Medicare

With the enactment of the Health Insurance Portability and Accountability Act of 1996 and the Balanced Budget Act of 1997, Congress has provided significant opportunities to strengthen areas in the Medicare program at high risk for fraud and abuse. How Medicare will use this legislation to improve its oversight of program expenditures remains to be seen, however. The outcome depends largely on how promptly and effectively the Health Care Financing Administration (HCFA) implements the various provisions. HCFA's past efforts to implement regulations, oversee Medicare managed care plans, and acquire major computer systems have often been slow or ineffective. Now that many more demands have been placed on HCFA, GAO is concerned that the promise of the new legislation to combat health care fraud and abuse could be delayed or not realized at all.

GAO noted that: (1) both the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Balanced Budget Act of 1997 (BBA) directly address Medicare fraud and abuse and provide opportunities to improve program management; (2) both acts offer civil and criminal penalties; (3) they also introduce opportunities to deploy new program safeguards; (4) for example, on the fee-for-service side of the program, BBA introduces prospective payment methods for skilled nursing facility and home health services, in part to halt opportunists from overbilling Medicare; (5) these are among Medicare's fastest-growing components: from 1989 to 1996, spending for home health care and skilled nursing facility care averaged, respectively, a 33-percent and 22-percent annual rise; (6) HIPAA also ensures a stable source of funding for anti-fraud-and-abuse activities, authorizes the Health Care Financing Administration (HCFA) to contract for improved claims reviews, enhances law enforcement coordination, and calls for data collection improvements; (7) on the managed care side, BBA's Medicare+Choice program, which broadens beyond health maintenance organizations (HMO) the private health plans available to Medicare beneficiaries, includes several provisions addressing the marketing, enrollment, and quality of care issues raised in GAO's reports and those of the Inspector General; (8) as always, however, the success of any reform legislation is contingent on its implementation; (9) the Congress has provided the Department of Health and Human Resources (HHS) and HCFA, the Department's administrator of the Medicare program, with many new statutory requirements governing traditional fee-for-service Medicare; some require little effort to carry out, whereas others, such as prospective payment system development, will require extensive time and resources to implement effectively; (10) in addition, the Medicare+Choice program will add considerably to HCFA's private plan monitoring workload; (11) the project to modernize Medicare's claims processing systems, which are at the core of many fraud and abuse detection efforts, has recently been halted; (12) this brings into question the ability of HCFA and its contractors to perform expeditiously the data-intensive analyses needed to spot and counteract abusive billing schemes; and (13) HCFA agrees that the tasks associated with implementing HIPAA and BBA mandates are considerable and plans to report routinely to HHS officials and to the Congress on HCFA's progress implementing the legislation.