Report to Congress: Medicare Contracting Reform: A Blueprint For a Better Medicare

Under section 911 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Congress mandated that the Secretary of Health and Human Services replace the current contracting authority under Title XVIII of the Social Security Act (the Act) with the new Medicare Administrative Contractor (MAC) authority. This reform (referred to as Medicare contracting reform), intended to improve Medicare's administrative services to beneficiaries and health care providers, will bring standard contracting principles to Medicare, such as competition and performance incentives, which the government has long applied to other federal programs under the Federal Acquisition Regulation (FAR). Using competitive procedures, Medicare will replace its current claims payment contractors - fiscal intermediaries (FIs) and carriers - with new contract entities, MACs. The MMA requires that the Centers for Medicare & Medicaid Services (CMS) compete and transition all work to MACs by October 2011.