Medicare

Soaring expenditures for health care underscore the need for the government to fund and manage Medicare judiciously, but budget constraints have resulted in underfunding key program safeguards that control billions of dollars in benefit payments. In fiscal year 1993, Medicare cost $146 billion, covered about 35 million beneficiaries, and processed nearly 700 million claims. Medicare has delegated much of the responsibility for program safeguards to a national network of some 80 claims processing and payment contractors. GAO testified that, given shortcomings in these safeguards, any cuts in Medicare's administration budgets should take into account their likely effect on benefit payments. During the past 5 years, Medicare's program safeguards budget, on a per claim basis, has declined dramatically. The upshot is that opportunities to curb unnecessary Medicare expenditures are being lost. Strong evidence exists that with an adequately funded and managed safeguard program, Medicare could avoid millions of dollars in unnecessary expenditures. GAO believes that Congress should continue to pursue modifying budget procedures so that Medicare's safeguard funding could be boosted without cutting spending elsewhere. GAO also believes that the Health Care Financing Administration needs to develop an effective strategy to manage contractors' payment safeguard activities.

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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