Cost Cutting Measures Possible if Public Health Service Hospital System Is Continued

GAO reviewed the Public Health Service (PHS) policies and procedures for: (1) determining the eligibility of seamen for free health care as PHS beneficiaries; (2) obtaining reimbursement for care provided to beneficiaries for injuries due to negligence of third parties and for care provided in community facilities to individuals who are not beneficiaries; and (3) managing a program under which PHS contracts with private health care providers. After the completion of the GAO review, the President proposed that Congress discontinue the PHS hospital system to provide care for sick and disabled seamen. Prompt enactment of the President's proposal would eliminate the need for the changes to the hospital system which are recommended in this report.

Individuals claiming to be seamen and seeking health care as PHS beneficiaries must present evidence of eligibility, but GAO noted that PHS hospital and clinic staffs did not require all persons to furnish documented evidence of eligibility, were lenient in reviewing evidence submitted, and rarely verified the accuracy of evidence given. As a result, some patients who were not eligible beneficiaries were provided health care. PHS officials said that training of hospital admissions personnel is needed to correct this management weakness. No practical means exists to verify the accuracy of documented evidence of seamen eligibility based on the current eligibility criteria. The Medical Care Recovery Act established the Government's right to recover costs of medical care provided to persons as a result of negligence of third parties. Hospitals generally were not attempting to identify patients who were treated in PHS facilities or by private health providers for injuries incurred under tort conditions. Little collection action was taken on cases referred for collection. On many of these cases, the statute of limitations has expired. The Government could also recover millions of dollars for health care provided for patients who have some form of health insurance. Hospitals were providing free care to community residents who were not entitled to free care but were expected to reimburse the hospitals based on their ability to pay. PHS has little control over the volume, cost, or quality of services provided under the contract care program.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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