The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 includes a provision that mandates the replacement of the current Medicare contractors by 2011. Section 911 of the MMA changes the way that the Centers for Medicare and Medicaid Services (CMS) will award and administer Medicare fee-for-service (FFS) contracts. Administration of Parts A and B will be transferred from Fiscal Intermediaries (FIs) and carriers (respectively) to 15 integrated MACs. In addition, 4 specialty MACs also will be developed for durable medical equipment (DME) suppliers. Home healthcare and hospice claims will be divided among 4 A/B MACs.

According to the CMS, the goals for Medicare Contracting Reform include the following:

• To provide flexibility to adapt more quickly to changes in the Medicare program
• To keep pace with Medicare payment and policy changes for new technologies
• To promote competition among contractors, improving efficiency, and accountability
• To reward and promote high-quality performance through incentives
• To centralize information, creating a platform for advances in the delivery of care

The 19 MACs will be awarded through a competitive bidding process. CMS has stated that MAC contracts will focus on the strength of the contractor in 3 critical areas: customer service, operational excellence, and financial management.