HHS awarded $575.5M to National Government Services for Medicare claims processing over 8 years

Contract Overview

Contract Amount: $575,536,673 ($575.5M)

Contractor: National Government Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2012-09-30

End Date: 2020-12-31

Contract Duration: 3,014 days

Daily Burn Rate: $191.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: JURISDICTION 6 A/B MAC CONTRACT

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46250

State: Indiana Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $575.5 million to NATIONAL GOVERNMENT SERVICES, INC. for work described as: JURISDICTION 6 A/B MAC CONTRACT Key points: 1. The contract utilized a Cost Plus Award Fee structure, incentivizing performance but potentially leading to higher costs than fixed-price contracts. 2. With 3 bidders, the competition level suggests a moderate degree of market interest for this essential Medicare administrative function. 3. The contract's duration of over 8 years (3014 days) indicates a long-term commitment to a single vendor for a critical service. 4. The significant award value points to the substantial operational scale and complexity of Medicare claims processing. 5. This contract represents a major component of the administrative infrastructure supporting the Medicare program. 6. The 'IN' state designation for Indiana suggests a regional focus for this specific MAC contract.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics and detailed cost breakdowns. However, the total award of $575.5 million over more than 8 years for Medicare claims processing by a MAC indicates a substantial investment. The Cost Plus Award Fee (CPAF) structure means that the final cost is influenced by performance, which can lead to variability. Compared to other MAC contracts, the scale appears significant, reflecting the importance of efficient claims adjudication for millions of beneficiaries. The pricing is tied to cost plus performance, making direct value-for-money assessments difficult without granular data on efficiency gains and award fee payouts.

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 vendors had the opportunity to bid. With three bidders, the competition level suggests a healthy, though not intensely crowded, market for this specialized service. This level of competition is generally favorable for price discovery and can encourage vendors to offer competitive terms. The agency likely benefited from a range of proposals, allowing for selection based on a combination of technical capability, past performance, and price.

Taxpayer Impact: A full and open competition with multiple bidders helps ensure that taxpayer dollars are used efficiently by driving down costs and encouraging innovation among contractors.

Public Impact

Beneficiaries of this contract are Medicare beneficiaries who rely on timely and accurate claims processing for their healthcare services. The services delivered include claims processing, provider services, and other administrative functions essential to the Medicare program's operation. The geographic impact is primarily focused on Indiana, as indicated by the 'IN' state designation, serving Medicare beneficiaries and providers within that region. The contract supports a significant workforce within the contractor organization, likely involving claims adjudicators, customer service representatives, and administrative staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Award Fee structure can incentivize contractors to incur costs to achieve performance targets, potentially leading to higher overall expenditures than fixed-price contracts.
Long contract durations, like this one exceeding 8 years, can reduce flexibility and make it harder to adapt to evolving healthcare needs or technological advancements without significant renegotiation.
Reliance on a single contractor for a critical function like Medicare claims processing in a specific region creates a dependency that could be problematic if the contractor faces performance issues or financial instability.

Positive Signals

The contract was awarded through full and open competition, suggesting a robust bidding process that likely yielded competitive proposals.
The use of an award fee structure incentivizes the contractor to meet or exceed performance standards, potentially leading to higher quality service delivery.
The significant award value indicates the contractor's capacity to handle the large volume and complexity of Medicare claims processing for the designated region.

Sector Analysis

This contract falls within the Health Information and Services sector, specifically focusing on the administrative and claims processing functions for government healthcare programs. The market for such services is dominated by large, specialized government contractors with the expertise and infrastructure to manage complex healthcare data and regulations. Comparable spending benchmarks would involve other Medicare Administrative Contractor (MAC) awards, which are substantial due to the scale of the Medicare program. The Centers for Medicare and Medicaid Services (CMS) relies heavily on these contracts to ensure the efficient operation of its programs.

Small Business Impact

The data indicates that small business participation was not a primary set-aside consideration for this contract (ss: false, sb: false). While the primary contractor is National Government Services, Inc., there is no explicit information provided on subcontracting plans or targets for small businesses. The scale and specialized nature of Medicare claims processing may limit opportunities for broad small business subcontracting, though specific administrative or support functions could potentially be outsourced. Further analysis would be needed to determine the extent of small business involvement through subcontracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Centers for Medicare and Medicaid Services (CMS), a division of HHS. CMS is responsible for monitoring contractor performance, ensuring compliance with program requirements, and managing the award fee structure. Transparency is facilitated through contract awards databases and public reporting of federal spending. The Inspector General of HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Medicare Administrative Contractor (MAC) Contracts
Centers for Medicare and Medicaid Services (CMS) Operations
Health Insurance Claims Processing
Federal Health IT Contracts
Government Health Services Contracts

Risk Flags

Long contract duration
Cost-reimbursement elements (CPAF)
Single award for critical function

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $575.5 million to NATIONAL GOVERNMENT SERVICES, INC.. JURISDICTION 6 A/B MAC CONTRACT

Who is the contractor on this award?

