GAO: Medicare Contracting Reform Plan Has ‘Gaps’

WASHINGTON–A new Government Accountability Office report is
recommending that CMS delay the implementation of its new claims
contracting process, saying that the plan is incomplete and that
estimated savings are uncertain.

As mandated by the Medicare Modernization Act, CMS is putting
all fee-for-service claims processing business up for
bid–including Part A, Part B, DME and home health and hospice. The
agency will award four “specialty” DME Medicare Administrative
Contractors–or DME MACs–along with 15 primary MACs and four other
specialty MACs serving home health and hospice providers. The bid
winners, currently scheduled to be announced by December, will
cover geographic areas that resemble current regions of the four
durable medical equipment regional carriers, but with a few
realignments (see HomeCare
Monday, Feb. 28).

Although the MMA does not require the current contractor
workload to be transferred to the new MACs until 2011, CMS is
tackling DME claims processing first–and the GAO has expressed
concerns that the agency has speeded up its timeline to implement
the plan in 2009. According to the Aug. 17 report, the plan lacks a
detailed schedule and other information about the claims processing
transfer.

“CMS has never before undertaken a project of this scope and
magnitude–one that affects more than 35 million beneficiaries and
one million health care providers,” the report stated. “If
transitions do not run smoothly, operational disruptions could lead
to delayed payments to providers and increased improper payments by
contractors.”

Furthermore, the proposed savings–which CMS has estimated at
$1.4 billion over six years–are based on “questionable evidence
and assumptions that were never validated by knowledgeable CMS
staff,” the report said. CMS estimates that it will cost $666
million to implement the changes.

In 2004, the DMERCs processed more than 68 million claims, with
total program payouts of more than $9 billion. The GAO report
suggests that CMS extend its implementation schedule to 2011 to be
better prepared, but CMS has said that it disagrees with the
recommendation.

More information, including a map of all new MAC jurisdictions
and a timeline for contract awards, is available at www.cms.hhs.gov/medicarereform/contractingreform.

To view the GAO report, click here.