Medicare Administrative Contractor contract for Jurisdiction N awarded to First Coast Service Options, Inc. for over $321 million

Contract Overview

Contract Amount: $321,748,707 ($321.7M)

Contractor: First Coast Service Options, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2022-05-01

End Date: 2027-04-30

Contract Duration: 1,825 days

Daily Burn Rate: $176.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: PART A/PART B MEDICARE ADMINISTRATIVE CONTRACTOR (MAC) JURISDICTION N (JN). JURISDICTION N INCLUDES THE FOLLOWING STATES AND AREAS: FLORIDA AND THE U.S. TERRITORIES OF PUERTO RICO AND THE U.S. VIRGIN ISLANDS.

Place of Performance

Location: JACKSONVILLE, DUVAL County, FLORIDA, 32202

State: Florida Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $321.7 million to FIRST COAST SERVICE OPTIONS, INC. for work described as: PART A/PART B MEDICARE ADMINISTRATIVE CONTRACTOR (MAC) JURISDICTION N (JN). JURISDICTION N INCLUDES THE FOLLOWING STATES AND AREAS: FLORIDA AND THE U.S. TERRITORIES OF PUERTO RICO AND THE U.S. VIRGIN ISLANDS. Key points: 1. The contract aims to ensure efficient and effective administration of Medicare benefits for beneficiaries in Florida and U.S. territories. 2. Competition for this contract was full and open, suggesting a robust bidding process. 3. The contract type is Cost Plus Award Fee, which incentivizes performance but requires careful oversight of costs. 4. The duration of the contract is five years, indicating a long-term commitment to service delivery. 5. The contractor, First Coast Service Options, Inc., has a significant role in managing Medicare operations within its jurisdiction. 6. The contract value is substantial, reflecting the complexity and scope of administering Medicare services for a large population.

Value Assessment

Rating: good

The contract value of over $321 million for a five-year period appears to be in line with similar Medicare Administrative Contractor (MAC) contracts, which typically involve significant sums due to the scale of operations. Benchmarking against other MAC jurisdictions would provide a more precise value-for-money assessment. The Cost Plus Award Fee structure allows for performance-based incentives, which can drive efficiency, but necessitates diligent monitoring of costs to ensure they remain reasonable and justified.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of three bidders suggests a competitive environment, which is generally favorable for price discovery and ensuring the government receives competitive pricing. The specific details of the bidding process and the evaluation criteria would further illuminate the effectiveness of the competition.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down costs through a competitive bidding process and encouraging contractors to offer their best value propositions.

Public Impact

Medicare beneficiaries in Florida, Puerto Rico, and the U.S. Virgin Islands will continue to receive services and claims processing. The contract supports the operational infrastructure of the Centers for Medicare and Medicaid Services (CMS) in administering the Medicare program. Healthcare providers within Jurisdiction N will interact with First Coast Service Options, Inc. for claims submission and payment. The contract sustains jobs within the contractor's organization, contributing to the local and regional economies where operations are based.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns under the Cost Plus Award Fee structure if not rigorously managed.
Dependence on a single contractor for a critical government function within a large geographic area.
Ensuring consistent service quality and beneficiary support across diverse geographic and demographic populations within Jurisdiction N.

Positive Signals

Awarded through full and open competition, indicating a competitive process.
Contractor has a defined role and established presence in Medicare administration.
Performance incentives are built into the contract structure (Cost Plus Award Fee).

Sector Analysis

This contract falls within the Health Insurance and Managed Care sector, specifically the administration of government healthcare programs. The market for Medicare Administrative Contractors is characterized by a limited number of large, specialized firms capable of handling the complex regulatory and operational requirements. Spending in this area is substantial and directly tied to the federal government's commitment to providing healthcare services to its citizens. Comparable spending benchmarks would involve analyzing other MAC contracts across different jurisdictions.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. As a large-scale administrative contract, the primary contractor is likely a large business. However, the contract may include requirements for subcontracting with small businesses, which would need to be assessed through a review of the contract's specific terms and conditions to understand its impact on the small business ecosystem.

Oversight & Accountability

Oversight is primarily conducted by the Centers for Medicare and Medicaid Services (CMS), which monitors contractor performance against contract requirements and award fee criteria. Accountability is driven by the Cost Plus Award Fee structure, incentivizing performance and cost control. Transparency is generally maintained through public reporting of contract awards and performance metrics, though specific operational details may be proprietary. Inspector General jurisdiction would apply to investigations of fraud, waste, and abuse related to the contract.

Related Government Programs

Medicare Administrative Contractor (MAC) Program
Centers for Medicare and Medicaid Services (CMS) Contracts
Health Insurance Administration
Federal Healthcare Spending

Risk Flags

Cost Plus Award Fee structure requires diligent oversight to manage costs.
Geographic dispersion across states and territories may complicate service delivery and oversight.
Contractor performance history needs thorough review to ensure continued effectiveness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $321.7 million to FIRST COAST SERVICE OPTIONS, INC.. PART A/PART B MEDICARE ADMINISTRATIVE CONTRACTOR (MAC) JURISDICTION N (JN). JURISDICTION N INCLUDES THE FOLLOWING STATES AND AREAS: FLORIDA AND THE U.S. TERRITORIES OF PUERTO RICO AND THE U.S. VIRGIN ISLANDS.

Who is the contractor on this award?

The obligated recipient is FIRST COAST SERVICE OPTIONS, INC..

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 $321.7 million.

What is the period of performance?

Start: 2022-05-01. End: 2027-04-30.

What is the historical performance of First Coast Service Options, Inc. as a Medicare Administrative Contractor?

First Coast Service Options, Inc. has a history of administering Medicare benefits, previously holding MAC contracts in Jurisdiction N. Assessing their past performance would involve reviewing CMS performance evaluations, audit reports, and any documented instances of contract deficiencies or successes. Key metrics to examine would include claims processing timeliness, accuracy rates, beneficiary satisfaction scores, and adherence to program integrity requirements. A thorough review would also consider any significant changes in their operational approach or technology adoption over time, and how these impacted service delivery and cost-effectiveness within their previous contract periods.

How does the awarded amount compare to the previous contract for this jurisdiction?

To compare the awarded amount of over $321 million for this five-year contract (2022-2027) to the previous contract for Jurisdiction N, historical spending data for the prior MAC contract in this region would be required. This would involve identifying the previous contractor, the duration of their contract, and the total expenditure during that period. Adjusting for inflation and changes in scope or beneficiary population would be crucial for a meaningful comparison. Without this historical data, it is difficult to ascertain whether the current award represents an increase, decrease, or stable level of spending relative to prior periods.

What are the key performance indicators (KPIs) used to evaluate First Coast Service Options, Inc. under this contract?

Under a Cost Plus Award Fee contract, Key Performance Indicators (KPIs) are critical for determining the 'award fee' component. While specific KPIs are not detailed in the provided data, typical metrics for MAC contracts include: claims processing accuracy and timeliness, call center response times and resolution rates, provider education and support effectiveness, adherence to program integrity measures, and overall operational efficiency. CMS would establish a detailed set of measurable objectives and targets for these KPIs, against which the contractor's performance would be assessed periodically to determine the extent of the award fee earned.

What is the potential impact of the Cost Plus Award Fee (CPAF) structure on contractor behavior and cost management?

The Cost Plus Award Fee (CPAF) structure is designed to incentivize contractor performance by allowing them to earn a fee based on meeting or exceeding pre-defined performance objectives, in addition to recovering allowable costs. This can encourage contractors to focus on quality and efficiency to maximize their fee. However, it also requires robust government oversight to ensure that costs incurred are reasonable, allocable, and necessary, and that the performance objectives are challenging yet achievable. Without stringent oversight, there is a risk that contractors might incur higher costs to achieve higher award fees, or that the performance metrics may not fully align with the government's ultimate goals.

How does the geographic scope of Jurisdiction N (Florida, Puerto Rico, U.S. Virgin Islands) present unique administrative challenges?

The geographic scope of Jurisdiction N presents several unique administrative challenges. It encompasses a large mainland state (Florida) with a significant and diverse Medicare beneficiary population, alongside U.S. territories (Puerto Rico and U.S. Virgin Islands) which have distinct healthcare infrastructures, regulatory environments, and logistical considerations. Managing claims processing, provider relations, and beneficiary outreach across these disparate regions requires sophisticated logistical planning, cultural competency, and potentially different operational strategies for each sub-region. Language barriers, varying healthcare access issues, and the complexities of inter-island or international (for territories) communication and service delivery add layers of difficulty compared to a more geographically consolidated jurisdiction.

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: 75FCMC21R0002

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: First Coast Service Options Inc.

Address: 532 RIVERSIDE AVE, JACKSONVILLE, FL, 32202

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

Financial Breakdown

Contract Ceiling: $557,202,136

Exercised Options: $397,002,170

Current Obligation: $321,748,707

Actual Outlays: $223,403,107

Subaward Activity

Number of Subawards: 35

Total Subaward Amount: $20,492,203

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline