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Establishing a proactive MAO vendor oversight program

Susan D. Kerrigan ( is Compliance Supervisor and Shawn A. Nettles ( is Regulatory Operations Coordinator at Health First Health Plans in Rockledge, FL.

For many compliance professionals, a monitoring event is a routine practice. However, there are times when a routine monitoring event can become memorable. Medicare Advantage Organizations (MAOs) expect to be asked to explain how the organization you have contracted with fits within the definition of a first tier, downstream, or related entity (FDR). However, a rather alarming question from the vendor is, “Can you give us a little more information about the General Services Administration (GSA) excluded provider list, federal contractor (SAM) exclusion list, and the OIG exclusions lists?” … a year into the contractual relationship.

This article does not provide medical advice, but this sort of question has been known to cause side effects such as an increased heart rate, trouble sleeping, and hopes that your organization is not scheduled for an audit. Although some questions from your FDR can be extremely concerning, these questions are often found to be built on a breakdown of communication and understanding regarding each organization’s responsibility.

One of the first steps to avoiding a breakdown of communication and understanding is to fully understand your organization’s relationship with a vendor. For MAOs, the primary question will be whether the vendor that you are contracting with is an FDR. Another important consideration for a compliance professional is how and what oversight responsibility the vendor owes the MAO and also how much oversight responsibility the vendor should be tasked with. After clearly defining the relationship and defining each organization’s oversight duties, it is important to express this mutual assent in writing in the form of a contract.

The implementation of these steps does not eliminate potential breakdowns of communication, but it does provide valuable support for building a positive and productive relationship for the individuals that your organization serves. The Medicare Managed Care Manual (Chapter 21) assists an MAO with defining their relationship with a vendor and understanding the six most important questions.

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