Unhappy with your local MAC? Waiting til you-know-where freezes over before they can issue a new LCD? Anderson/Jackson/Miller have a new proposal to up-end the current A-B MAC system through ongoing, operational competition.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6624938
I've read it; you should read it; it's open access; Claude Opus 4.7 read it, and tells us about it below.
The paper is 16 pages long, with 79 footnotes and a number of interesting tables and illustrations. The first author is from Tufts, the last author from Stanford/Hopkins, and the middle author appears to be at the WPS MAC itself.
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AI Corner: Claude Opus 4.7
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Medicare's Hidden Backbone:
Why MAC Reform Is the Overlooked Lever Everyone in Healthcare Innovation Should Care About
Three-sentence summary: A new paper by Anderson, Jackson, and Miller argues that the most underused opportunity to modernize traditional fee-for-service Medicare isn't benefit redesign — it's overhauling the Medicare Administrative Contractor (MAC) system, which currently runs as twelve regional monopolies focused on grinding through claims rather than serving beneficiaries.
The authors propose moving to a multi-MAC competitive model (roughly three per region) in which beneficiaries choose their administrator annually, MACs compete on Part B premium rebates, provider access, and speed of covering new technologies, and program integrity functions get folded back into claims operations.
- Done right, this is budget-neutral, shrinks systemic operational risk, and finally rewards MACs for doing things like saying "yes" to a new device in something less than geological time.
The article: Anderson et al.
If you work in biotech, devices, or diagnostics, you have almost certainly run into the MAC system — usually at the worst possible moment. Your CE-marked, FDA-cleared, peer-reviewed-evidence-supported technology lands on the desk of a regional MAC medical director, and then… nothing. For months. Sometimes years. The Local Coverage Determination (LCD) process is famously the place where reasonable timelines go to die. To borrow the Charles Barsotti New Yorker cartoon: "How about never? Does never work for you?" That, in essence, is the timetable many innovators experience. Anderson, Jackson, and Miller's new paper, "The Forgotten Opportunity: Improving Traditional Medicare Operations," argues that this isn't a quirk of the system — it is the system, and it's fixable.
The status quo, briefly. CMS contracts with twelve Part A/B MACs and four DME MACs, each holding a regional monopoly over claims processing, coverage policy, and provider-facing operations for traditional Medicare. Together they touch about 34 million beneficiaries, 1.2 million providers, and roughly $431.5 billion in annual FFS payments. Contracts run up to ten years on a cost-plus-award-fee basis, and — strikingly — no new entrant has won a MAC jurisdiction since the program began in 2003. CMS, terrified of "crashing" Medicare claims processing during a transition, has become structurally risk-averse, which entrenches incumbents and stifles innovation. Meanwhile, program integrity has been carved off into a separate, fragmented contractor ecosystem (UPICs, CERT, Strike Force teams), improper payment rates sit at 7.66% ($31.7 billion in FY2024), and LCDs vary so much across jurisdictions that the same device can be covered in Florida and denied in Oregon. Beneficiaries — the people the program ostensibly exists to serve — have essentially no voice in any of this. They don't pick a MAC. They don't even know who their MAC is.
The proposal. The authors want to flip the model. Instead of one monopoly administrator per region, CMS would contract with roughly three MACs per jurisdiction, and beneficiaries would choose among them during the annual Medicare open enrollment window (Oct 15–Dec 7). MACs would then compete on three dimensions: (1) price — returning fraud-and-waste savings to beneficiaries as Part B premium rebates; (2) access — using performance dollars to boost provider payments in underserved specialties like behavioral health (where only about a third of psychiatrists currently bill Medicare Part B) or rural geographies; and (3) innovation — covering new technologies and services faster than the competition. Program integrity work would be reintegrated into MAC operations, with CMS's Center for Program Integrity repositioned as a regulator-of-MACs rather than a direct operator — mirroring how CMS already oversees Medicare Advantage plans. The any-willing-provider standard stays. The benefit package stays. What changes is that FFS Medicare finally starts behaving like a real health plan, with regional administrators accountable to the people whose care they're paying for.