The obligated recipient is NATIONAL GOVERNMENT 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 $575.5 million.

What is the period of performance?

Start: 2012-09-30. End: 2020-12-31.

What was the historical spending trend for this specific MAC contract over its duration?

The provided data summarizes the total award value ($575.5 million) and contract duration (September 30, 2012, to December 31, 2020, approximately 8.25 years). To determine historical spending trends, one would need access to the contract's annual or quarterly financial reports. These reports would detail the obligated amounts, expenditures, and potentially the breakdown between base costs and award fees for each period. Without this granular data, we can only infer that spending likely ramped up after the award date and was distributed across the contract's life, with potential fluctuations based on operational needs and performance incentives. The total value suggests an average annual expenditure of roughly $70 million, but actual year-over-year spending could have varied significantly.

How does the per-beneficiary cost of claims processing under this contract compare to other MAC contracts?

A direct comparison of per-beneficiary cost is not feasible with the provided data alone. To perform this analysis, we would need the number of Medicare beneficiaries served by National Government Services, Inc. in Indiana during the contract period, as well as the total claims processed. We would then compare this calculated per-beneficiary or per-claim cost against similar metrics from other MAC contracts serving comparable populations and geographic areas. Factors such as the complexity of claims, the specific services provided by the MAC, and regional cost variations would need to be controlled for in a robust comparison. The current data only provides the total contract value, not the volume of services or beneficiaries.

What were the key performance indicators (KPIs) used to determine the award fees for National Government Services, Inc.?

The specific Key Performance Indicators (KPIs) used for determining award fees under this Cost Plus Award Fee (CPAF) contract are not detailed in the provided summary. Typically, for MAC contracts, KPIs would focus on critical operational metrics such as claims processing timeliness (e.g., percentage of claims processed within standard timeframes), accuracy rates (e.g., error rates in adjudication), provider satisfaction, beneficiary inquiry resolution rates, and compliance with program integrity requirements. The award fee structure incentivizes the contractor to exceed baseline performance targets in these areas. A thorough review of the contract's Statement of Work (SOW) or Performance Work Statement (PWS) would be necessary to identify the precise KPIs and their associated weighting and targets.

What is the track record of National Government Services, Inc. in managing large federal healthcare contracts prior to and during this period?

National Government Services, Inc. (NGS) has a significant track record in managing federal healthcare contracts, particularly those related to Medicare. As a subsidiary of Evera, they have historically served as a Medicare Administrative Contractor (MAC) for various regions, including Indiana and the Northeast. Their experience spans decades, involving the processing of millions of claims annually for both Part A and Part B Medicare beneficiaries. Prior to and during the period of this contract (2012-2020), NGS was known for its operational capacity and established processes for handling the complex administrative functions required by CMS. While specific performance details or controversies would require deeper investigation into contract performance reports and oversight findings, their continued role as a MAC indicates a generally accepted level of competence and reliability in managing these large-scale, critical government functions.

Were there any significant challenges or disputes encountered during the performance of this contract?

Information regarding specific challenges or disputes during the performance of this particular contract (HHS-575536673) is not readily available in the provided summary data. Federal contract performance can encounter issues such as scope creep, disagreements over contract terms, performance deficiencies, or funding disputes. To identify any significant challenges, one would need to consult contract performance reports, agency oversight records, Government Accountability Office (GAO) bid protest decisions, or Inspector General (IG) reports related to National Government Services, Inc. and their MAC operations during the 2012-2020 timeframe. The absence of readily available public dispute information does not guarantee a problem-free performance, but it suggests no major, publicly documented conflicts significantly impacted the contract's continuation or outcome.

How did the transition to this contract impact the Medicare claims processing landscape in Indiana?

The transition to this contract, awarded in 2012, would have occurred within the broader context of the MAC Jurisdiction 6 (J6) re-competition. This re-competition aimed to consolidate MAC responsibilities and ensure efficient, standardized claims processing across different regions. For Indiana, National Government Services, Inc. taking over or continuing its role as the MAC for J6 likely meant a continuation of established processes, potentially with refinements based on the new contract's requirements and performance expectations. The impact would primarily be felt by healthcare providers submitting claims and Medicare beneficiaries receiving services, ensuring continuity in payment processing. Significant disruptions are generally avoided during such transitions due to the critical nature of the service, with CMS typically managing the handover carefully to maintain operational stability.

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: RFPCMS20070013

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Elevance Health, Inc.

Address: 8115 KNUE RD, INDIANAPOLIS, IN, 46250

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

Financial Breakdown

Contract Ceiling: $684,738,518

Exercised Options: $683,707,544

Current Obligation: $575,536,673

Actual Outlays: $660,258

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $12,735,103

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline