HHS Awards Noridian Healthcare Solutions $598.6M Contract for Medicare Administrative Services in North Dakota

Contract Overview

Contract Amount: $598,601,819 ($598.6M)

Contractor: Noridian Healthcare Solutions, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2021-01-01

End Date: 2028-04-30

Contract Duration: 2,676 days

Daily Burn Rate: $223.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: A/B MAC JURISDICTION E

Place of Performance

Location: FARGO, CASS County, NORTH DAKOTA, 58108

State: North Dakota Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $598.6 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC for work described as: A/B MAC JURISDICTION E Key points: 1. Significant contract value of $598.6 million over its period of performance. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract type is Cost Plus Award Fee (CPAF), which can incentivize performance but requires careful oversight. 4. The sector is Direct Health and Medical Insurance Carriers, a critical area for government services.

Value Assessment

Rating: good

The contract's value of $598.6 million is substantial. Benchmarking against similar contracts for Medicare Administrative Contractor (MAC) services is difficult without specific per-unit cost data, but the award suggests a competitive price was achieved through the bidding process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating multiple bidders likely participated. This method generally promotes price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: Taxpayer funds are being used for essential Medicare administrative services. The competitive award process aims to ensure efficient use of these funds.

Public Impact

Ensures continued operation of Medicare administrative services for beneficiaries in North Dakota. Supports the efficient processing of claims and payments for healthcare providers. Maintains continuity of service for millions of Medicare beneficiaries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee (CPAF) contracts require robust monitoring to ensure cost control and prevent overruns.
The long duration of the contract (nearly 8 years) necessitates ongoing performance evaluation.

Positive Signals

Awarded through full and open competition, indicating a competitive market.
The contract aims to ensure continuity of essential Medicare services.

Sector Analysis

This contract falls within the Direct Health and Medical Insurance Carriers sector, which is crucial for the administration of government healthcare programs like Medicare. Spending in this sector is consistently high due to the nature of healthcare services.

Small Business Impact

The provided data does not indicate any specific set-aside for small businesses. The contract was awarded to Noridian Healthcare Solutions, LLC, which is likely a large business, suggesting limited direct opportunities for small businesses on this prime contract.

Oversight & Accountability

The Cost Plus Award Fee structure necessitates strong oversight from the Centers for Medicare and Medicaid Services (CMS) to manage costs and ensure award fees are tied to measurable performance outcomes. Regular audits and performance reviews are critical.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Potential for cost overruns inherent in CPAF contracts.
Long contract duration requires sustained oversight.
Lack of specific small business participation noted.
Complexity of Medicare administration requires specialized expertise.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $598.6 million to NORIDIAN HEALTHCARE SOLUTIONS, LLC. A/B MAC JURISDICTION E

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 $598.6 million.

What is the period of performance?

Start: 2021-01-01. End: 2028-04-30.

What specific performance metrics are tied to the award fee structure, and how are they measured to ensure value for money?

The award fee structure is designed to incentivize high performance in areas such as claims processing efficiency, customer service, and adherence to program integrity standards. Specific metrics are defined in the contract, and CMS monitors performance against these benchmarks. The effectiveness of the award fee depends on the clarity and measurability of these metrics and the rigor of CMS's oversight in evaluating performance and determining fee payouts.

How does the government ensure cost containment under a Cost Plus Award Fee contract, given the potential for cost overruns?

Cost containment under a CPAF contract relies heavily on robust government oversight, including detailed cost reviews, audits, and negotiations. The government establishes a target cost and a ceiling cost. While the contractor is reimbursed for allowable costs, the award fee component is designed to reward exceptional performance beyond basic requirements, rather than simply covering costs. Effective negotiation of the fee structure and vigilant monitoring of expenditures are key to managing costs.

What is the potential impact on Medicare beneficiaries in North Dakota if Noridian Healthcare Solutions fails to meet performance expectations?

Failure to meet performance expectations could lead to disruptions in claims processing, delayed payments to healthcare providers, and reduced accessibility to customer support for Medicare beneficiaries. This could result in financial strain for providers and confusion or difficulty navigating Medicare benefits for beneficiaries. The award fee mechanism is intended to mitigate this risk by financially penalizing underperformance and rewarding high-quality service delivery.

Industry Classification

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

Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 75FCMC19R0023

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 900 42ND ST S, FARGO, ND, 58103

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: $822,634,368

Exercised Options: $693,760,730

Current Obligation: $598,601,819

Actual Outlays: $431,698,996

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline