Medicare claims contractor swap renews fears of pay disruptions

Medicare officials promise smooth transitions to new contractors for physicians in California, Texas and several other states, but the last such consolidation had major glitches.

By Charles Fiegl amednews staff — Posted Oct. 15, 2012

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Physicians in several states are concerned about a possible surge in Medicare payment problems as they lose their familiar program contacts during the latest round of transitions to a new system of Medicare administrative contractors.

Medicare officials are trying to streamline the system by re-bidding contracts for the companies that oversee claims processing, program enrollment and other administrative functions for the entitlement program. In doing so, the Centers for Medicare & Medicaid Services will decrease the number of contractor jurisdictions from 15 to 10. Doctors in California, Texas and several other states are set to experience a contractor change by the end of 2012 or early 2013, and the full consolidation effort will take several years.

The Sept. 20 announcement of a new contractor for physicians in California, Hawaii and Nevada brought back painful memories of the previous contractor shake-up in 2008. Backlogs of 26,000 pending enrollment applications at the new contractor at the time caused some physicians to go without any pay from Medicare for six months to up to a year, said Elizabeth McNeil, California Medical Assn. vice president of federal government relations. Doctors in the Golden State are trying to determine whether they want to support a continued relationship with their current contractor, Palmetto, if the company protests the award announcement, or risk new claims processing disruptions during a switch to the winning company, Noridian.

Physicians remembering the 2008 debacle were not pleased to hear that they would be switching contractors again, McNeil said.

Medicare administrative contractors provide a range of services — including claims adjudication, customer service, enrollment changes and medical reviews — to physician practices, hospitals and other health professionals. In 2003, Medicare had a patchwork of about 35 contractors overseeing the administration of the outpatient and inpatient components of the entitlement program.

Congress then enacted a law mandating that Medicare contracts be bid competitively every five years. CMS chose to divide the country into 15 regions and began awarding those contracts in 2006 and 2007. Some jurisdiction changes were delayed due to protests filed by companies with losing bids that were fighting to keep a share of their Medicare business. Consolidating the jurisdictions into 10 regions will balance workloads better and save on overhead costs, the agency said.

The newest Medicare contractor reforms are ending partnerships that have been in place since the inception of the Medicare program. The contractor Wisconsin Physicians Service, for example, had been the payer in Wisconsin since 1966. On Sept. 27, National Government Services, with corporate headquarters in Indianapolis, won the bid to administer the Medicare program in Illinois, Minnesota and Wisconsin.

Wisconsin Physicians Service was created as a branch of the Wisconsin Medical Society in 1946, according to the society. The state society transferred the business, assets and liabilities to WPS in 1977. State physicians supported the company’s bid to have its contract renewed in 2011.

TrailBlazer Health Enterprises, based in Dallas, lost a contract for the jurisdiction that comprises Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma and Texas to Novitas Solutions, based in Camp Hill, Pa. A protest by TrailBlazer of that award was denied March 1.

The change means physicians will need to complete electronic fund transfer agreements with Novitas before the transition to avoid delayed payments, said Genevieve Davis, Texas Medical Assn. director for payment advocacy. Practices also must learn any contractor-specific changes pertaining to coverage-requirement policies and adjust to some more mundane changes, such as by becoming familiar with the Novitas website to locate updates. Physicians aren’t looking forward to the altered landscape.

“Members are nervous,” Davis said. “TrailBlazer has been around forever.”

Attention from Capitol Hill

The negative legacy of the 2008 round of Medicare contractor consolidations has not faded. Rep. Michael Burgess, MD (R, Texas), led other members of the Texas delegation in Congress by sending a May 4 letter to CMS expressing concerns about the potential payment system disruptions during the transition to Novitas. For instance, the lawmakers questioned the company’s ability to handle a sizable workload — more than 83.3 million claims for patient services are processed in Texas each year — without delay. The contractor change also would require new electronic fund transfer agreements and testing to ensure the adjudication of claims, eligibility checks and billing status updates work correctly.

