HHS awarded $14.3M to Maximus for Medicare appeals, a non-competitive delivery order

Contract Overview

Contract Amount: $14,338,250 ($14.3M)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2009-01-01

End Date: 2010-09-28

Contract Duration: 635 days

Daily Burn Rate: $22.6K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

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 $14.3 million to MAXIMUS FEDERAL SERVICES, INC. for work described as: MEDICARE 2ND LEVEL OF APPEALS Key points: 1. The contract was awarded on a non-competitive basis, raising questions about potential cost savings. 2. The fixed-fee structure provides some cost control, but the lack of competition limits price discovery. 3. The duration of the contract (635 days) suggests a significant, ongoing need for these services. 4. The administrative management and general management consulting services are critical for Medicare operations. 5. The award to a single contractor without competition may indicate a lack of market alternatives or a strategic choice. 6. The value of this single delivery order is substantial, highlighting the importance of the appeals process.

Value Assessment

Rating: fair

This $14.3 million delivery order for Medicare appeals services represents a significant investment. While the fixed-fee structure offers some predictability, the absence of a competitive bidding process makes it difficult to benchmark the value against other potential providers. Without comparative pricing data from a competitive environment, it's challenging to definitively assess if this represents excellent value for money. The contract's duration and scope suggest a substantial need, but the pricing cannot be independently verified against market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a non-competitive delivery order. This means that the agency did not solicit bids from multiple offerors. The specific reasons for this sole-source award are not detailed in the provided data, but it could be due to a lack of available qualified contractors, a need for specialized services, or a follow-on to a previous sole-source award. The limited competition means that the government did not benefit from the price discovery that typically occurs in a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competition, as the government did not have the opportunity to select the most cost-effective offer.

Public Impact

Beneficiaries of Medicare who are undergoing the second level of appeals will receive services under this contract. The contract ensures the continued operation of a critical administrative function within the Centers for Medicare and Medicaid Services (CMS). The services provided are essential for the fair and timely resolution of disputes related to Medicare coverage and payments. The geographic impact is national, as Medicare serves beneficiaries across the United States. The contract supports administrative and consulting roles, likely impacting a workforce skilled in healthcare administration and legal processes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price benchmarking and potential cost savings.
Non-competitive award raises questions about the thoroughness of market research.
Fixed-fee structure, while offering some cost control, may not be the most cost-effective in a sole-source scenario.

Positive Signals

Contract addresses a critical function (Medicare appeals) ensuring service continuity.
Fixed-fee pricing provides a degree of cost certainty for this delivery order.
Award is to a known entity (Maximus Federal Services, Inc.) which may imply prior satisfactory performance.

Sector Analysis

The healthcare administrative services sector is a significant part of government contracting, particularly within agencies like HHS. This contract falls under administrative management and general management consulting services, a broad category that supports the operational efficiency of large government programs. The market for such services is competitive, but specific, high-level functions like Medicare appeals may have fewer specialized providers. Benchmarking this contract's value is difficult without competitive data, but the overall spending on healthcare administration by the federal government runs into billions annually.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from this specific award. The primary contractor, Maximus Federal Services, Inc., is likely a large business, and the focus of this contract is on specialized administrative services rather than broad service provision where small business subcontracting is typically mandated.

Oversight & Accountability

Oversight for this contract would primarily fall under the Centers for Medicare and Medicaid Services (CMS), a division of HHS. As a delivery order under a larger framework (implied by 'delivery order'), there may be existing oversight mechanisms. Transparency is limited by the non-competitive nature of the award. The Inspector General of HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Medicare Appeals Process
Healthcare Administrative Services
Federal Consulting Contracts
Department of Health and Human Services Contracts
Centers for Medicare and Medicaid Services Operations

Risk Flags

Non-competitive award
Lack of price benchmarking data
Potential for higher costs due to limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $14.3 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 $14.3 million.

What is the period of performance?

Start: 2009-01-01. End: 2010-09-28.

What is the track record of Maximus Federal Services, Inc. with the federal government, particularly in healthcare administration?

Maximus Federal Services, Inc. has a substantial track record with the federal government, particularly within the Department of Health and Human Services (HHS). They are a major contractor involved in various health and human services programs, including Medicaid, Medicare, and health insurance marketplaces. Their work often involves eligibility determination, call center operations, claims processing, and appeals. Given their long-standing presence and the nature of this contract, it suggests they possess the specialized expertise required for managing Medicare's second level of appeals. However, a comprehensive review would require examining past performance evaluations and any documented issues or successes on similar contracts.

How does the $14.3 million value of this delivery order compare to historical spending on Medicare appeals services?

The provided data only includes the value of this specific delivery order ($14.3 million) and its duration (635 days). To compare this to historical spending, one would need access to historical contract data for Medicare's second-level appeals. This would involve analyzing previous contracts awarded for similar services, noting their values, durations, and the contractors involved. Without this historical context, it's impossible to determine if $14.3 million is high, low, or average for this type of service over a comparable period. The non-competitive nature of this award further complicates direct value comparisons.

What are the specific risks associated with a non-competitive award for critical administrative services like Medicare appeals?

The primary risk associated with a non-competitive award for critical administrative services like Medicare appeals is the potential for inflated costs and reduced efficiency. Without the pressure of competition, the awarded contractor may not have the same incentive to offer the lowest possible price or the most innovative solutions. There's also a risk that the agency may not be aware of or have access to potentially better-suited or more cost-effective alternatives available in the market. Furthermore, a sole-source award can sometimes indicate a lack of robust market research or a reliance on a single vendor, which can create dependency and limit future flexibility.

How effective is the fixed-fee pricing model in ensuring value for money in this specific contract?

The fixed-fee pricing model aims to provide cost certainty by establishing a set fee for the work performed. In theory, this benefits the government by capping costs. However, the effectiveness in ensuring value for money is significantly diminished when the contract is awarded non-competitively. While the contractor cannot exceed the agreed-upon fee, the initial fee itself might be higher than it would have been in a competitive scenario. The government relies on the contractor's good faith and the contract's defined scope to ensure value. Without competition, there's less external validation that the fixed fee represents a fair market price for the services rendered.

What are the implications of the contract duration (635 days) for the Medicare appeals process?

A contract duration of 635 days (approximately 21 months) for Medicare's second-level appeals suggests a sustained and significant workload. This duration implies that the appeals process is a continuous and substantial operational requirement for CMS, rather than a short-term or project-based need. It indicates that the contractor, Maximus Federal Services, Inc., is expected to provide ongoing support for this function over an extended period. Such a duration can allow for greater efficiency and institutional knowledge development by the contractor, but it also means that any inefficiencies or cost overruns will persist for the life of the contract.

Could this non-competitive delivery order be a follow-on to a previously competed contract, and what does that imply?

It is possible that this non-competitive delivery order is a follow-on to a previously competed contract, or it could be a new award under an existing indefinite-delivery/indefinite-quantity (IDIQ) contract that was competed. If it's a follow-on to a sole-source award, it perpetuates the lack of competition. If it's a delivery order under a competed IDIQ, the initial competition for the IDIQ provides some level of market vetting. However, the specific terms and pricing of individual delivery orders, especially if awarded non-competitively, still warrant scrutiny. Without knowing the preceding contract's history, it's difficult to definitively assess the implications, but a pattern of non-competitive awards can reduce overall value.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $14,338,250

Exercised Options: $14,338,250

Current Obligation: $14,338,250

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200400007I

IDV Type: IDC

Timeline