The Medicare Prescription Drug, Improvement, & Modernization Act of 2003 (MMA) significantly reformed contracting for the administration of claims for Part A, Medicare's hospital insurance, & Part B, which covers outpatient services such as physicians' care. The MMA required the Centers for Medicare & Medicaid Services to conduct open competition for its claims administration contracts & to transfer the work to Medicare administration contractors by Oct. 2011. This report reviewed the extent to which: (1) the plan provides an appropriate framework for implementing Medicare contracting reform; & (2) the plan's cost & savings estimates are sound enough to support decisions on implementation. Charts & tables.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 significantly reformed contracting for payment of Medicare's $310 billion per year in fee-for-service claims. The Centers for Medicare and Medicaid Services (CMS) is transitioning claims administration to 19 new entities known as Medicare Administrative Contractors (MAC) and plans to complete the process ahead of Oct. 1, 2011, the date required by law. This report examined: (1) how CMS has implemented Medicare contracting reform; (2) how CMS assessed the performance of the MACs and what the results of its assessments have been; and (3) what CMS's costs and savings have been for Medicare contracting reform. Charts and tables.