Medicare

Medicare has undergone many changes as Congress has expanded and modernized the program. The Health Care Financing Administration's (HCFA) implementation of these changes has sometimes created program vulnerabilities. As a result, dishonest or unknowing providers have submitted claims for inappropriate service, unknowledgeable contractors have processed these claims, and HCFA has sometimes paid more than it should have. The Balanced Budget Act of 1997 set in motion additional changes that were intended to modernize the Medicare program, expand benefits, and extend the life of the Medicare trust fund. HCFA faces the challenge of implementing the act's provisions in a way that ensures beneficiaries' access to covered services without compromising the program's fiscal integrity. This report compares (1) HCFA's implementation of the expansion of the partial hospitalization benefit and (2) HCFA's implementation of the more recent changes under the act to determine whether HCFA is acting upon lessons learned from the partial hospitalization program.

GAO noted that: (1) HCFA has a difficult task in overseeing the implementation of changes to Medicare, yet this oversight is essential to counteract the opportunities that sometimes arise for dishonest providers to abuse the program; (2) in the early 1990s, when HCFA implemented the expansion of the partial hospitalization benefit to include community mental health centers (CMHC), HCFA did not systematically evaluate the implications of the benefit's expansion; (3) as a result, Medicare paid claims that should not have been paid; (4) moreover, HCFA did not provide its contractors with timely and adequate guidance on the partial hospitalization benefit, and neither HCFA nor its contractors systematically monitored claims for the new benefit until it had been in effect for several years; (5) finally, although individual Medicare contractors detected some improper payments in the early years of the partial hospitalization program, HCFA did not take prompt action to investigate these problems or share this information with its other contractors; (6) taking advantage of its experience with CMHC, HCFA has done better in implementing the benefit changes required by the BBA, but more needs to be done to determine whether corrective actions are needed; (7) for example, HCFA created several internal groups to evaluate its implementation of certain changes under the BBA and to identify the potential for vulnerability to fraud and abuse that might result from these changes; (8) in addition, HCFA has provided more timely explanation of the benefit changes to its contractors and providers, but it still needs to provide contractors with more specific instructions on how to review claims and detect inappropriate billing; (9) although HCFA has recognized the need to develop baseline data for use in identifying questionable claims, it has not yet begun to do so; (10) finally, HCFA has made limited progress in addressing the recommendations of the groups that it charged with evaluating its implementation of several BBA benefit changes; and (11) for example, HCFA was advised to conduct a baseline study to determine the volume and type of services billed by nonphysician providers, but HCFA officials told GAO it had not yet done so largely because its resources were focused on year-2000 concerns.

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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