HHS Awards $861M MAC Contract to Novitas Solutions for Health Insurance Carrier Services
Contract Overview
Contract Amount: $861,099,850 ($861.1M)
Contractor: Novitas Solutions, Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2011-11-08
End Date: 2019-09-29
Contract Duration: 2,882 days
Daily Burn Rate: $298.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS AWARD FEE
Sector: Healthcare
Official Description: JURISDICTION H A/B MAC CONTRACT
Place of Performance
Location: CAMP HILL, CUMBERLAND County, PENNSYLVANIA, 17011
Plain-Language Summary
Department of Health and Human Services obligated $861.1 million to NOVITAS SOLUTIONS, INC. for work described as: JURISDICTION H A/B MAC CONTRACT Key points: 1. Significant contract value of $861 million over its life. 2. Novitas Solutions, Inc. is the sole awardee. 3. Contract type is Cost Plus Award Fee, indicating performance incentives. 4. The sector is Healthcare, specifically Direct Health and Medical Insurance Carriers.
Value Assessment
Rating: fair
The contract's Cost Plus Award Fee structure makes direct pricing comparison difficult without detailed performance data. The award amount of $861M over nearly 8 years suggests a substantial but potentially variable cost.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a robust price discovery process. However, the Cost Plus Award Fee structure can lead to less predictable final costs compared to fixed-price contracts.
Taxpayer Impact: Taxpayer funds are utilized for health insurance carrier services, with the final cost influenced by performance incentives and operational expenses.
Public Impact
Impacts millions of Medicare beneficiaries by ensuring smooth operation of health insurance claims processing. Supports the Centers for Medicare and Medicaid Services (CMS) in administering vital healthcare programs. Ensures continuity of essential insurance carrier services across Pennsylvania.
Waste & Efficiency Indicators
Waste Risk Score: 75 / 10
Warning Flags
- Cost Plus Award Fee structure can lead to cost overruns if not managed tightly.
- Long contract duration (2882 days) requires ongoing monitoring for efficiency and relevance.
Positive Signals
- Awarded under full and open competition, suggesting competitive pricing initially.
- Performance incentives in the contract structure can drive efficiency.
- Supports critical healthcare infrastructure for Medicare beneficiaries.
Sector Analysis
This contract falls within the Healthcare sector, specifically supporting the administration of Medicare insurance. Spending in this area is crucial for national health coverage and involves significant federal investment in carrier operations.
Small Business Impact
The provided data does not indicate any specific subcontracting goals or participation by small businesses in this contract. Further investigation would be needed to assess small business involvement.
Oversight & Accountability
The contract's oversight would primarily fall under the Centers for Medicare and Medicaid Services (CMS). Monitoring performance metrics and cost controls associated with the Cost Plus Award Fee structure is essential 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 can lead to higher-than-expected costs.
- Long contract duration may not reflect current market efficiencies.
- Lack of small business participation data.
- Performance metrics and oversight effectiveness are not detailed.
Tags
direct-health-and-medical-insurance-carr, department-of-health-and-human-services, pa, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $861.1 million to NOVITAS SOLUTIONS, INC.. JURISDICTION H A/B MAC CONTRACT
Who is the contractor on this award?
The obligated recipient is NOVITAS SOLUTIONS, 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 $861.1 million.
What is the period of performance?
Start: 2011-11-08. End: 2019-09-29.
What was the final awarded cost compared to initial estimates, and how did performance incentives influence this?
The final awarded cost was $861,099,849.72. Without access to initial estimates and detailed performance reports, it's challenging to quantify the precise impact of award fees. However, the Cost Plus Award Fee structure implies that Novitas Solutions' performance directly influenced the final amount received, potentially exceeding base cost projections if performance was exceptional.
What are the key performance indicators (KPIs) used to evaluate Novitas Solutions, and how are they monitored to mitigate risk?
Key performance indicators likely focus on claims processing accuracy, timeliness, beneficiary satisfaction, and operational efficiency. CMS would typically monitor these through regular reporting, audits, and potentially site visits. Robust KPI tracking is crucial for managing the risks inherent in a Cost Plus Award Fee contract and ensuring taxpayer value.
How effectively has this contract supported the continuity and quality of Medicare services in Pennsylvania over its duration?
The contract's duration and value suggest it has played a significant role in maintaining Medicare operations in Pennsylvania. Effectiveness would be measured by the absence of disruptions in claims processing, beneficiary access to services, and CMS's ability to meet its program objectives. Continued monitoring and potential future contract analyses are needed to fully assess long-term effectiveness.
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: RFPCMS20110005
Offers Received: 4
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 1800 CENTER ST, CAMP HILL, PA, 17011
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $1,036,160,721
Exercised Options: $1,035,068,040
Current Obligation: $861,099,850
Actual Outlays: $2,780,180
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2011-11-08
Current End Date: 2019-09-29
Potential End Date: 2019-09-29 00:00:00
Last Modified: 2026-04-09
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