GAO rules against current DMERC

Sunday, January 21, 2007

WASHINGTON - Palmetto GBA has lost its last-ditch appeal to become the Region C Medicare Administrative Contractor (MAC).

In ruling against Palmetto's appeal Jan. 16, the Government Accountability Office (GAO) handed the MAC job--valued at about $144 million over five years--once and for all to Cigna Government Services.

Last week's GAO ruling follows a months long struggle between Palmetto and Cigna for the MAC contract.

The MACs are part of Medicare's reconfiguration of the DMERCs into two specialty contractors: the MACs for claims processing; the Program Safeguard Contractors (PSC) for program integrity duties.

CMS awarded the MAC contract to Palmetto, which has served as Region C DMERC since 1993, in January 2006. Soon after, Cigna, which also bid on the contract, filed a protest, sending it to the GAO for a ruling. The agency ruled in Cigna's favor Sept. 28.

"CMS found the proposal from Cigna offered the best overall value to the government and, therefore, has awarded the Jurisdiction C DME MAC contract to Cigna," the agency stated following the GAO's decision.

Palmetto protested that decision in October.

Kim Brummett, vice president of contracting and reimbursement for Greensboro, N.C.-based Advanced Home Care, expressed disappointment that the GAO ruled against Palmetto.

"The folks at (Palmetto) have been really great to work with," said Brummett. "We've built some really great relationships and it's just awful."

But Michael Watson, vice president of government relations for American Medical Technologies in Santa Rosa, Calif., said he didn't believe most providers would miss Palmetto.

"They were having so many problems in fulfilling their contract that we started filing complaint after complaint," said Watson, who complained about customer service and slow reimbursement. "We rarely saw an EOB come in that did not have interest added to the reimbursement because they were untimely (paying) the claim."

Palmetto will stay on until Cigna takes over July 1. The company did not respond to a request for comment.

Still up in the air are contracts for the National Supplier Clearinghouse (NSC) and the Statistical Analysis Durable Medical Equipment Regional Contractor (SADMERC), which Palmetto now holds. A MAC must hold those contracts.

CMS stated that it is evaluating its options for the contracts and that they will not automatically go to Cigna.