The Centers for Medicare & Medicaid Services (CMS) is in the process of changing the way in which it contracts for many of the key operational functions1 of Medicare. Since the inception of the Medicare program, Medicare Fiscal Intermediaries (FIs) and Carriers have served as the Medicare contractors, but under Section 911 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the Secretary for Health & Human Services is required to create new Medicare Administrative Contractors (MACs) to administer the Medicare Part A and Part B Fee-for-Service programs.2 During the procurement process, CMS has sought and will continue to seek input from the industry.

By 2011, a total of 19 MACs will replace the existing Medicare contracting authorities through a series of three procurement cycles. Fifteen of the MACs will be called A/B MACs and will service the majority of providers (both Part A and Part B providers). In addition, there will be four specialty MACs that will service durable medical equipment suppliers (DME MACs). Although CMS originally planned to have an additional four specialty MACs to service home health and hospice providers, CMS recently announced that the workloads for home health and hospice claims will be consolidated into four of the A/B MACs.3


CMS began its Medicare Contracting Reform initiative with the DME MACs. On January 6, 2006, CMS announced that the four specialty MAC contracts had been awarded. As of June 1, 2007, all four DME MACs are fully operational.


Procurement for A/B MACs also is progressing. One A/B MAC contract has been awarded, and Cycle One of the A/B MAC procurement, including seven jurisdictions, is underway, with contracts expected to be awarded in July and September 2007. CMS will award the remaining seven A/B MAC contracts through Cycle Two of the procurement process, and will issue the Requests for Proposals (RFPs) for Cycle Two in September and December 2007.4 CMS expects the full workload to be transitioned to the A/B MACs by October 2009.

CMS provides information and requests public comments during the procurement process. For each Cycle, CMS posted Requests for Information (RFI) on the Federal Business Opportunities website to solicit industry feedback on the acquisition model and other aspects of procurement. The RFIs are available for viewing on . In addition, CMS posts links to RFPs and maintains up-to-date information regarding the contracting reform process at .

Relevance for Local Coverage Determinations

As part of the MAC transition, local coverage determinations (LCDs) must be consolidated within each MAC region.5 The CMS Statement of Work for A/B MACs instructs MACs to accept the least restrictive policy and to allow the public an opportunity to comment, but this process is relatively short and does not always go smoothly. We have encouraged CMS to implement a listserve to notify the public when LCDs are consolidated in a MAC region and proposed policies are issued. Until CMS implements such a system, we urge you to monitor the MAC websites closely for proposed consolidated LCDs, such that you have the opportunity to submit comments within the 30 day period.