President Joe Biden speaks as First Lady Jill Biden looks on at an event with service members and their families in New York on Nov. 25 2024. (Manuel Balce Ceneta/AP)
The Biden administration has dropped efforts to rebid a pricey contract to run the 1-800-MEDICARE call center and other services, a contracting battle that got dragged into debates over election-year politics and Republican accusations of undue influence by labor unions.
Maximus, the McLean, Virginia, company that has long served as a contractor for the federal health department, will keep its $6.6 billion contract and continue to operate call centers for Medicare and the Affordable Care Act until 2031, the company and federal officials confirmed.
“We appreciate the opportunity to continue supporting HHS and CMS in their vital missions and look forward to delivering innovative, high-quality, and reliable solutions that benefit the American public,” Bruce Caswell, president and CEO of Maximus, said in a statement.
Unions had complained about the company’s business practices, and officials including Health and Human Services Secretary Xavier Becerra had personally weighed in on the need to revisit the contract, one of the richest services agreements offered by the federal government. But the intervention by officials and the proposed language for the new contract drew fire from GOP leaders who said it wrongly put pressure on contractors to employ a unionized staff and called it an election-year favor to organized labor.
Maximus sued the Biden administration over its decision to rebid the contract, calling it “baseless and unlawful.”
Sen. Bill Cassidy (R-Louisiana), incoming chairman of the Senate health panel, credited his office’s oversight efforts for helping end the standoff.
“The Maximus contract should never have ended in the first place,” Cassidy said in a statement Tuesday. “Clearly, the Biden-Harris administration wanted to rebid this contract to force unionization on call-center employees even if they chose not to join a union.”
Federal officials did not respond to questions about why they ended their efforts to rebid the contract and whether their original push to do so was prompted by labor unions.
“Continuing to maintain and improve on the customer experience is, and will remain, a top priority for CMS,” the Centers for Medicare and Medicaid Services said in a statement.
The fight centered on the Biden administration’s decision in September 2022 to award a $6.6 billion contract to Maximus - and Biden officials’ decision to end the contract 15 months later, citing concerns about customer service despite high approval ratings for Maximus’s call center operations. The Medicare call line boasted a 95 percent satisfaction rate, according to federal officials.
CMS officials also amended the contract to add a “labor harmony agreement,” essentially a pledge by participating companies that they would make peace with unions and not experience a labor stoppage affecting the call centers.
Democrats and unions had praised the addition of the labor harmony provisions, which came after Claude Cummings Jr., president of the Communications Workers of America, and other labor leaders criticized Maximus’s wages and other practices. Sen. Bernie Sanders (I-Vermont), Rep. Rosa DeLauro (D-Connecticut) and other prominent Democrats also sided with the unions against Maximus. The CWA did not respond to a request for comment about federal officials’ decision to end the rebidding of the contract.
Outside observers said little precedent existed for abruptly ending an ongoing contract and adding new labor harmony language.
Seventeen Republican attorneys general in August demanded that HHS restore the contract to Maximus, warning that rebidding the contract and potentially disrupting the call centers was a “favor to union organizations” that would “compromise the health care services that Americans rely on.” They also contended that setting labor policy is the job of Congress, which has endorsed measures allowing employees the right to refrain from union activities.
Maximus has long maintained that the Biden administration’s attempt to rebid the contract was illegal and driven by outside considerations, though it declined to specify its allegations.
“The facts, evidence, and timing points to other motivations beyond Maximus’ superior performance on this contract,” Eileen Cassidy Rivera, a Maximus spokeswoman, said in a statement Wednesday.
