CMS should look at contractor performance, government agency says

Following years of provider disputes, the Government Accountability Office released a report Monday encouraging the Centers for Medicare & Medicaid Services to look at ways to improve the Medicare Administrative Contractor program.

The GAO report examined differences in responsibilities among MACs and the costs associated with those differences. It says reforms could increase efficiency and effectiveness through alternative contracting approaches.

MAC responsibilities include claims processing and customer service, which account for most of their reported costs. As of February 2015, 16 MACs — chosen by the CMS through a competitive process in accordance with the Federal Acquisition Regulation — administered claims submitted by Medicare providers and suppliers. Twelve MACs administered claims for inpatient hospital care, outpatient physician and hospital services, and home health and hospice care, among other services, while the remaining four MACs administered claims for durable medical equipment.

Among the issues detailed in the GAO report is the reluctance for MACs to share certain innovations or operational improvements with other MACs, due to the competitive nature of the contracting system. CMS officials also noted the challenges posed by the 5-year limit on MAC contract terms, which they said constrained their ability to respond to issues with MACs' performance.

MACs currently operate on a cost-plus-award-fee contract structure, selected by CMS when the 2006 program began. GAO recommended CMS formally assess the potential benefits and risks of alternative contracting approaches in order to enhance MAC effectiveness.