Medicare

GAO reviewed the Department of Health and Human Services' (HHS) Office of the Inspector General's (OIG) actions on monetary penalties recommended by peer review organizations (PRO) against hospitals and physicians for improper or unnecessary health care services to Medicare beneficiaries.

GAO found that OIG: (1) revised its policy partially to meet a statutory provision limiting monetary fines to the cost of the unnecessary or poor-quality care; (2) established a new policy in 1987, requiring penalty calculations based on cost-effectiveness; (3) seldom imposed monetary penalties against hospitals or physicians after it changed its policy; (4) approved only 3 of 24 PRO monetary penalty recommendations, but agreed that in 15 instances, the physician or hospital violated their obligations; (5) rejected recommendations because it determined that the penalties were not cost-effective; (6) policy to accept only violation cases meeting its criteria did not ensure sanction consistency; and (7) has not modified its cost-effectiveness policy approach for determining monetary penalties. GAO also found that since the OIG policy became effective, PRO: (1) have significantly reduced monetary penalty recommendations and halted action on some cases that warranted sanctions; and (2) have submitted only 4 monetary penalty recommendations over a 15-month period, compared with 35 in the previous such period.

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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