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Medicare Administrative Contractors' Performance

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Tara Bernabe

Medicare Administrative Contractors' Performance

Tara Bernabe, a team leader for the Office of Evaluation and Inspections, is interviewed by Linda Ragone, Deputy Regional Inspector General in Philadelphia.


Given the billions of dollars awarded to Medicare Administrative Contractors (MACs) and the critical role they play in administering the Medicare program, effective oversight of MACs' performance is important to ensure that they are adequately processing claims and performing other assigned tasks.


We collected performance assessment information from CMS and determined (1) the extent to which MACs met or did not meet performance requirements reviewed by CMS and (2) the extent of CMS's performance assessment and monitoring of MACs. The study included 2 performance periods for 13 MACs. The performance periods began and ended between September 2008 and August 2011.


MACs met the majority of quality assurance standards reviewed by CMS. However, MACs did not meet one quarter of the standards reviewed, and MACs had not resolved issues with 27 percent of these unmet standards as of June 2012. MAC standards have stringent performance requirements; a number of standards require 100 percent performance compliance. CMS did not require action plans for 12 percent of unmet standards, and unmet standards without action plans were almost four times more likely to have issues go unresolved. MACs can earn award fees if their performance exceeds basic requirements, and metrics are included in MACs' award fee plans to encourage improved performance. However, certain areas identified as problematic through quality assurance reviews were not always included as metrics in MACs' award fee plans. Two MACs consistently underperformed across various CMS reviews, and CMS's reviews of MACs, while extensive, were not always completed timely.


We recommend that CMS (1) require action plans for all quality assurance standards not met, (2) use results of quality assurance reviews to help select award fee metrics for review, (3) meet timeframes for completing quality assurance reports, (4) meet timeframes for completing award fee determinations, (5) establish reasonable timeframes for issuing contractor performance reports, and (6) seek legislative change to increase the time between MAC contract competitions to give CMS more flexibility in awarding new contracts when MACs are not meeting CMS requirements. CMS concurred with all six recommendations.