Health Care Financing Administration

The Health Care Financing Administration (HCFA) provided GAO with copies of 96 agreements in which HCFA negotiated settlements for Medicare overpayments exceeding $100,000. In 93 of the 96 matters, which were negotiated between 1991 and 1999, GAO found nothing improper. In settling the three largest overpayments, however, HCFA acted inappropriately. These three largest matters represented 66 percent of all Medicare overpayment settlements since 1991 for which HCFA provided records. In the settlements, HCFA agreed to accept $120 million for debts exceeding $332 million (or about 36 cents on the dollar). GAO found that (1) former HCFA Administrator Bruce Vladek's participation in the largest settlement raised conflict-of-interest concerns, (2) HCFA ultimately chose not to obtain the Department of Justice's approval of the settlements and ignored its own regulations and internal guidance, (3) HCFA appears to have disregarded permissible settlement criteria established by regulations, (4) the settlement agreements contained questionable provisions, and (5) HCFA executed settlements without the benefit of legal counsel. This testimony summarizes the February 2000 GAO report, GAO/OSI-00-4.

GAO noted that: (1) GAO found nothing improper in the settlement of 93 of the 96 settlement agreements; (2) however, HCFA acted inappropriately in several respects as to the 1995, 1996, and 1997 settlements of the three largest overpayments; (3) the former HCFA Administrator's participation in the largest settlement raised conflict-of-interest concerns; (4) HCFA unilaterally chose not to obtain Department of Justice approval of the settlements and ignored its own regulations and internal guidance; (5) HCFA appears to have disregarded permissible settlement criteria established by regulation; (6) the settlement agreements contained questionable provisions; and (7) HCFA executed settlements without the benefit of legal counsel.