Medicare

Medicare has already paid more than $1 billion in claims that should have been billed to private health insurers and another $1 billion in mistaken payments may be in the offing, but efforts to recoup the funds are hampered by deep budget cuts in Medicare safeguard efforts and time limits on recovery periods. During the last decade, Congress sought to reduce Medicare costs by making certain insurers the primary payers for beneficiary services. Amounts owed by other health insurers, however, are unrecovered or, in many cases, unidentified even after Medicare contractors have confirmed that beneficiaries have other health insurance that provides primary coverage. Nationwide, large backlogs of mistaken payments remain unrecovered. Significant program savings have gone unrealized because contractors do not have the money to recover mistaken payments under the Medicare secondary payer program. The fiscal year 1992 funding levels for the program are below the amounts provided in fiscal year 1989, yet the number of beneficiary claims is significantly higher, and large backlogs remain. Increased funding of program activities is essential if over $1 billion in mistaken payments are to be recovered.

GAO found that: (1) in response to a Health Care Financing Administration (HCFA) survey, Medicare contractors identified backlogs of over $1 billion in erroneously paid beneficiary claims, and identified over 1.1 million additional beneficiaries who had additional insurance; (2) insurers could owe Medicare an additional $1 billion in claims after the contractors research the additional 1.1 million beneficiaries; (3) a HCFA data match using Internal Revenue Service and Social Security Administration records to identify a beneficiary or a spouse with additional insurance could add several million more claims to the existing backlogs, but Medicare could lose millions of dollars in claims because of a Department of Health and Human Services (HHS) regulation that limits contractors' claim recovery time; and (4) although collections of erroneous MSP payments greatly exceed carriers' recovery costs, MSP budget reductions hinder carrier collection. GAO also found that the HHS fiscal year (FY) 1992 budget will not permit contractors to significantly reduce existing backlogs, since the budget is: (1) below the FY 1989 funding levels, when claims volume was about 27 percent less and contractors did not have huge MSP backlogs; and (2) about 22 percent less than Medicare contractors requested.

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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