HHS Awards $140M+ Contract to Palmetto GBA for MAC Services Through 2031
Contract Overview
Contract Amount: $140,143,625 ($140.1M)
Contractor: Palmetto GBA, LLC
Awarding Agency: Department of Health and Human Services
Start Date: 2024-09-01
End Date: 2031-07-31
Contract Duration: 2,524 days
Daily Burn Rate: $55.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: Healthcare
Official Description: JJ A/B MAC
Place of Performance
Location: COLUMBIA, RICHLAND County, SOUTH CAROLINA, 29202
Plain-Language Summary
Department of Health and Human Services obligated $140.1 million to PALMETTO GBA, LLC for work described as: JJ A/B MAC Key points: 1. Significant contract value exceeding $140 million. 2. Palmetto GBA, LLC is the sole awardee. 3. Contract duration extends to July 2031. 4. Cost Plus Award Fee contract type. 5. No explicit small business participation noted.
Value Assessment
Rating: fair
The Cost Plus Award Fee structure allows for performance-based incentives, but requires careful monitoring to ensure costs remain reasonable and aligned with objectives. Benchmarking against similar MAC contracts is difficult without detailed cost breakdowns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific awardee and contract type (Cost Plus Award Fee) warrant scrutiny to ensure the pricing reflects fair market value and effective cost controls.
Taxpayer Impact: Taxpayer funds are being utilized for Medicare Administrative Contractor services, with the potential for cost efficiencies driven by performance incentives, but also the risk of cost overruns if not managed properly.
Public Impact
Ensures continued administration of Medicare benefits for beneficiaries. Supports the operational efficiency of the Centers for Medicare and Medicaid Services. Potential impact on provider reimbursement and claims processing. Contract performance directly affects the quality of service for Medicare recipients.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure requires robust oversight.
- Lack of explicit small business participation.
- Long contract duration may limit future flexibility.
Positive Signals
- Full and open competition utilized.
- Contract aims to ensure efficient Medicare administration.
- Performance incentives may drive cost savings.
Sector Analysis
This contract falls within the Health and Medical Insurance Carriers sector, specifically supporting Medicare Administrative Contractor (MAC) functions. Spending in this area is critical for the functioning of national healthcare programs, with benchmarks often tied to administrative cost ratios as a percentage of program spending.
Small Business Impact
The provided data does not indicate any specific set-aside for small businesses for this contract. Further investigation may be needed to determine if subcontracting opportunities exist for small businesses within the scope of this award.
Oversight & Accountability
The Cost Plus Award Fee contract type necessitates strong oversight from the Centers for Medicare and Medicaid Services to ensure Palmetto GBA, LLC meets performance expectations and manages costs effectively. Regular performance reviews and audits will be crucial for accountability.
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
- Cost Plus Award Fee structure requires diligent oversight.
- Long contract duration may pose long-term management challenges.
- No explicit small business participation noted.
- Potential for cost creep if performance metrics are not rigorously managed.
Tags
direct-health-and-medical-insurance-carr, department-of-health-and-human-services, sc, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $140.1 million to PALMETTO GBA, LLC. JJ A/B MAC
Who is the contractor on this award?
The obligated recipient is PALMETTO GBA, 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 $140.1 million.
What is the period of performance?
Start: 2024-09-01. End: 2031-07-31.
How will the performance incentives in the Cost Plus Award Fee structure be measured and validated to ensure they genuinely drive value and efficiency for taxpayers?
The effectiveness of performance incentives hinges on clearly defined, measurable, achievable, relevant, and time-bound (SMART) objectives. CMS must establish robust metrics for areas like claims processing accuracy, timeliness, customer service, and cost containment. Regular audits and performance reviews will be essential to validate achievement against these metrics and ensure that award fees are earned based on demonstrable value and efficiency, rather than simply meeting minimum requirements.
What are the specific risks associated with a Cost Plus Award Fee contract of this magnitude and duration, and what mitigation strategies are in place?
Risks include potential for cost overruns if performance targets are not well-defined or if oversight is lax, leading to higher-than-expected expenditures. The long duration (over 7 years) could also lead to vendor complacency or a lack of adaptation to evolving healthcare needs. Mitigation strategies should involve stringent cost controls, regular performance evaluations against clear benchmarks, and built-in mechanisms for contract modification or review to ensure continued relevance and efficiency.
How does this contract contribute to the overall effectiveness and efficiency of the Medicare program, particularly in terms of beneficiary access and provider support?
This contract is essential for the day-to-day operational effectiveness of the Medicare program, ensuring timely and accurate processing of claims and providing crucial support to healthcare providers. Palmetto GBA's role as a MAC directly impacts beneficiary access to care by facilitating payments and resolving administrative issues. The effectiveness is measured by the efficiency of these processes, the accuracy of payments, and the quality of support provided to both beneficiaries and providers.
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: 75FCMC23R0035
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 17 TECHNOLOGY CIR, COLUMBIA, SC, 29203
Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $641,806,022
Exercised Options: $164,269,437
Current Obligation: $140,143,625
Actual Outlays: $79,108,902
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2024-09-01
Current End Date: 2031-07-31
Potential End Date: 2031-08-31 00:00:00
Last Modified: 2026-04-09
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