Working with its Medicare contractors, the operation of Medicare Parts A and B by the Centers for Medicare & Medicaid Services (CMS) includes processing claims, enrolling providers in the Medicare program, handling provider reimbursement services, processing appeals, responding to provider inquiries, educating providers about the program, and administering the participating physician/supplier program (PARDOC). These operating activities are described in more detail in the following CMS explanation, which has been adapted for brevity and updated.
The Medicare contractors are responsible for processing and paying Part A bills and Part B claims correctly and in a timely manner. By 2014, most providers were submitting their claims in electronic format—99.8 percent for Part A and more than 97.5 percent for Part B.
CMS and its Medicare contractors are responsible for both enrolling providers and suppliers into the Medicare program and ensuring that they continue to meet the requirements for their provider or supplier type. Enrollment includes several verification processes to ensure that Medicare is only paying qualified providers and suppliers. In addition, the Medicare program requires that all new enrollees or those changing their enrollment obtain Medicare payments by electronic funds transfer.
Medicare Part A providers are required to file an annual cost report. In addition to determining the amount paid for overhead items, the cost report is used to finalize prospective add-ons to the payment system and includes such items as payments for graduate medical education, indirect medical education, disproportionate share hospitals (those serving a significantly disproportionate number of low-income patients), and bad debt payments. The contractors’ provider reimbursement area performs several activities, most requiring substantial manual effort, including these:
The statutorily mandated Medicare appeals process enables beneficiaries, providers, and suppliers to dispute an unfavorable contractor determination, including coverage and payment decisions. There are five levels in the Medicare Parts A and B appeals process. The steps start with the Medicare administrative contractor (MAC) and end with judicial review in federal district court. In FY 2014, for example, CMS had anticipated that the MACs would process 3.8 million redeterminations.
CMS coordinates communication between Medicare contractors and providers to ensure consistent responses. To accomplish this, CMS requires the Medicare contractors to maintain a provider contact center (PCC) that can respond to telephone and written (letters, e-mail, fax) inquiries. The primary goal of the PCC is to deliver timely, accurate, accessible, and consistent information to providers in a courteous and professional manner. These practices are designed to help providers understand the Medicare program and, ultimately, bill for their services correctly.
CMS had estimated that it would receive 34.2 million telephone inquiries in FY 2014. CMS has made a number of efforts that contributed to decreased volume in fee-for-service (FFS) provider calls to MACs’ toll-free lines. These efforts have included the following:
PARDOC helps reduce the impact of rising healthcare costs on beneficiaries by increasing the number of enrolled physicians and suppliers who participate in Medicare. Participating providers agree to accept Medicare-allowed payments as payment in full for their services. The MACs conduct an annual enrollment process and monitor limiting-charge compliance to ensure that beneficiaries are not being charged more than Medicare allows. Every year, the MACs are instructed to furnish participation enrollment materials to providers. The open enrollment period runs from November 15 through December 31 of each year. CMS has more information about physicians participating in Medicare at www.medicare.gov. The National Participating Physician Directory includes the providers’ medical school and year of graduation, any board certification in a specialty, gender, hospitals at which they have admitting privileges, and any foreign language capabilities.
The goal of provider outreach and education is to reduce errors by helping providers manage Medicare-related matters on a daily basis and properly bill the Medicare program. The Medicare contractors are required to educate providers and their staff about the fundamentals of the program, policies and procedures, new initiatives, and significant changes, including any of the more than 500 change requests that CMS issues each year. They also identify potential issues by analyzing provider inquiries, claim submission errors, medical review data, comprehensive error rate testing data, and the Recovery Audit Program data.
CMS encourages its contractors to be innovative in their outreach approach and to use a variety of strategies and methods for disseminating information. Techniques include the use of print media, digital resources, telephone calls, educational messages on the general-inquiries phone line, face-to-face instruction, and presentations in classrooms and other settings.
The enterprise data centers (EDCs) are the foundation of all CMS production data center operations. Traditionally, the Medicare contractors either operated their own data centers or contracted out these services. As part of its contracting reform initiative, CMS reduced the number of data centers from more than one dozen separate small centers to three large EDCs. CMS manages these contracts and has achieved administrative efficiencies from this consolidation, which also delivers greater performance, security, reliability, and operational control. In addition, the new EDC infrastructure gives CMS flexibility in meeting current and future data-processing challenges. This flexibility is critical as the workloads for FFS claims continue to grow and Medicare claims-processing applications require a more stable environment.
Source: Condensed and adapted from Centers for Medicare & Medicaid Services (CMS). 2014. Justification of Estimates for Appropriations Committees, 31–34. Accessed June 13, 2020. www.cms.gov/About-CMS/Agency-Information/PerformanceBudget/Downloads/FY2014-CJ-Final.pdf.