Medicare

Although Medicare provides health care coverage for most citizens over 65, it is not always the primary insurer. Medicare is the secondary payer when beneficiaries are covered by both Medicare and workers' compensation, certain employer-sponsored group health insurance plans, and automobile and other liability insurance plans. Hospitals are responsible for obtaining data on beneficiaries' health insurance coverage to identify other insurers who should pay before Medicare. Hospitals receiving payments from both Medicare and a primary insurer must refund any amount due Medicare. Intermediaries (insurance companies under contract with Medicare) process Medicare claims for the hospitals, and they are responsible for ensuring that any mistaken payments are identified and returned to the program. GAO reviewed 196 patient accounts at 17 hospitals; each hospital owed Medicare refunds ranging from $1,300 to $327,400, which collectively amounted to more than $900,000. The credit balances resulted primarily from Medicare and another insurer mistakenly paying for the same inpatient service or Medicare paying twice for the same service. The five intermediaries that service these hospitals lacked the necessary internal controls to ensure that credit balances were identified and promptly recovered, and they gave recovery activities low priority. During GAO's review, Medicare officials initiated actions to help resolve many of the credit balance problems brought to its attention, but additional efforts are needed.

GAO found that: (1) each of the 17 hospitals visited owed refunds to Medicare that collectively amounted to over $900,000; (2) the credit balances resulted primarily from Medicare and another insurer mistakenly paying for the same inpatient service or Medicare paying twice for the same service; (3) the five Medicare intermediaries that serviced the 17 hospitals lacked the necessary internal controls to ensure that credit balances were identified and promptly recovered; (4) since intermediaries considered credit balance recovery activities to be a low priority, many of the credit balances remained outstanding for years despite attempts by some hospitals to make repayment; (5) in attempting to make refunds, some hospitals did not correctly complete the required paperwork and the intermediaries did not follow up to ensure that problems were corrected and the amounts owed Medicare were recovered; (6) the Health Care Financing Administration (HCFA) now requires the 48 nationwide intermediaries to establish units responsible for identifying and recovering outstanding credit balances and to instruct hospitals to provide information on their outstanding credit balances and refund any amounts owed to Medicare; and (7) preliminary data from 11 intermediaries indicate that the hospitals they service owe refunds totalling $37 million.

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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