A New System of Medicare Contractors Begins Phase-In this Year

Sunday, February 6, 2005

February 14, 2005

WASHINGTON - A new system slated to begin in December 2005 will give a new face to Medicare’s existing DMERC structure.
The new system will expand the Medicare contractor network to four administrative contractors to handle home medical equipment claims and four to handle home health claims. The idea is to open the range of financial entities that will be permitted to serve as Medicare Administrative Contractors, to be determined by competitive bidding, according to a February 7 report to Congress, “Medicare Contracting Reform: A Blueprint for a Better Medicare,” that describes the changes, which are mandated by MMA and are designed to reduce costs.
The system will also allow providers to participate in annual evaluations of the contractors, who will have performance-based incentives.
CMS said it will replace fiscal intermediaries and carriers that currently process claims from hospitals, physicians and suppliers of services with 15 administrative contractors responsible for processing both Part A and Part B claims and the additional 8 administrative contractors to process home health and HME claims.
The new contractors will focus on customer service, operational excellence, and financial management. CMS will contract separately for specialized tasks such as program safeguard activities, coordination of benefits, and a new appeals function, to be handled by qualified independent contractors.