CMS awards first combined Medicare claims contract

The Centers for Medicare and Medicaid Services awarded a $28.9 million contract to Noridian Administrative Services LLC of Fargo, N.D., to process and pay Medicare claims from both hospitals and physicians in six states.

As the new Part A/Part B Medicare Administrative Contractor, Nordian will serve as the first point-of-contact for processing and paying fee-for-service claims from providers in Arizona, Montana, North Dakota, South Dakota, Utah and Wyoming.

'The contract award is a major step to improved Medicare service for beneficiaries and providers, and significant cost savings from greater efficiency in managing the original fee-for-service Medicare program,' said CMS administrator Mark McClellan in a statement.

The contract, valued at $28.9 million in its first year, has a base period and four one-year options. The contract awarded this week is the first of 15 to be awarded by 2011 to fulfill requirements of the contracting reform provisions of the Medicare Modernization Act of 2003. CMS will replace its current claims payment contractors'fiscal intermediaries and carriers'with new contract entities called Medicare Administrative Contractors.

Noridian immediately will begin implementation activities and assume full responsibilities for the claims processing work in its six-state jurisdiction no later than March 2007.

CMS, an agency of the Health and Human Services Department, aims to increase accuracy of claims and payments, and cost savings resulting from efficiencies and innovation from the contract reforms, he said.

Under the current system, fiscal intermediaries process claims for Medicare Part A providers, including hospitals and skilled-nursing facilities. Part B contractors, known as carriers, handle claims for doctors, laboratories and other practitioners. When contracting reform is fully implemented, the fiscal intermediaries and carriers will be replaced by contractors that will be responsible for both Part A and B claims.

In another Medicare procurement, CMS awarded Pinnacle Business Solutions Inc. of North Little Rock, Ark., a contract valued at up to $79 million to maintain the Medicare Fiscal Intermediary Shared System. Pinnacle also will update software that collects and validates data and performs claims control, pricing, adjudication, correspondence, reimbursement and financial processing. Fiscal intermediaries are organizations that process and pay for medical services at hospitals and nursing homes.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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