Ok that was just on Monday I posted about the disappointment with fraud imageprevention and I guess it has earned this this bit big of business, is this all there is to this?  I realize the contractors have the data but like commercial insurance carriers do they run the work to a 3rd party a lot of time.  Usually the software used for anti fraud comes from subsidiaries of commercial insurance companies like Ingenix, a subsidiary of United Health Group and I’m sure their software is in the mix here too, so more transaction profits for those folks. 

Medicare Fraud Prevention Has Cases Falling Through the Cracks–Looks Who’s Getting the Contracts And Check Out the Algorithms For Their Profitable Business Models

When you look at the site under Part A you can clearly see Wellpoint as a huge administrator for many of the states, so in case you were not aware here’s another area of integration with health insurers and the administration through contractors and I am adding this as information so to create an awareness of where and how companies function today so you can see the tie ins with Medicare contractors.  It is a bit shocking to see a contract for Congressional Contacts have a Wellpoint email address I must say, so what kind of an office is this you might ask? 


In essence the contract looks like a win for Well Point as a partner with this contractor for Medicare so again we have transaction fees that enter into the picture here and hopefully Wellpoint does this in house and doesn’t outsource their part of the Medicare Contractor business.  Today in the news another Blue Cross Office unrelated to Medicare announced their new outsourcing solution. 

Blue Cross and Blue Shield of North Carolina To Outsource Jobs–Laying Off About 90 Employees

To get right down the the bottom here, this clearly shows how the US Government is lacking with technology and Health IT capabilities to not be able to do this in house.  It’s a big catch up game.  Just this week Wellpoint made their commitment to HIT and with what appears to be a lot of business on the line here with this contractor, it was the politically correct thing to do. 

WellPoint Joins Meaningful Use in HIT–It’s the Politically Correct Thing To Do With Pay for Performance Algorithms For Analysis

One other big issue that hurts the government from increasing internal infrastructure was this move out of the Senate, which shows they just don’t get it as Web and Cloud work together, so they approved one and not the other, duh?  Do pay close attention to items as such as those are the folks that somehow rationalize their thoughts to make law?  It scares me and the reasoning here for not approving is due to lack of proper and detailed guidance” with the Cloud.  Proper guidance these days is not stopping anyone from running for office though <grin>.

Senate Cuts Cloud Services From Budget That Would Allow for Data Center and IT Infrastructure Consolidation–Back to the 8 Track Tapes Next?

Anyway, so much for my rant but again the big contracts for those that were in theimage news for not fighting fraud….hmmmmm…we really need people that can make sense out of some of this and have good consumer digital IT and Health IT knowledge in these places, otherwise I guess I’ll have more posts like this.  The Government needs some good coders internally working.   BD 

To support its efforts, CMS recently awarded a $5.5 million five-year contract to National Government Services Inc., a large Medicare contractor in 20 states, to assist in preparing and processing incentive payments beginning in fiscal 2011.

The services will help ensure the proper accounting of the payments to eligible physicians and hospitals under the HITECH Act, according to CMS.

The agency has estimated that up to 50,000 physicians and more than 2,000 hospitals will participate in the first year of the meaningful use program.

Indianapolis-based National Government Services will develop software to create provider incentive payment files, prepare the files to prompt payment and track the payments.

Data will flow into this system from CMS’s National Level Repository (NLR), which will contain healthcare providers’ registration for incentive payments, documents verifying their eligibility and banking information for each recipient.

Other CMS’s Medicare administrative contractors will supply supporting information about participating Medicare providers, such as their identification numbers, banking information and medical claims payments history. 



  1. Gosh, where do I begin? This is alot of misinformation above...maybe I can give you a couple of places to get more information? Start with going to WWW.CMS.GOV. Under Programs and Information, click on Medicare. Under Medicare Contracting, click on Medicare Contracting Reform. That's the start of a very complex puzzle, my dear... I will paraphrase what I know...but there are too many details to complete it all here...

