WASHINGTON--The Government Accountability Office has sided with Cigna in its claim that CMS unfairly selected the new Medicare Administrative Contractor for Region C and is recommending that CMS reopen discussions with potential contractors.

Cigna Government Services, the current DMERC for Region D, filed a protest earlier this year after it lost MAC contract bids on both Regions C and D. CMS instead awarded Palmetto GBA the Region C contract, and Noridian Administrative Services the Region D contract.

According to the GAO, the agency found that after both firms submitted their final proposal revisions for Region C, CMS only communicated with Palmetto. After speaking with CMS, Palmetto revised its proposal.

"The agency's failure to provide Cigna a similar opportunity to make proposal revisions constituted improper unequal treatment of offerors, to Cigna's competitive prejudice," the GAO said in a May 4 statement. The GAO recommended that before making a final decision, CMS renew discussions with potential contractors and give them the same opportunity to make proposal revisions.

As part of CMS' administrative contracting reform, the new MACs will handle billing, customer service and other day-to-day operations (see HomeCare Monday, Jan. 9). Separate Program Safeguard Contractors, which assumed duties earlier this year, are handling benefit integrity, medical review and medical policy for each region.

The transition from the DMERCs to the new MACs originally was scheduled for July 1, but in response to Cigna's protest, CMS announced that it would extend its DMERC contracts for Region C and D--Palmetto GBA and Cigna, respectively--to Sept. 30.

The DMERC-to-MAC transition will still take place as scheduled for Regions A (National Heritage Insurance Company, replacing HealthNow) and B (AdminaStar Federal) on July 1.

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