For any provider who has been frustrated by consistent problems with their local Medicare Administrative Contractor (MAC), Robert A. Vito, regional inspector general for evaluation and inspections for the U.S. Department of Health and Human Services’ Office of Inspector General (HHS OIG) shed some light on how underperforming MACs are able to keep their government contracts.

In testimony to the House Committee on Energy and Commerce Subcommittee on Health, Vito reiterated the findings his agency first published in January that the current contract bidding system for MACs makes it too difficult for the Centers for Medicare and Medicaid Services (CMS) to replace contractors the agency knows are not performing claims processing and other MAC duties as they should.

There are only 16 MACs nationwide who together were paid $4.3 billion from the government over a 5-year period. Of these, the OIG found that two (12.5 percent) were consistently underperforming. One did not meet CMS’s quality assurance standards 48 percent of the time and the other did not meet them 31 percent of the time, Vito noted in his testimony. Overall, MACs did the worst at enrolling new providers, processing claims where Medicare was the secondary payor, and managing appeals of their coverage decisions.

Because MAC contracts are awarded for one year with four additional option years (a total of five years), it is impractical for CMS to go through the time (typically a whole year) and expense of rebidding a contract before the final option year expires. As a result, the agency keeps working with the underperforming MACs and trying to bring up their performance with incentive payments and stricter oversight.

A longer contract period would seem to work against competition for contracts, but Vito noted that it would actually help the situation by make rebidding contracts of underperforming MACs more practical for CMS. However, since CMS cannot adjust its contract schedule without being directed to do so by Congress, a new law will be needed to fix this problem.

Meanwhile CMS and the OIG continue to gather data. Late last year, CMS offered Medicare fee-for-service physicians, suppliers, health care practitioners and institutional facilities the opportunity to complete an online survey called the MAC Satisfaction Indicator (MSI). The survey aims to assess how happy (or unhappy) providers are with their regional MAC. Results should be published on CMS’s website later this year.