Medicare Claims Processing

Pursuant to a congressional request, GAO reviewed the changes in the Medicare carrier in Georgia and the data-processing subcontractor in Florida, focusing on: (1) the effect of those changes on beneficiaries and providers; and (2) actions the Health Care Financing Administration (HCFA) could take to reduce service disruptions.

GAO found that: (1) after the carrier and subcontractor changes, the percentage of claims that required over 30 days to process rose from 4.6 percent to 25 percent in Georgia and from 3.9 percent to 28 percent in Florida; (2) the interest the new contractor and the Florida carrier paid on delayed claims increased from $375,000 in 1988 to $6.3 million in 1989; (3) in Georgia, overpayment errors jumped from 0.65 percent to 13 percent, resulting in an estimated $19.2-million increase; (4) Georgia beneficiaries expressed frustration with telephone service and contradictory claim notices and Florida beneficiaries experienced payment delays; (5) time constraints compounded the Georgia carrier's difficulties in preparing for operations, and the Florida carrier had to accept a less efficient system after its new subcontractor's system failed to meet specifications; (6) HCFA regional offices could benefit from improved guidance concerning carrier changes; and (7) the incoming carrier's failure to develop a full understanding of the outgoing carrier's systems, procedures, and policies, and the shortcuts taken by the outgoing carrier while winding down operations, magnified the disruption that followed the Georgia carrier change.

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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