CMS chooses finalists for Medicare claims processing competition

The Centers for Medicare and Medicaid Services has selected two companies to vie for a potential seven-year contract to help stand up a new software system for processing and adjudicating Medicare claims.

HealthEdge Software and Peraton will move forward with demonstrations and experiments of their prototype solutions through a series of challenges. CMS sees the future ClaimsCore system as supporting more than 2 million active users and processing more than 100,000 claims per day.

HealthEdge’s portion of the contract has an initial $2.5 billion obligation and a $1.1 billion ceiling. Peraton’s allocation was initially obligated $9.1 million and has a potential value of $825 million, CMS said in a pair of award notices Monday.

Solicitation documents released in March describe how CMS set up the three-phase competition to evaluate how bidders’ solutions can adjudicate the claims, deliver outputs consistent with legacy results and provide transparent explanations in the event of variances.

CMS will eventually choose a single integrator that will be tasked with helping the agency bring together the responsibilities of four legacy systems, which were originally built in the 1970s, into a single environment for managing claims.

The final request for proposals did not explicitly state a timeline for that decision, but does point to Jan. 1, 2027 as the initial base period’s end date.

CMS’ statement of objectives for ClaimsCore lays out 11 primary goals in this effort to replace the legacy systems, which were built on COBOL and IBM mainframes. The systems currently process 1.2 billion claims per year, amounting to around $460 billion in payments.

Reduced provider burdens, flexibility, interoperability, elastic scaling, and consolidated development and operations are among those objectives. Ensuring payment integrity is also a cornerstone of ClaimsCore with the goal of reducing fraud, waste and abuse.