WHY WAS THIS FUNDED?

Medicare law requires the Centers for Medicare and Medicaid Services (CMS) to hire private companies to handle the day-to-day processing of Medicare claims, since the government does not do this work in-house. This contract is authorized under the Social Security Act, which established Medicare and set the rules for how claims must be handled.

WHAT PUBLIC PROBLEM IS IT TRYING TO SOLVE?

Medicare covers health care for tens of millions of older Americans and people with disabilities, and someone must review and pay the millions of medical bills submitted every year by doctors, hospitals, and other providers. Without a contractor like Palmetto GBA, Medicare payments to health care providers could not be processed, delaying care and payment.

WHO BENEFITS?

Medicare patients benefit because their doctors and hospitals get paid promptly, which keeps providers willing to accept Medicare. Health care providers across the regions served by Palmetto GBA also benefit from reliable, timely payment processing.

WHAT ARE THE RISKS?

A contract of nearly one billion dollars over eight years carries risks related to oversight, billing accuracy, and fraud detection. If the contractor makes errors in approving or denying claims, taxpayers could lose money to improper payments, or patients and providers could be harmed by incorrect decisions.

WHAT HAPPENS IF FUNDING IS REMOVED?

If this contract were cancelled, Medicare claims in Palmetto GBA's service region could not be processed, meaning doctors and hospitals might stop receiving payments for care they already provided. This could disrupt access to health care for Medicare patients in those areas.

ARGUMENTS FOR

• •Outsourcing Medicare claims processing to experienced private companies allows the government to handle a massive volume of medical bills efficiently without building a large federal bureaucracy.
• •Palmetto GBA has specialized expertise in medical billing and compliance, which can help identify fraudulent or incorrect claims and protect taxpayer dollars.
• •Reliable claims processing ensures that doctors and hospitals continue to participate in Medicare, protecting access to care for seniors and people with disabilities.

ARGUMENTS AGAINST

• •Paying a private company nearly one billion dollars over eight years raises questions about whether the government is getting the best value, or whether this work could be done more cheaply by a public agency.
• •Large, long-term contracts with a single company can reduce competition and make it harder for the government to switch contractors if performance is poor.
• •Private contractors handling Medicare payments have been linked to improper payment rates and fraud vulnerabilities, creating ongoing oversight challenges for federal regulators.