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Medicare Administrative Contractors

Since Medicare’s inception in 1966, private health care insurers known as Part A Fiscal Intermediaries (FI) and Part B carriers have processed medical claims for Medicare beneficiaries. Section 911 of the Medicare Prescription Drug Improvement, and Modernization Act (MMA) of 2003 mandated that the Secretary of Health & Human Services replace Part A FIs and Part B carriers with Medicare Administrative Contractors (MACs).  Contracting reform was intended to improve Medicare’s administrative services to beneficiaries and health care providers through the use of new contracting tools including competition and performance incentives.

Today, the Centers for Medicare & Medicaid Services (CMS) selects MACs in accordance with the Federal Acquisition Regulation. As required under the MMA, CMS established MACs as multi-state, regional contractors responsible for administering both Medicare Part A and Medicare Part B claims. The transition from the Part A FIs and Part B carriers to MACs began in 2006, and the last FI and carrier contracts will end by September 2013.

CMS relies on a network of MACs to process Medicare claims, and MACs serve as the primary operational contact between the Medicare Fee-For-Service program, and approximately 1.5 million health care providers enrolled in the program.  MACs enroll health care providers in the Medicare program and educate providers on Medicare billing requirements, in addition to answering provider and beneficiary inquiries.  Collectively, the MACs and the other Medicare claims administration contractors process nearly 4.9 million Medicare claims each business day, and disburse more than $365 billion annually in program payments.

With the application of performance-based evaluation criteria in the selection of MACs, Medicare claims administration costs have decreased. In recent years, MACs have proposed innovative and cost-effective solutions to Medicare claims processing business operations.  Through the implementation of Medicare Contracting Reform mandated under the MMA, CMS has established a premier health plan that allows for comprehensive, quality care and world-class beneficiary and provider service.