Medicare reform update

Tuesday, September 30, 2003

BALTIMORE - Since Medicare reoriented its carrier system and awarded the first four DMERC contracts in Dec. 1992, the carriers have always been insurance companies. That’s likely to change if Congress passes its omnibus Medicare reform package this year.

Already the conference committee reconciling the House and Senate versions of Medicare reform have agreed to a provision that would let companies besides insurance companies compete for the contracts. The reform would also create a competitiveprocess for the procurement of those contracts.

CMS used a competitive process to select the four DMERCs a decade ago, rating factors such as timeliness of claims processing, cost per claim, claims processing quality, and experience in claims processing. But there’s been no competition since then. Every Sept. 30, the contracts are renewed for another one-year term.

Three of the DMERCs - Adminastar Federal, Palmetto GBA and CIGNA - have been with Medicare since 1992. In 2000, United Healthcare decided to quit its contracting relationship with CMS in Region A, where the carrier is now HealthNow NY.

CMS said it reviews each carrier’s performance results and the agency’s budgetary situation before the annual renewal.
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