CMS Issues RFI Regarding Awarding and Administration of MAC Contracts

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FinerfrockBy Bill Finerfrock and Matt Reiter, Capitol Associates

In the December 21, 2015 Federal Register, CMS announced that it is issuing an RFI on the awarding and administration of Medicare Administrative Contractor (MAC) contracts.

Specifically, the RFI solicits public comment on the processes and procedures that CMS could use to leverage new legal authorities to:

  • Incentivize and reward exceptional MAC contract performance;
  • Publish performance information on each MAC, to the extent permitted by law; and
  • Make MAC jurisdictional changes.

Comments must be received by no later than 5 p.m. on February 19, 2016 in order to be assured consideration.

Comments must reference file code CMS-1653-NC. Comments can be submitted electronically via or in writing to:

Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-1653-NC
P.O. Box 8013
Baltimore, MD 21244-8013

Currently, CMS awards MAC contracts through use of competitive procedures in accordance with the Federal Acquisition Regulation (FAR). Since 2006, CMS has relied on a network of 16 MACs to process Medicare claims, including 12 MACs that administer both Part A and Part B claims and 4 MACs that specialize in administering Part B claims for DMEPOS. MACs serve as the primary operational contact between the Medicare Fee-For-Service (FFS) program and approximately 1.5 million health care providers and suppliers enrolled in the program. MACs process Medicare claims, enroll health care providers and suppliers in the Medicare program, educate providers and suppliers on Medicare billing requirements, and answer provider and supplier inquiries. Collectively, the MACs process nearly 4.9 million Medicare claims each business day and disburse more than $365 billion annually in program payments. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) extended the maximum length of a MAC contract, inclusive of all option and renewal periods, from 5 years to 10 years.

With this RFI, CMS hopes to examine whether some additional contracting mechanisms could be utilized to further improve MAC performance. CMS is evaluating numerous elements of our MAC acquisition strategy, including potential adjustments to our MAC contract terms and conditions. The scope of our evaluation includes the processes and procedures that we use for awarding the MAC contracts and administering the MAC contracts after award.

CMS currently uses a cost-plus-award-fee contract type for the MAC contracts, meaning that MACs are financially incentivized and rewarded with additional fee/profit for exceptional performance in areas critical to the success of the Medicare FFS program.

CMS stated in its announcement:

Prior to the enactment of MACRA, the law required that MAC contracts be recompeted no less frequently than once every 5 years, which created the potential for frequent turnover in these critical contracts and disruption for Medicare providers and suppliers. With the enactment of MACRA, we are now able to renew a MAC contract for up to 10 years and reduce the potential for frequent turnover if the MAC meets or exceeds our performance objectives; conversely, we may still utilize competitive procedures sooner than 10 years in the event that a MAC does not meet our performance objectives. In concert with or in (partial or full) replacement of our award fee process, we are considering incorporating an “award term” concept into MAC contracting, meaning that we may incentivize and reward consistently, well-performing MACs with a longer-term contract (but not longer than 10 years). For example, MACs that consistently exceed our performance standards may be rewarded with a longer-term contract (up to 10 years); whereas, MACs that do not consistently exceed our performance standards may be limited to a shorter-term contract (more or less than 5 years).

Based on that background, CMS is soliciting public comment on the following questions regarding MAC incentives for exceptional performance:

  • Do you have any concerns or suggestions related to development of a potential “award term” strategy and plan?
  • Do you have any other suggestions for incentivizing and rewarding exceptional MAC performance?
  • Are there any specific metrics or evaluation criteria that would be valuable in measuring the level and quality of the service provided by a MAC?
  • Are there any specific metrics or evaluation criteria that would be valuable in measuring the level and quality of the MAC’s relationships (including education and outreach) with providers?
  • With regard to the MAC’s quality and level of service and performance, what types or kinds of information should be published for public release?
  • If we were to publish the results of the evaluation of a MAC’s performance on our Web site, which types of metrics or information should be made available for public release?
  • What would the advantages and disadvantages be if CMS completed the last two MAC consolidations (From 12 A/B MACs to 10 A/B MACs) that were previously postponed?

This announcement in the Federal Register can be viewed in its entirety here.

Bill Finerfrock is the president and owner of Capitol Associates, a government relations/consulting firm. Prior to assuming ownership of Capitol Associates, Bill was a senior vice president in the company for more than 20 years. Capitol Associates was recently selected to work with AHRA on their regulatory affairs issues. Bill specializes in health care financing, health systems reform, health workforce and rural health. He can be reached at

Matt Reiter has been an associate with Capitol Associates since 2014. Matt focuses on Federal issues relating to the health care revenue cycle, medical specialties as well as the Affordable Care Act. He provides analysis of legislation and regulatory policies for the firm’s clients and represents clients before Congress, Federal Agencies and at industry functions.

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