Medicare

Weak oversight of Medicare fee-for-service claims administration contractors has left the Health Care Financing Administration (HCFA) with few guarantees that contractors are doing their jobs, including paying providers appropriately. Since 1993, at least six contractors have settled civil and criminal charges arising from allegations that they were not checking claims to ensure proper payment, were allowing Medicare to pay claims that other insurers should have paid, or were committing other improprieties. For years, HCFA left decisions about oversight priorities entirely in the hands of regional reviewers, did not evaluate regional oversight to achieve consistency, and set few performance standards to hold contractors accountable. GAO recommends that Congress amend the Social Security Act to allow the Secretary of Health and Human Services explicit authority to more freely contract with appropriate types of companies for claims administration. Also, HCFA should be required to report to the Congress with an independent evaluation on the impact of any new authorities on the Medicare program.

GAO noted that: (1) although HCFA has taken recent steps to improve its oversight of claims and administration contractors, HCFA's oversight process has weaknesses that leave the agency without assurance that contractors are fulfilling their contractual obligations, including paying providers appropriately; (2) since 1993, at least six contractors have settled civil and criminal charges following allegations that they were not checking claims to ensure proper payment, were allowing Medicare to pay claims that should have been paid by other insurers, or were committing other improprieties; (3) for years HCFA left decisions about oversight priorities entirely in the hands of regional reviewers, did not evaluate regional oversight to achieve consistency, and set few performance standards for contractors to aid in holding them accountable; (4) this has led to uneven review of key program safeguards designed to prevent payment errors; (5) HCFA is also seeking new contracting authority that could help the agency increase competition and better ensure contractor performance; (6) GAO believes Congress may wish to consider amending the Social Security Act to allow the Secretary of the Department of Health and Human Services explicit authority to more freely contract with appropriate types of companies for claims administration; (7) even if such legislation were enacted, however, HCFA would need several years to carefully plan and properly implement any new contracting initiatives to avoid the types of problems it encountered in the past when it tried to make changes to its contracting methods; and (8) GAO further believes that HCFA should be required to report to Congress with an independent evaluation on the impact of any new authorities on the Medicare program.