CMS awards claims payment contracts to Highmark, Palmetto

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The Centers for Medicare & Medicaid Services (CMS) has awarded two contracts to Highmark Medicare Services and Palmetto GBA for the combined administration of Part A and Part B Medicare claims payment in seven states, the District of Columbia and three U.S. territories. Implementations will begin immediately.

The Medicare Administrative Contractors (MACs) contracts are part of an effort to streamline the fee-for-service payment system and are among the largest, in terms of claims volume, of 15 contracts that CMS will award by 2011, in an effort to cover every state and the District of Columbia.

“These contract awards are a major step toward improving service to beneficiaries and providers, as well as providing greater administrative efficiency and effectiveness for the original fee-for-service Medicare program,” acting CMS Administrator Kerry Weems said.
Under the terms of the contract, the Camp Hill, Pa.-based Highmark will assume full claims responsibility for Jurisdiction 12, which includes the states of Delaware, Maryland, New Jersey and Pennsylvania, as well as the District of Columbia, no later than September 2008.

Palmetto of Columbia, S.C., will assume full responsibility for Jurisdiction 1, which includes California, Hawaii, Nevada, American Samoa, Guam and the Northern Mariana Islands, no later than June 2008.

The contracts include a base period and four one-year options and will provide the two companies with an opportunity to earn award fees based on their ability to meet or exceed the performance requirements set by CMS, Weems said.

When Medicare contracting reform is fully implemented, MACs will replace all fiscal intermediaries and carriers responsible for both Part A and Part B claims. The new structure will mean that beneficiaries and providers will have a single point of contact with the Medicare program. Once operational, the MACs will be the contact for all Medicare providers and physicians in the states included in their jurisdiction, while beneficiaries will pose their claims-related questions to a Beneficiary Contact Center, according to CMS.

In accordance with the Medicare Modernization Act, CMS said that MAC contracts are to be open for bidding at least once every five years. The organization expects to award three more contracts by the end of the year.