Medicare Administrative Contractors, or MACs, are private organizations that carry out the administrative responsibilities of Traditional Medicare (Parts A and B). They also handle durable medical equipment, home health and hospice claims.

In fiscal year 2011, Medicare Administrative Contractors (MACs) processed nearly 1.1 billion Traditional Medicare claims, which paid the bills for beneficiary health care at 6,172 hospitals; 15,697 skilled nursing facilities; 11,930 home health agencies; more than 95,000 durable medical equipment suppliers; and about one million physicians and other medical practitioners.

Each MAC signs a contract with the federal government to administer the Medicare program in a certain region of the United States. Currently, there are 12 contracts for Parts A and B, which the Centers for Medicare & Medicaid Services (CMS) is consolidating down to just 10 contracts over the coming years. Four separate contracts have been rewarded for durable medical equipment claims processing.

The Secretary of the Department of Health and Human Services is required by law to put the administrative contracts up for competitive bidding at least once every five years. The contracts for processing Medicare Parts A and B claims alone are worth hundreds of millions of dollars. For example, the Jurisdiction F contract, which covers 2.5 million Medicare beneficiaries across Alaska, Arizona, Idaho, Montana, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming, has a value of $218 million.

MACs are responsible for many tasks, including:

• Claims processing, or cutting checks to Medicare providers for their services;
• Making sure services are correctly coded and billed for, both before and after payment;
• Deciding which health care services are medically necessary. (MACs follow the national coverage determinations set by the CMS, but in cases where there is no such determination or the rules are too vague regarding a specific procedure, a MAC may develop a local coverage determination);
• Collecting overpayments; and
• Enrolling, educating and training Medicare providers on billing procedures.

Prior to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), Medicare claims were processed by fiscal intermediaries, who mostly processed Part A claims, and by carriers, who mostly processed Part B claims. There were a total of 48 contracts. The MMA called for consolidating administration for Part A and Part B to just 15 MAC A/B contracts and four MAC durable medical equipment contracts. The 15 MAC A/Bs are in the process of being consolidated down further, to 10 contracts.

This process of transferring all Medicare data, records and operations from contractors with pre-MMA contracts to MACs is ongoing. Those interested can keep up-to-date on the MAC implementation schedule, as well as contract awards, at CMS.gov.