What Is a Medicare Contractor?

By 2011, new Medicare Administrative Contractors (MACs) will replace Medicare contractors. The Centers for Medicare & Medicaid Services (CMS) contract with insurance companies nationwide to evaluate, process and pay over 1 billion Medicare claims each year. Medicare contractors who operate under insurance companies use national and local coverage regulations and policies to determine what is "reasonable and medically necessary" for paying claims.

Medicare Contractors

• There are two types of Medicare contractors. The "fiscal intermediaries" process part A claims for health care facilities. The "carriers" process part B claims for physicians. Here's the problem: Carriers were contracted with one insurance company, and fiscal intermediaries were contracted with a different insurance company. So for one jurisdiction part A claims were submitted to one insurance company and part B claims were submitted to a different insurance company. In 2001 the General Accounting Office identified problems associated with the processing activities of claims and payments. Congress took action to reform Medicares contracting methods.

Medicare Reform Act

• In December 2003, Congress passed a law requiring the CMS to reforms its contracting methods for processing Medicare part A and B claims. The CMS is replacing all Medicare Contractors (23 fiscal intermediaries and 17 carriers) with 23 MACs under new insurance companies that will be responsible for processing all Medicare claims for payment.

New Medicare Administrative Contractors (MACs)

• By the end of 2011 all of the jurisdictions will be fully transitioned to new MACs. This will provide a one-stop shop to ensure a smoother and more accurate process from claims to payments, and to better serve providers and beneficiaries. The new A/B MAC list by jurisdiction is located in the resource section.