“These are just a few of our key concerns, and we would like to work with CMS to help avoid any possible disruptions,” the letter stated. “If these concerns materialize, physicians may withdraw from the program, at least temporarily, further exacerbating both access and service issues to seniors.”

The actual transfer for the Texas region will occur on Nov. 19, acting CMS Administrator Marilyn Tavenner wrote in a June 12 reply. The Medicare agency will monitor the transition from TrailBlazer to Novitas during the various phases before and after the changeover.

“CMS is working with both contractors to ensure that the implementation of this contract is completed without disrupting services to health care providers who are caring for Medicare beneficiaries in Texas and all other affected states,” she said.

Contractor swaps should go smoothly compared with those five years ago, said a senior CMS official, who spoke on the condition of anonymity because she was not authorized to discuss the initiative publicly. In California, the 2008 transition occurred at the same time that all physicians were required to adopt new national provider identifiers as a prerequisite for billing claims for patient services. CMS also was bolstering the enrollment application process, which exacerbated the problems.

“We are aware of concerns,” the official said. “Thankfully, there is no NPI implementation and no major fee-for-service operational changes occurring” during the new round of contractor revisions.

Contractor implementation plans are reviewed by CMS. The outgoing contractor also is required to review workloads and assist the incoming company during the handoff.

The implementation plan for the jurisdiction that includes Texas has 7,000 action items, said David Vaughan, a Novitas vice president and project manager for the transition. Novitas assures physicians that it understands the anticipated workload, staffing requirements and operational systems to be able to start processing claims on day one. It has held dozens of outreach events with physicians and state medical societies, and it asks that doctors also be prepared by completing required electronic funds transfer forms, testing the ability to send claims and receive remittances electronically, and reading newsletters and Web posts from the company. If problems arise, the contractor has a plan to deal with them, he said.

“We’re not intimidated by this project,” Vaughan said.

Back to top


Who will your Medicare contractor be?

The Centers for Medicare & Medicaid Services is conducting a multiyear process of consolidating the 15 Medicare administrative contractors that process Medicare claims and enrollments into 10 jurisdictions. Although not all Medicare physicians will be switching to a new contractor, the Medicare agency is abandoning the current numbered regions in favor of lettered regions. Jurisdictions A-D represent contractors overseeing durable medical equipment providers.

Old/current jurisdiction New/future jurisdiction Postconsolidation contractor Status
1 (Calif., Hawaii, Nev.) E Noridian Transition in early 2013
2 (Alaska, Idaho, Ore., Wash.) F Noridian Transitioned Feb. 28, 2012
3 (Ariz., Mont., N.D., S.D., Utah, Wyo.) F Noridian Transitioned Feb. 28, 2012
4 (Colo., N.M., Okla., Texas) H Novitas Transition under way
5 (Iowa, Kansas, Mo., Neb.) G TBD Awarded to Wisconsin Physicians Service, but region will be consolidated
6 (Ill., Minn., Wis.) G TBD Awarded to National Government Services, but region will be consolidated
7 (Ark., La., Miss.) H Novitas Transition under way
8 (Ind., Mich.) I TBD Awarded to Wisconsin Physicians Service, but region will be consolidated
9 (Fla.) N TBD Re-competing by end of 2012
10 (Ala., Ga., Tenn.) J TBD Re-competing in 2013
11 (N.C., S.C., Va., W.Va.) M Palmetto Transitioned June 2011
12 (Del., D.C., Md., N.J., Pa.) L Novitas Re-bid awarded Sept. 17, 2012
13 (Conn., N.Y.) K TBD Re-compete launched May 2012
14 (Maine, Mass., N.H., R.I., Vt.) K TBD Re-compete launched May 2012
15 (Ky., Ohio) I TBD Awarded to Cigna Government Services, but region will be consolidated

Note: TBD indicates “to be determined”

Source: “Status of MAC Contract Awards,” Centers for Medicare & Medicaid Services, Sept. 27 (link)

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn