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CMS awards $15 billion data management contract

Nov. 20, 2012 - 05:34PM   |  
The Centers for Medicare and Medicaid Services is expected to award a $15 billion, 10-year contract to manage its immense stores of data.
The Centers for Medicare and Medicaid Services is expected to award a $15 billion, 10-year contract to manage its immense stores of data. (Getty Images)

The Centers for Medicare and Medicaid Services last week awarded a $15 billion contract to consolidate data centers and manage its immense stores of data.

Eight vendors — including CGI Federal, Lockheed Martin, Accenture Federal Services, LLC and National Government Services — were awarded spots on the 10-year contract, according to a notice on

The new contract will build on a previous award to Hewlett-Packard, IBM and Companion Data Services about six years ago. All three vendors were also awarded spots on the new contract.

CMS manages a network of 80-plus data centers and stores and maintains 370 terabytes of Medicare data and 30 terabytes of Medicaid data. Medicare claims will double and Medicaid claims will triple by 2015, when physicians’ payments will be based on the level of patient care. The volume of data will be massive, considering a terabyte is roughly 3.4 million pieces of standard printing paper.

Called the Virtual Data Center contract, it will consolidate multiple contracts and provide applications hosting, telecommunications and networking, disaster recovery, enterprise security, and other services. The contract will help consolidate the agency’s data centers to between six and eight, reduce energy consumption and eliminate duplicative spending on hardware and software, said the agency’s CIO, Tony Trenkle, at a health information technology conference last month.

Having a standard contract vehicle for these services will also help CMS better use computing resources, set consistent security requirements, effectively use cloud computing and increase the availability of mission-critical data across its data centers.

Winners must be able to provide all the services required under the contract.

That was one of the reasons CMS discontinued its $3 billion set-aside contract for small businesses, said Alexander Serbau, a senior analyst with research firm Deltek. There weren’t enough small businesses that could meet all the requirements.

Serbau said it is uncommon for agencies to set such stiff requirements, but this will give CMS a wider range of vendors to choose from once task orders are made.

With the awarding of the contract, CMS will shift to a contractor-owned, contractor-operated model for its data centers. For now, its data center in Baltimore will be government-owned, but eventually most, if not all, of the systems hardware and software in the center will be owned and operated by contractors.

Cindy D’Annunzio, an account director at Companion Data Services, said the company stores two-thirds of CMS Medicare fee-for-service claims at its 108,000-square-foot data center in Columbia, S.C.

D’Annunzio said her company is providing CMS all the services required under the new contract. “What makes us unique is that we are a health care IT company,” she said.

Because Companion Data Services doesn’t own a specific brand of technology, it’s able to be vendor-agnostic and use whatever technology works best, she said.

CMS requires that contract winners with proprietary software first work with CMS to determine that the software won’t conflict with the agency’s plans to standardize its information technology infrastructure. If CMS approves the software, the contractor must make its software available, at no additional cost, to other vendors on the contract.

A chief reason for the contract is that CMS, like other agencies, is under pressure to transition to a more data-based operation. The health care reform law requires the agency to collect more data and better document and reward providers based on quality of care, which demands greater interaction between CMS and providers and better, faster access to the data it collects.

Last month, Trenkle noted that successful health reform depends on more and better data.

But at CMS, that data is spread across multiple systems. If CMS were a separate agency, it would have the third-largest IT budget, behind the Defense Department and Department of Homeland Security, according to Trenkle.

Companion Data Services also hosts the agency’s National Data Warehouse application, which tracks calls to 1-800-Medicare. The application helps CMS analyze data and find ways to improve customer service through the Medicare hotline, which receives more than 40 million calls a year on enrollment procedures, covered services and other topics, the company said.

CMS also must have easy access to its data for better decision-making.

The agency has been working with Oak Ridge National Laboratory for the past year to test data analytics and computing capabilities and better ways to store data. One example of how CMS might use analytics is for tracking claims and identifying fraud, waste and abuse in real time, said Brian Worley director of the lab’s Computational Sciences and Engineering Division.

Trenkle said tools developed with the lab will be tested at CMS’ Baltimore data center.

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