HHS awards $124M contract for Medicare Secondary Payer Commercial Repayment Center services to Performant Recovery, Inc

Contract Overview

Contract Amount: $124,200,753 ($124.2M)

Contractor: Performant Recovery, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2023-02-09

End Date: 2027-02-08

Contract Duration: 1,460 days

Daily Burn Rate: $85.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MEDICARE SECONDARY PAYER COMMERCIAL REPAYMENT CENTER (MSP CRC) CONTRACT

Place of Performance

Location: LIVERMORE, ALAMEDA County, CALIFORNIA, 94551

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $124.2 million to PERFORMANT RECOVERY, INC. for work described as: MEDICARE SECONDARY PAYER COMMERCIAL REPAYMENT CENTER (MSP CRC) CONTRACT Key points: 1. Contract aims to recover overpayments made by primary payers when Medicare is secondary. 2. The contract utilizes a firm-fixed-price structure, providing cost certainty for the government. 3. A full and open competition was conducted, suggesting a robust bidding process. 4. The contract duration is four years, indicating a long-term need for these services. 5. The North American Industry Classification System (NAICS) code 561440 points to collection agency services. 6. The award was made via a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: good

The contract value of $124.2 million over four years for Medicare Secondary Payer (MSP) Commercial Repayment Center (CRC) services appears reasonable given the specialized nature of the work. While direct comparisons are difficult without knowing the specific recovery rates and complexity of cases handled, the firm-fixed-price structure provides a predictable cost. The government is paying for a service designed to recover funds, so the ultimate value will depend on the net recoveries achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of three bidders suggests a competitive environment, which typically drives better pricing and service quality. The government's decision to use full and open competition implies they sought the best value from a wide range of potential providers.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market that encourages efficiency and cost-effectiveness among contractors, leading to potentially lower overall costs for government services.

Public Impact

Beneficiaries: Medicare beneficiaries indirectly benefit from the program's integrity being maintained. Services Delivered: The contract supports the recovery of funds that should have been paid by other insurance entities. Geographic Impact: Services are likely nationwide, given the scope of Medicare. Workforce Implications: Creates jobs within the contractor's organization for recovery specialists and administrative staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting beneficiaries.
Dependence on contractor's efficiency for actual recovery success.
Risk of data security breaches given sensitive financial and health information.

Positive Signals

Focus on recovering funds for Medicare, improving program solvency.
Firm-fixed-price contract provides budget predictability.
Full and open competition suggests a competitive market for these services.

Sector Analysis

The healthcare revenue cycle management and debt collection sector is highly specialized. This contract falls within the broader administrative and support services industry, specifically focusing on government healthcare program integrity. The market for such services is driven by regulatory requirements and the government's need to recoup improperly paid funds. Benchmarks for similar contracts are often proprietary or depend heavily on the specific recovery targets and case volumes.

Small Business Impact

The provided data does not indicate any specific small business set-aside or subcontracting requirements for this contract. As it was awarded under full and open competition, it's possible that small businesses could have bid directly or participated as subcontractors. Further analysis would be needed to determine the extent of small business involvement.

Oversight & Accountability

Oversight is likely conducted by the Centers for Medicare and Medicaid Services (CMS) through contract performance reviews, financial audits, and monitoring of recovery metrics. The Department of Health and Human Services (HHS) Office of Inspector General (OIG) may also have jurisdiction for audits and investigations related to potential fraud or mismanagement.

Related Government Programs

Medicare Secondary Payer (MSP) Program
Healthcare Fraud and Abuse Control Program
Centers for Medicare and Medicaid Services (CMS) Administrative Contracts
Federal Debt Collection Services

Risk Flags

Contract performance risk
Data security and privacy risk
Regulatory compliance risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $124.2 million to PERFORMANT RECOVERY, INC.. MEDICARE SECONDARY PAYER COMMERCIAL REPAYMENT CENTER (MSP CRC) CONTRACT

Who is the contractor on this award?

The obligated recipient is PERFORMANT RECOVERY, 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 $124.2 million.

What is the period of performance?

Start: 2023-02-09. End: 2027-02-08.

What is the historical spending pattern for the Medicare Secondary Payer Commercial Repayment Center (MSP CRC) contract?

Historical spending data for the MSP CRC contract prior to this award is not directly available in the provided data. However, the Medicare Secondary Payer (MSP) program itself has been in place for decades, with various contracts and mechanisms used to identify and recover conditional payments. The Centers for Medicare and Medicaid Services (CMS) has consistently allocated resources to ensure that primary payers assume their responsibility, indicating a sustained effort and likely consistent, albeit potentially varying, levels of spending over time to manage this function. The specific value of $124.2 million for this current four-year contract suggests a significant scale of operations, reflecting the complexity and volume of cases managed within the MSP CRC.

How does the performance of Performant Recovery, Inc. on other contracts compare to the potential risks of this award?

Performant Recovery, Inc. has a history of performing government contracts, including those related to debt collection and revenue recovery. While specific performance metrics for this MSP CRC contract are not yet available as it is a recent award, their track record on similar contracts would be a key factor in the government's decision-making process. Potential risks associated with such contracts include the efficiency of recovery efforts, data security, and adherence to regulatory compliance. A review of Performant Recovery's past performance, including any past performance evaluations, contract disputes, or audit findings, would be necessary to fully assess the risk profile for this specific award. Generally, agencies conduct thorough past performance reviews during the source selection process.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Key performance indicators (KPIs) for this contract would likely focus on the effectiveness and efficiency of the recovery process. These could include metrics such as the total amount of funds recovered, the rate of successful recovery per case, the average time to resolve a case, the cost of recovery relative to the amount recovered (cost-to-collect ratio), and compliance with all relevant privacy and security regulations (e.g., HIPAA). The government would monitor these KPIs to ensure Performant Recovery, Inc. is meeting its contractual obligations and achieving the desired outcomes of identifying and recouping overpayments made by primary payers when Medicare is secondary.

What is the estimated value or cost benchmark for similar commercial repayment center services in the private sector?

Estimating a precise private sector benchmark for services equivalent to the Medicare Secondary Payer Commercial Repayment Center (MSP CRC) contract is challenging due to the unique regulatory environment and scale of Medicare. However, in the broader healthcare revenue cycle management and third-party liability recovery space, firms typically charge a percentage of recovered funds or a combination of fixed fees and success-based commissions. These percentages can vary widely, often ranging from 10% to 30% or more of the recovered amount, depending on the complexity, age of the debt, and volume. The $124.2 million contract value over four years, for a service aimed at recovering funds, implies a significant operational scope and potential for substantial recoveries, suggesting the government is seeking a cost-effective solution compared to potential internal management or less specialized external services.

How does the firm-fixed-price contract type influence the risk allocation between the government and Performant Recovery, Inc.?

The firm-fixed-price (FFP) contract type significantly shifts risk towards the contractor, Performant Recovery, Inc. Under an FFP contract, the contractor agrees to a set price for the work, regardless of the actual costs incurred. This means that if Performant Recovery's costs for operating the MSP CRC exceed their estimates, the company absorbs the loss. Conversely, if their costs are lower than anticipated, they retain the profit. This structure incentivizes the contractor to manage costs efficiently and perform the work within the agreed-upon budget. For the government, the primary benefit is cost certainty, as the total expenditure is fixed, barring any contract modifications or unforeseen circumstances that might necessitate a change.

What is the potential impact of this contract on the overall integrity and financial health of the Medicare program?

This contract plays a crucial role in maintaining the financial integrity of the Medicare program. By ensuring that primary payers (like commercial insurance companies or liability insurers) pay when they are supposed to, the contract prevents Medicare from bearing costs that are not its responsibility. This reduces unnecessary expenditures, thereby preserving Medicare's trust fund and ensuring its long-term solvency. Effective operation of the MSP CRC helps to correct payment errors, recover improperly spent funds, and reinforce the intended payer hierarchy, ultimately contributing to a more sustainable and equitable healthcare financing system for beneficiaries.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Collection Agencies

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Performant Financial Corporation

Address: 900 S PINE ISLAND RD STE 150, PLANTATION, FL, 33324

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

Financial Breakdown

Contract Ceiling: $165,349,353

Exercised Options: $125,735,473

Current Obligation: $124,200,753

Actual Outlays: $84,792,977

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QRAA20D003Z

IDV Type: FSS

Timeline