HHS's $19.4M Medicare appeals contract awarded non-competitively to Maximus Federal Services

Contract Overview

Contract Amount: $19,436,709 ($19.4M)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2008-02-14

End Date: 2009-08-13

Contract Duration: 546 days

Daily Burn Rate: $35.6K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MEDICARE 2ND LEVEL OF APPEALS

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $19.4 million to MAXIMUS FEDERAL SERVICES, INC. for work described as: MEDICARE 2ND LEVEL OF APPEALS Key points: 1. Contract awarded on a non-competitive basis, raising questions about potential cost savings through competition. 2. The contract duration of 546 days suggests a focused scope for Medicare's second level of appeals. 3. Awarded under the GSA Federal Supply Schedule (FSS), which can streamline procurement but may not always yield the lowest price. 4. The fixed-price contract type shifts some performance risk to the contractor. 5. The specific NAICS code (541611) indicates consulting services, aligning with the nature of appeals processing. 6. The contract was awarded in 2008, indicating a historical engagement with Maximus for this service.

Value Assessment

Rating: questionable

Benchmarking the value of this specific contract is challenging without comparable non-competitive awards for similar Medicare appeals services. The fixed-price nature provides some cost certainty, but the lack of competition means potential savings from a competitive bidding process were likely forgone. The award amount of $19.4 million for a 546-day period suggests a significant operational undertaking. Without more data on the scope of services and expected outcomes, a definitive value assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a non-competitive delivery order, indicating that it was not publicly solicited. This approach is typically used when a specific contractor is deemed the only viable option, often due to existing expertise, prior performance, or unique capabilities. The lack of multiple bidders means there was no direct price comparison or negotiation driven by market forces, potentially leading to a higher cost than if it had been competed.

Taxpayer Impact: Taxpayers may have paid a premium for this service due to the absence of competitive pressure to drive down costs. The government did not benefit from the potential for lower pricing that typically arises from a competitive solicitation process.

Public Impact

Beneficiaries of Medicare who are undergoing the second level of appeals for claims decisions. Ensures a formal process for Medicare beneficiaries to challenge claim denials or payment reductions. Services are delivered nationwide, impacting Medicare beneficiaries across the United States. Supports the administrative functions of the Centers for Medicare and Medicaid Services (CMS).

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits transparency and potential for cost savings.
Lack of defined performance metrics in the provided data makes assessing contractor effectiveness difficult.
The contract's fixed-price nature, while shifting risk, could lead to contractor complacency if not managed closely.

Positive Signals

Awarded under the GSA FSS, suggesting adherence to established procurement procedures.
Fixed-price contract type aligns incentives for contractor efficiency.
Maximus Federal Services has a long-standing relationship with government agencies, implying experience in this domain.

Sector Analysis

The healthcare administrative services sector is characterized by complex regulatory environments and the need for specialized expertise. Contracts like this, focused on appeals processing, are critical for the functioning of large government healthcare programs like Medicare. The market includes a mix of large government contractors and specialized firms. Benchmarking this contract's value is difficult without specific data on the volume of appeals processed and the complexity of cases handled, but it represents a significant investment in program integrity and beneficiary support.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans or their impact on the small business ecosystem. The award to a large prime contractor suggests that small businesses were likely not directly involved in this specific delivery order.

Oversight & Accountability

Oversight for this contract would typically fall under the Centers for Medicare and Medicaid Services (CMS), a division of HHS. As a delivery order under a GSA schedule, it benefits from the established oversight framework of both GSA and the awarding agency. Transparency is limited by the non-competitive nature of the award. Specific accountability measures would be detailed in the contract's statement of work and performance standards, which are not fully detailed in the provided data.

Related Government Programs

Medicare Appeals
HHS Administrative Services
CMS Operations
GSA Federal Supply Schedule Contracts
Healthcare Claims Processing

Risk Flags

Non-competitive award
Lack of performance data
Potential for higher cost due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $19.4 million to MAXIMUS FEDERAL SERVICES, INC.. MEDICARE 2ND LEVEL OF APPEALS

Who is the contractor on this award?

The obligated recipient is MAXIMUS FEDERAL SERVICES, 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 $19.4 million.

What is the period of performance?

Start: 2008-02-14. End: 2009-08-13.

What was the specific justification for awarding this contract non-competitively?

The provided data indicates the contract was a 'NON-COMPETITIVE DELIVERY ORDER'. Typically, such awards are justified under specific exceptions to full and open competition, such as the existence of only one responsible source, or in certain emergency situations. For a contract of this nature, the justification likely centered on Maximus Federal Services possessing unique qualifications, prior successful performance in handling Medicare appeals, or specific technical expertise that made them the sole viable option for CMS at the time of award. Without the official justification document (e.g., a Justification and Approval - J&A), the precise reasoning remains speculative but would have been documented by the agency.

How does the $19.4 million cost compare to similar Medicare appeals contracts?

Direct comparison of the $19.4 million cost is difficult without knowing the exact scope, volume of appeals, and specific services rendered during the 546-day period (approximately 18 months). However, Medicare appeals processing is a substantial undertaking. If this contract covered a significant portion of the second-level appeals nationwide, the cost might be considered reasonable given the complexity and regulatory requirements. If it covered a smaller segment or was less intensive, the cost could be higher than expected. Benchmarking would require access to data on the number of appeals processed, average resolution time, and success rates, as well as costs of comparable contracts awarded competitively or through different mechanisms.

What are the key performance indicators (KPIs) associated with this contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this contract. However, for a Medicare appeals contract, typical KPIs would likely include metrics related to timeliness of decisions (e.g., average processing time per appeal), accuracy of decisions, adherence to procedural guidelines, beneficiary satisfaction (if measurable), and potentially cost-efficiency metrics. The effectiveness of Maximus Federal Services would be evaluated against these established KPIs, which would have been detailed in the contract's Statement of Work (SOW) and Quality Assurance Surveillance Plan (QASP).

What is Maximus Federal Services' track record with government contracts, particularly in healthcare appeals?

Maximus Federal Services has a significant and long-standing track record of performing work for government agencies, particularly within the healthcare sector. They are a major contractor for various state and federal health and human services programs, including Medicaid and Medicare. Their experience often involves eligibility determination, call center operations, and claims processing, which are related to appeals functions. Their extensive history suggests a deep understanding of the regulatory landscape and operational requirements for managing large-scale government health programs. However, like any large contractor, their performance has also been subject to scrutiny and review over the years.

What is the historical spending trend for Medicare's second-level appeals processing?

Historical spending on Medicare's second-level appeals processing has generally trended upwards over time, reflecting increasing healthcare utilization, complexity of claims, and beneficiary engagement with the appeals process. Specific figures fluctuate based on legislative changes, policy shifts, and the volume of appeals filed. Contracts for these services are often substantial, awarded to large prime contractors capable of managing nationwide operations. While this specific $19.4 million contract from 2008-2009 represents a snapshot, overall government spending in this area is a significant component of administrative costs within Medicare, aimed at ensuring program integrity and beneficiary rights.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

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

Competition & Pricing

Extent Competed: NON-COMPETITIVE DELIVERY ORDER

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: RFPQIC04001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Maximus Inc (UEI: 082347477)

Address: 11419 SUNSET HILLS ROAD, RESTON, VA, 20190

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $20,509,553

Exercised Options: $19,436,709

Current Obligation: $19,436,709

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200400007I

IDV Type: IDC

Timeline