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The Centers for Medicare & Medicaid Services (CMS) has announced that National Government Services (NGS) has been awarded a contract of up to five years for the combined administration of Part A and Part B Medicare claims payment in Connecticut and New York.

"This is another step toward improving service to beneficiaries and health care providers, as well as giving CMS greater oversight of the Medicare contractors that process and pay Medicare claims," said Acting CMS Administrator Kerry Weems. "In awarding these contracts, CMS is ensuring that each Medicare contractor continues to provide the best overall value to the government, and the American taxpayers, from both a cost and technical perspective."

NGS will serve as the first point of contact for the processing and payment of Medicare fee-for-service claims from hospitals, skilled nursing facilities, physicians and other health care practitioners in the two states. The new Part A/Part B Medicare Administrative Contractor (A/B MAC) was selected using competitive procedures in accordance with federal procurement rules.

The new contractor will take claims payment work now performed by two fiscal intermediaries and four carriers in the two states. The A/B MAC contract, which has an approximate value of $323 million over five years, will fulfill the requirements of the Medicare Modernization Act's (MMA) contracting reform provisions.

Under the current system, fiscal intermediaries process claims for Medicare Part A providers, such as hospitals, skilled nursing facilities and other institutional providers. Carriers process claims for physicians, laboratories and other practitioners under Medicare Part B.

The contract for NGS includes a base period and four one-year options and will provide NGS with an opportunity to earn award fees based on its ability to meet or exceed the performance requirements set by CMS. These requirements are rooted in CMS' key objectives for the MACs, including enhanced provider customer service, increased payment accuracy, improved provider education and training leading to correct claims submissions, and realized cost savings resulting from efficiencies and innovation. In accordance with the MMA, MAC contracts will be recompeted at least every five years.

As the A/B MAC contractor, NGS will immediately begin implementation activities and will assume full responsibility for the claims processing work in its two-state jurisdiction no later than November 2008.

NGS headquartered in Indianapolis, Indiana, is the sixth new Part A/Part B MAC to be named by CMS. By 2011, a total of 15 new Part A/Part B Medicare contractors will cover every state and the District of Columbia.

When contracting reform is fully implemented, all the fiscal intermediaries and carriers will be replaced by MACs responsible for both Part A and Part B claims processing. For beneficiaries and providers, the new structure will mean that they each will have a single point of contact with the Medicare program. When it becomes operational, the A/B MAC for Connecticut and New Yorkwill be the contact for all Medicare providers and physicians in the two states, while beneficiaries will pose their claims-related questions to a Beneficiary Contact Center.

CMS awarded the first A/B MAC contract in July 2006 to Noridian Administrative Services, LLC, headquartered in Fargo, N.D. The list of new contractors and the states they cover, along with other information, can be found at http://www.cms.hhs.gov/MedicareContractingReform/