GAO Recommends Do-Over for MAC Region C Contract Bid

WASHINGTON–The Government Accountability Office has sided with
Cigna in its claim that CMS unfairly selected the new Medicare
Administrative Contractor for Region C and is recommending that CMS
reopen discussions with potential contractors.

Cigna Government Services, the current DMERC for Region D, filed
a protest earlier this year after it lost MAC contract bids on both
Regions C and D. CMS instead awarded Palmetto GBA the Region C
contract, and Noridian Administrative Services the Region D
contract.

According to the GAO, the agency found that after both firms
submitted their final proposal revisions for Region C, CMS only
communicated with Palmetto. After speaking with CMS, Palmetto
revised its proposal.

“The agency’s failure to provide Cigna a similar opportunity to
make proposal revisions constituted improper unequal treatment of
offerors, to Cigna’s competitive prejudice,” the GAO said in a May
4 statement. The GAO recommended that before making a final
decision, CMS renew discussions with potential contractors and give
them the same opportunity to make proposal revisions.

As part of CMS’ administrative contracting reform, the new MACs
will handle billing, customer service and other day-to-day
operations (see HomeCare
Monday, Jan. 9). Separate Program Safeguard Contractors,
which assumed duties earlier this year, are handling benefit
integrity, medical review and medical policy for each region.

The transition from the DMERCs to the new MACs originally was
scheduled for July 1, but in response to Cigna’s protest, CMS
announced that it would extend its DMERC contracts for Region C and
D–Palmetto GBA and Cigna, respectively–to Sept. 30.

The DMERC-to-MAC transition will still take place as scheduled
for Regions A (National Heritage Insurance Company, replacing
HealthNow) and B (AdminaStar Federal) on July 1.

For more information on CMS contracting reform, click
here.