    National Government Services (NGS) is a subsidiary of WellPoint (WLP). Back in 2005/2006, WLP bought 3 private companies: Empire, Administar Federal, and United Government Services. All these companies were fiscal intermediaries for CMS, the Centers for Medicare and Medicaid, which works under the U.S Department of Health and Human Services. Before the Medicare reform, which was under President Bush (and I have no bias about him, I'm just trying to give you some basics), these private companies were paid based on cost to administer funds to health facilities that served Medicare beneficiaries. Since blue cross had the administration experience, alot of these companies were originally specialized departments within Blue Cross and they broke off to singularly work for the Medicare Program. Workers were dedicated to the Program and spent many years developing the databases and information systems.

  2. So, we have fiscal intermediaries and they develop these databases so that congress and the senate have information to make decisions about the program and create laws.
    One of their biggest sources of information is the hospital cost report. These reports are kind of like how an individual files a 1040 with the IRS...you submit information to the IRS and there are incentives-- like if you have a mortgage, you get deductions for your interest and property taxes, etc. Well, CMS requires health facilities, the most important being hospitals, to file these...
    I will continue tomorrow...

  3. Thank you for chiming in here. I used to be all over the CMS site all the time but since I'm not writing code anymore I don't get over there as often. Yes I do realize that the government didn't have the expertise nor the infrastructure to do any of this and thanks for the confirmation here. Many do not realize this.

    It's good to have the background on how it all came together and who acquired who and when:) Lots of big companies use insurers to administer their own private paid plans too.
    Now it makes sense on the business model of the contractor. There are a lot of contracts out there given to where the government doesn't have the resources outside of Medicare and I have posted about a few of those too. I think this is why we have the big push for our government to grow and establish some of their own too. Again thanks much for chiming in here too.

  4. Yes, you are correct, the government does not have the resources or infrastructure, like these large insurance companies. And yes, big companies use private insurers to administer the insurance plans.

    Where was I? The cost report...Each hospital submits an annual summary of all the services they administered to Medicare beneficiaries and the overhead costs. This is all public information made available on the CMS website for every hospital every year. So on this summary, a final settlement payment amount is calculated-- similar to filing a refund for your IRS 1040. In addition to paying for servicing Medicare beneficiaries, there are incentive payments-- nursing and allied health programs, residency programs, organ acquisition programs, Medicaid payments, and bad debt payments. This is really all that's left for Prospective Payment Hospitals...All hospitals greater than 25 beds are paid on a fee schedule...Hospitals with 25 beds or less are paid on cost. That concludes this lesson.

  5. So yea, we're in the middle of contract reform, which was started in 2006 and is supposed to be completed in 2011. The government could not afford to pay on cost anymore to administer the Program, so they decided to contract out the administration of the Program. On FBO.GOV, you can find the request for proposals for these contracts. On the CMS website, under contract reform, you can see the map, where each new contract was assigned an administration jurisdiction. Under the original passing of the law, 15 jurisdictions were created. These contracts are called Medicare Administration Contracts or MACs.

  6. In the beginning, in 2006, these fiscal intermediaries thought that they could bid and win these contracts...WellPoint bought UGS, Administar, and Empire; they merged to form NGS. They won the contract for J-13, New York. At one time, they had 24% of the MAC contracts and thought that they were the top contractor for CMS.
    However, CMS didn't really have experience with awarding contracts and competition was fierce. Companies hired lawyers and protested with the GAO...The GAO had major findings that required corrective action, re-bidding, and major delays in awarding these contracts. These delays were measured in years and they're still going on as we speak.

    Only the companies with lots of cash flow could withstand waiting years to win a contract and get through all the protests.

    Cigna is a good case study right now. Cigna won the J-15 MAC and subcontracted the Medicare Part A workload to a fiscal intermediary called Riverbend. This was just awarded this year and the RFP came out in 2006-- so they've been waiting 4 years. Riverbend is no longer in business and Cigna is up for sale. The other contractors that bid on the award have protested this award with the GAO because CMS awarded a contract to a company that no longer has a Part A subcontractor and probably doesn't have the cash flow to transfer the information systems to its facilities.

    So, as you will see under the Spotlight section on the CMS contracting reform page, there are only a handful of contractors left in business.

    Because CMS went through so many growing pains by contracting administration, they are actually in the middle of combining those 15 jurisdictions into fewer jurisdictions.

    When Medicare contracting started, companies were bidding at $1.25 per claim. Now, they are bidding as low as $.60 per claim.

