Medicare

During the past decade, the Health Care Financing Administration (HCFA) has encouraged Medicare beneficiaries to enroll in health maintenance organizations (HMO). HMOs are attractive because they have financial incentives to control costs and utilization and offer beneficiaries more services than are normally covered under Medicare. Yet HCFA has been ineffective in getting certain HMOs to promptly correct violations of Medicare requirements. Continued violations by Humana Medical Plan in Florida demonstrates HCFA's unwillingness and inability to enforce Medicare requirements on HMOs serving Medicare beneficiaries. Press articles alleged widespread problems with Humana--Medicare's largest HMO contractor--including marketing and claims payments abuses and quality-of-care issues. HCFA found Humana in violation of federal standards in four areas: marketing, claims payment, processing of beneficiary appeals, and implementation of an internal quality assurance system. Deficiencies in these areas can mean that beneficiaries incur high out-of-pocket expenses or are denied appropriate care. As a result, GAO believes that allowing Humana to enroll more than 125,000 new beneficiaries during its protracted period of noncompliance was unreasonable. GAO concludes that HCFA could and should have done more to require Humana to resolve its deficiencies. To help prevent the recurrence of sustained difficulties, HCFA needs to unequivocally establish both its authority and intention to take timely and decisive action against HMOs that violate Medicare's minimum beneficiary safeguard standards. GAO summarized this report in testimony before Congress; see: Medicare: HCFA Needs to Take Stronger Actions Against HMOs Violating Federal Standards, by Janet L. Shikles, Director of Health Financing and Policy Issues, before the Subcommittee on Health and the Environment, House Committee on Energy and Commerce. GAO/T-HRD-92-11, Nov. 15, 1991 (11 pages).

GAO found that: (1) HCFA identified the alleged problems and found additional problems; (2) HCFA found the contractor to be in violation of federal standards related to marketing, claims payment, beneficiary appeals processing, and implementing an internal quality control system; (3) the problems HCFA identified could have adverse effects on beneficiaries' out-of-pocket costs and their access to, and quality of, care; (4) HCFA requested the contractor to resolve its deficiencies in October 1991, but the contractor remained noncompliant in claims payment and beneficiary appeals; and (5) although HCFA has authority to impose intermediate sanctions on noncompliant HMO, it has been reluctant to do so due to the lack of HCFA regulations and policies covering the use of its authority.

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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