The Centers for Medicare & Medicaid Services is considering whether to consolidate four of its regional Medicare Administrative Contractors into two bodies, resuming an effort to put payment and denial control into the hands of fewer private companies.

Payment and compliance experts said last week that whether such a move would help or hurt skilled nursing providers depends on exactly how CMS proceeds — details that are unclear as CMS begins considering feedback in response to a request for information issued in September.

MACs are responsible for interpreting and applying CMS rules and penalties and have the power to deny payments, launch audits, and enroll and disenroll nursing homes from the Medicare program.

There are currently 12 MACs serving nursing homes across the US, and four of those also handle home health claims. Providers have long described a lack of consistency in rule interpretation and penalty severity among the various MACs, as well as differences in customer service delivery and the speed of appeals resolution.

“The challenge is we have a bunch of different cooks in the kitchen who are supposed to make the same lasagna, but they all have different recipes,” said Melissa Brown, chief operating officer for Gravity Healthcare Consulting. 

She helps clients navigate appeals and enrollment issues and says they often don’t have any recourse when payment is denied and concerns are remediated quickly. She pointed to a glitch at a MAC earlier this year that slowed some payments by 30 to 40 days with no option for affected operators to get help elsewhere.

She said consolidating MACs could be good or bad for providers, depending on who is selected to oversee the larger organization and whether CMS continues to fund and staff the combined MAC at the level that was previously allotted to two groups. More consistency, she said, would be a win, especially for providers who have facilities in states that are not split between the affected regions.

“There are definitely some pros and cons to think about,” agreed Kristy Brown, director of SNF strategy at Quality Healthcare Resources. She’s concerned about how consolidation might hurt her company’s revenue cycle management teams working on behalf of nursing homes.

“First off, I’m worried about the disruption during the transition period. We’ve seen time and time again that when CMS rolls out new systems and processes, it can lead to delays in payments and customer service issues,” she said. “Each MAC seems to have its own way of processing claim errors, so how will consolidation affect this? Plus, some of the smaller MACs have developed specialized knowledge and relationships within their regions, which could be lost in the shuffle.

“We also need to consider the MACs themselves,” she added. “There are good ones and not-so-good ones.”

Regional variations

According to the CMS request for information, the agency wants to combine the following regions:

  • J5  (Iowa, Kansas, Missouri and Nebraska) + J6 (Illinois, Minnesota and Wisconsin)
  • J8 (Indiana and Michigan) + J15 (Kentucky and Ohio)

“From what I’ve read, Jurisdiction J5 and Jurisdiction J8 are known for delays and inefficiencies in processing claims,” QHR’s Brown told McKnight’s Long-Term Care News. “On the flip side, J6 and J15 are much better at customer service and timely processing. If you’re in a region like J6 or J15, you might worry that merging with a less efficient region could lower the overall quality of service. The specialized knowledge and effective processes that make these regions work well might get diluted or lost in the consolidation.”

On the other hand, providers in J5 and J8 might hope that a merger would improve their  experience. She said it comes down to weighing the risk of transitional chaos against the potential future consistency that comes with consolidation.

“For SNF providers operating in multiple regions, dealing with different MACs can be quite a hassle. Each MAC might have its own set of rules, processes and systems, which means providers have to navigate a lot of variability,” she said. “This can lead to inefficiencies and increased administrative burdens.” 

As an example, Gravity’s Brown pointed to variations in something as simple as call times. In some years with certain MACs, she’s had to wait “hours” on the phone for claim assistance. Currently, she’s seeing good call response times, especially on the enrollment side of MAC operations. But that could change if MACs begin combing, especially if CMS is viewing this effort as a cost-saving strategy, she said.

“By consolidating the MACs, there would be fewer variations in how claims are processed and how customer service is handled,” added QHR’s Brown. “This could lead to more consistent and predictable interactions for providers. It would simplify training for staff and reduce the chances of errors or delays caused by differing regional practices.”

Contract concerns

CMS first started to consolidate in the early 2000s but paused its plans to better build a competitive pool of contractors in order to bring more program stability. Having achieved that goal, the agency is proposing that it start awarding longer-term contracts to the companies named as MACs. 

Since 2016, CMS has awarded seven-year contracts, plus the option to extend for another six years. The agency now wants to move the base to years, something it already has Congressional permission to pursue. CMS said its historical experience shows longer contracts are correlated with better MAC performances.

“The Agency believes awarding 10-year contracts will motivate contractors to be more innovative and efficient because contractors would have more time to achieve a return on their investment and drive down costs,” the RFI said.

CMS said its RFI did not obligate it to pursue the consolidation.

Melissa Brown suggested a two-year guaranteed contract with an eight-year option to extend. A longer contract  promises the potential for stability for nursing homes and others submitting Medicare claims. But that structure also would allow CMS to pivot quickly if a MAC starts to underperform.

“It keeps the MACs hungry and working to do the things they need to do to keep the contracts,” she explained.

Here, again, Kristy Brown said there are both possible pros and cons.

“If a MAC has a 10-year contract and is underperforming, issues could persist longer without any recourse for the provider. MACs might lose their incentive to maintain high performance. On the other hand, a longer contract might encourage MACs to invest more in stability and predictability, which could lead to better service delivery. With a longer timeframe, MACs might be more willing to invest in long-term improvements and innovations.”