Medicare administrative contractors are keeping info too close to their chests, which is limiting their performance, a new Government Accountability Office study says.
The GAO was asked to assess contractor effectiveness since the implementation of contracting reform in 2006.
When it initially initiated the reform, the Centers for Medicare and Medicaid Services selected a cost-plus-award-fee contract structure for the contractors, according to the GAO. This type of cost-reimbursement contract provides financial incentives for achieving specific performance goals.
CMS uses performance metrics to target areas where contractors have performed poorly in the past, the study stated.
Both CMS and Medicare administrative officials identified challenges to continued improvements, such as the contractors’ desire to protect their competitive advantage by not sharing certain innovations or other operational improvements with other contractors, according to the GAO study.
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CMS has made modifications to its cost-plus-award-fee structure since 2006, but has not formally revisited its contracting approach or reassessed its effectiveness, the GAO study found.
Moreover, CMS has not made an assessment of different contracting approaches that could prove more appropriate later in the course of a long-term contract, the GAO said.
Without formally assessing the potential benefits and risks of alternative contracting approaches, CMS may be missing opportunities to enhance the contractors’ efficiency and effectiveness, it stated.
In fiscal year 2013, the contractors processed almost 1.2 billion claims totaling more than $363 billion in Medicare payments, the report stated.
As of February 2015, 16 Medicare administrative contractors administered claims submitted by Medicare providers and suppliers; 12 administered Medicare Part A and Part B claims for inpatient hospital care, outpatient physician and hospital services, and home health and hospice care, among other services; and four administered claims for durable medical equipment.
The GAO evaluated differences in responsibilities among the contractors and the associated costs.
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GAO found that the Medicare Parts A and B contractors and those processing claims for durable medical equipment typically carry out similar responsibilities. Most of their reported costs come from claims processing and customer service, though contractors processing durable medical equipment claims spent a higher portion of their time on appeals.
The contractors’ use of Internet-based provider portals has reduced expenditures on telephone-based provider customer service, according to the report.
The report concluded that CMS should conduct an analysis to determine whether alternative approaches would improve contractor performance, the GAO recommends in the report published April 30 but released June 1.
The Department of Health and Human Services agreed with the recommendation and said it plans to analyze alternative approaches for Medicare administrative contractors.
CMS is required by law to select claims administrative contractors through a competitive process.
Twitter: @SusanMorseHFN