  7. So now, its a double edged sword for smaller companies...they have to spend the money on IT to update their systems and at the same time, cut overhead high enough to where they can bid at $.60 per claim.

    The major problem is that they have people who dedicated years to the Program and making these databases. So if they lose those employees, which is what is happening, no one knows how to access the data and new employees take years to learn the systems...

    Companies like WellPoint have the cash to change the systems, make them more efficient, and make them automated. This reduces labor and also it reduces the type of labor. Before, someone would require high IT skills, high analytical skills, and an accounting background. WellPoint had to change the systems to reduce labor costs, so that the systems can be operated by not so skilled workers. That's the only way they could reduce costs in the long run to compete at $.60 per claim.

    The problem with that is even now, its so complex, its very hard to cut this skilled labor and still meet the requirements in the MAC contract.

    Another major problem is that these contracts only last 5 years. So its really like doing a project for the government. By the time the company sets up the infrastructure to complete the contract, its time to pack up...Meaning, they don't want to be stuck in a building lease...WellPoint is currently experimenting with having labor work from home so that no matter where the contract is in America, their workers can do the job from their computer in their pj's.

    The government is having a hard time with this concept. The government also does not understand the internet...they just awarded a contract for electronic health records, where the company is supposed to enroll physicians into the program and create the software for housing these records.

    This is a good thing, but the government did not approve cloud computing as part of the contract because they couldn't grasp the concept...With cloud computing, the software would have been designed so that a contractor would update the software and all the hospitals would have the software...the data would be in a cloud-- a server housed wherever, and all the hospitals could access that server with the electronic health records. It is unfortunate that the government could not grasp this concept because it could not only save lives by giving hospitals access to records, but it is also more efficient and less costly going forward...

  8. Thank you for adding all of this information and I agree it's complicated. On the cloud computing, I hit that one and addressed it as the Senate only approved additions and improvements for web services and left out the cloud, agree a mistake there as I said in my post back to 8 track tapes here.


    I fully understand the government having a lack of their own infrastructure and this I agree began years ago and now we are at the crossroads to where they have little and the dependence on companies who have the resources is big.

    I also caught the contract award to Northrop Grumman with collect the data with the electronic medical records for meaningful use and incentives, again it had to be awarded to an outside company as there are none in house to create it.


    I am sitting on a data base transfer to do for a client as I write this evening too so I'm well aware of the time it takes to transfer data and ensure integrity for the new format.

    We are to the point to where when laws are created I think we need to run a full business intelligence analysis to see where every area of data is touches and/or changed before laws are created and contracts are awarded.

    You do make some very good points with awarding contract too every 5 years as we are at the point to where we can't keep moving data and systems around, it's time consuming and it runs into additional money for everyone concerned.

    On the electronic medical records side, I wrote a program years ago when things were simple and now I look at all the companies out there and all the data formats and have said myself, no more programs, go write for life sciences as they need code over there to find cures:)

    In support too of physicians how many ambulatory and hospital system do we need and if they are on staff at more than one hospital, it's a big learning curve.

    I do understand the cost of data systems and how everyone is working to automate and run as lean and mean as possible.

    Some of this really worries me too at times as I do see a need for some standards and commonality here as we will end up with data coming out of our ears and instead of expediting things it may get worse.

    I am with you on the cloud computing and with proper security set ups and phasing in slowly I think there's a ton of potential and with healthcare claims in a private cloud it would stand to keep costs down.

    Actually today I had a bit of a rant as I get frustrate too with the efforts I put in here trying to explain to people in laymans's terms as best i can on how these things operate and share information in a way that anyone can at least get something out of what I post.


    It is hard when you have laws being made with technology throwing us a new left curve every day and the lack of understanding and having decision makers with the basics of consumer IT knowledge in positions of authority as we end up with what I have been speaking about quite a bit called unintended circumstances and issues.

    I wish too that we had more role models and participants at the consumer level too as that makes it a lot easier as well. Would you rather learn how to drive from someone who read a book and doesn't drive but has knowledge or would you rather have someone who drives a car teach you? That is my analogy on first hand experience:)

    Thank you again for all your time and notes here as I learn something all the time too:)


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