates are inaccurate or if scope creep occurs without proper change control.

How does the geographic focus on North Dakota for specific task orders align with the broader goal of reducing national improper payment rates?

The mention of North Dakota for specific task orders suggests that this contract may involve pilot programs, regional initiatives, or specific operational needs within that state. While the ultimate goal is to reduce national improper payment rates, focusing on a specific geographic area allows for tailored interventions, testing of new strategies in a controlled environment, or addressing unique regional challenges. Lessons learned and best practices developed in North Dakota can then potentially be scaled and applied to other regions or nationally, making it a strategic approach to improving overall payment integrity across the federal healthcare system.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: MEDICAL SERVICES › NURSING, NURSING HOME, EVAL/SCREEN

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HHSM5002017RFP0021

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 900 42TH ST S, FARGO, ND, 58108

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: $411,121,491

Exercised Options: $408,822,942

Current Obligation: $407,443,548

Actual Outlays: $221,084,953

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HHSM500201600082I

IDV Type: IDC

Timeline