Why this matters specifically for the innovation economy. Today, a device or diagnostic company has to run an LCD gauntlet that is slow, opaque, and inconsistent. Under a multi-MAC model, a manufacturer with strong evidence could potentially get to "yes" with at least one MAC in a region quickly, and competitive pressure would push others to follow. The current system rewards saying "no" or "later" because there's no downside — no MAC loses customers when it stalls. Add genuine choice and suddenly there's a downside. The authors also note that variation in coverage, currently treated as a bug, becomes a feature: a beneficiary who wants access to, say, AI-interpreted imaging or an emerging remote diagnostic could pick the MAC that covers it. For diagnostics companies especially — which often live or die on LCD timing — this would be transformative.
Opportunities worth highlighting. Beyond faster coverage, the model unlocks several things the current system structurally cannot deliver. Embedding fraud analytics directly into claims workflows (rather than bolting them on through separate UPIC contractors) would enable real-time detection rather than the current pay-and-chase model. Competition would push MACs to invest in machine learning, modern provider portals, and the kind of consumer-facing tooling that MA plans have spent a decade building. A revamped Medicare Plan Finder could finally give beneficiaries an apples-to-apples comparison across MA plans, MAC + Medigap + Part D bundles, with provider networks and drug formularies side by side — something that does not meaningfully exist today. And critically, the reform is budget-neutral: the financial engine is recovered fraud and waste, not new appropriations. In a fiscal environment where Medicare trust fund pressure is intensifying and any proposal requiring new spending is politically dead on arrival, that matters.
The risks and drawbacks — and they're real. I'd be doing you a disservice not to flag them. First, beneficiary choice fatigue. Medicare beneficiaries already face a notoriously complex annual decision among MA plans, Part D plans, and Medigap policies; adding MAC selection to the pile could overwhelm seniors, especially those with cognitive decline or limited digital literacy. The paper acknowledges this and calls for investment in SHIP counselors and Plan Finder upgrades, but the implementation risk is non-trivial — and broker incentives in MA have shown how easily "choice" architecture can be manipulated. Second, fragmentation of coverage policy. The current LCD inconsistency the authors criticize could, under a multi-MAC model, get worse before it gets better: now a beneficiary in the same zip code could have different coverage than their neighbor based on which MAC they picked. For physicians treating patients across MACs in one region, this would be an administrative headache. Third, the cherry-picking problem. MACs bear no actuarial risk in this model, but they may still face soft incentives to attract healthier, lower-touch beneficiaries (fewer claims, fewer complaints, easier metrics). MA already struggles with risk selection despite risk adjustment; importing competition into FFS could replicate that pathology. Fourth, provider whiplash. Providers would now need to deal with three MACs per region instead of one, each potentially with different LCDs, different prior auth rules (if WISeR-style utilization review expands), different portals, and different appeals processes. The paper's vision of "non-price competition" on provider payment is appealing, but variable fee schedules within a single region would create real administrative burden and could distort referral patterns. Fifth — and this is mine, not the authors' — there's the question of what happens to small or rural providers if a MAC fails or exits. The paper argues multi-MAC reduces single-vendor risk, which is true at the regional level, but a failing MAC's beneficiaries still need to move somewhere, and the transition mechanics in a system with active beneficiary enrollment are more complex than the paper fully works through.
The bottom line. Whether you're building a Class III implant, a novel molecular diagnostic, a digital therapeutic, or you're just a Medicare beneficiary who'd like your claims questions answered by a human who knows your name, the MAC system is upstream of almost everything that frustrates you about traditional Medicare. Anderson, Jackson, and Miller have written the rare health policy paper that identifies a genuinely overlooked lever — one that doesn't require new mandatory spending, doesn't blow up the any-willing-provider promise that defines FFS Medicare, and aligns nicely with the agency's stated direction of being a regulator more than an operator. The implementation risks are real and the paper is more confident about the upside than I'd be. But the status quo — "How about never?" — is no longer defensible, and a serious conversation about what comes next is overdue.
Reference: Anderson LT, Jackson K, Miller BJ. "The Forgotten Opportunity: Improving Traditional Medicare Operations." SSRN, April 21, 2026.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6624938
See a humorous view auto-written by Chat GPT "Whazzup."
