Medicare/Medicaid

The Department of Health and Human Services has been directed to establish a data bank, beginning in February 1995, that would contain information on all workers, spouses, and dependents who are covered by employer-provided health insurance. The goal is to save millions by strengthening processes to (1) identify the approximately 7 million Medicare and Medicaid beneficiaries who have other health insurance coverage that should pay medical bills before Medicare and Medicaid kicks in and (2) ensure that this insurance is appropriately applied to reduce Medicare and Medicaid costs. In GAO's view, however, the data bank will end up costing millions and likely achieve little in the way of savings. GAO believes that changes and improvements to existing activities would be a much easier, less costly, and thus preferable alternative to the data bank. This is largely because the data bank will result in an enormous amount of added paperwork for both the Health Care Financing Administration and the nation's employers. GAO summarized this report in testimony before Congress; see: Medicare/Medicaid: Data Bank Unlikely to Increase Collections From Other Insurers, by Leslie G. Aronovitz, Associate Director for Health Financing Issues, before the Senate Committee on Governmental Affairs. GAO/T-HEHS-94-162, May 6, 1994 (four pages).

GAO found that: (1) although Medicare and Medicaid programs could realize substantial savings if they had more complete information on their participants' group health insurance coverage, the data bank may not measurably strengthen existing information gathering operations; (2) state Medicaid systems are also capable of providing equally useful and cost-effective health insurance information; (3) over the next 5 years, the data bank will likely increase costs by more than $100 million, will substantially increase Health Care Financing Administration (HCFA) and employer recordkeeping, and increase the nation's total health care costs without accruing significant benefits; (4) HCFA must continue to improve existing alternatives to use in place of the data bank; (5) Medicare's data match recovery efforts are still under development and states have not fully developed Medicaid third-party liability programs as required; (6) Congress needs to delay data bank implementation until it can demonstrate its cost-effectiveness and other potential benefits; (7) Congress may need to grant HCFA additional authority to impose penalties on states that do not comply with Medicaid requirements; and (8) HCFA should vigorously pursue alternatives to the data bank.

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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