Improving Medicare Program Management

CMS faces challenges managing oversight of the traditional program (Parts A and B), the MA program (Part C), and the prescription drug benefit (Part D), and managing functions such as contracting.

• CMS's Electronic Health Records (EHR) and Electronic Prescribing Programs both provide incentive payments to eligible Medicare providers—physicians and other health care providers, such as physician assistants and nurse practitioners—who adopt and use health information technology, and penalties for those who do not. The EHR Program provides incentive payments from 2011 to 2016 to Medicare physicians and introduces penalties beginning in 2015, while the Electronic Prescribing Program provides incentive payments from 2009 to 2013 and provides for penalties from 2012 to 2014, when the program ends. GAO found that the two programs have inconsistent requirements in several areas. For example, the EHR Program requires providers to adopt and use certified EHR systems that meet criteria established by HHS, which include electronic prescribing-related capabilities, while the Electronic Prescribing Program does not have a certification requirement. The two programs have also established separate reporting requirements related to electronic prescribing, potentially requiring physicians to report to both programs from 2011 through 2014, placing an additional burden on physicians. Additionally, although CMS plans to establish an audit program for the EHR Program to address potential fraud and abuse, it does not have plans to develop a similar program for the Electronic Prescribing Program.
  

  Highlights of GAO-11-159 (PDF)

• CMS's implementation of its new Medicare Administrative Contractors (MAC) has progressed, with some delays. Due to delays because of protests filed in connection with the procurement process, CMS did not meet the target that it set for 2009 and 2010 in transferring workload to MACs. As of December 2010, CMS transferred Medicare fee-for-service claims workload to the new MACs in all but six jurisdictions. For those six jurisdictions, CMS is transferring claims workload in two jurisdictions, and has ongoing procurement activity in the remainder. Some new MACs had delays in paying providers' claims, but overall, CMS's contractors continued to meet the agency's performance targets for timeliness of claims processing in 2009.

  Highlights of GAO-10-71 (PDF)

• To achieve Medicare savings and to address durable medical equipment (DME) fraud concerns, CMS began implementing a DME competitive bidding program (CBP) in 2009, where suppliers submit bids to provide DME items to Medicare beneficiaries. In CBP, CMS then enters into contracts with select DME suppliers to provide items at the competitively determined prices. We found that there were substantial difficulties with CMS’s initial implementation of CBP. Another way to obtain savings could be from buying certain kinds of DME directly from manufacturers. We found that if CMS were required to buy items directly from DME manufacturers to obtain savings by leveraging their purchasing power, the agency could face issues similar to CBP—such as choosing which DME items to competitively bid that would result in the most Medicare savings—and manufacturer level specific issues—such as strengthening its regulatory relationship with the manufacturers for competitive bidding.

  Highlights of GAO-11-337R, Highlights of GAO-10-27 (PDF)

• Regarding Medicare Advantage, CMS has not complied with statutory requirements to mail information on plan disenrollment to beneficiaries but did take steps to post this information on its Web site. In addition, the agency took enforcement actions for inappropriate marketing against at least 73 organizations that sponsored Medicare Advantage plans from January 2006 to February 2009.
  

  Highlights of GAO-09-25 (PDF), Highlights of GAO-10-36 (PDF)

• Under Part D, the private companies that offer prescription drug plans to Medicare beneficiaries may make mid-year formulary changes—such as modifying the drugs included or utilization management requirements—provided that their plans' formularies continue to meet certain minimum requirements. CMS monitors certain mid-formulary requests made by these private companies prior to their implementation to ensure that formularies meet requirements. In addition, CMS conducts retrospective oversight activities of the companies' compliance with mid-year formulary change requirements. Our analysis of mid-year formulary changes in 2008 and 2009 indicated that sponsors implemented multiple mid-year changes for almost all plans in those years and most of these changes—87.4 percent of changes in 2008 and 88.6 percent in 2009—were enhancements.
  

  Full Report of GAO-11-366R (PDF)

• In 2010, 9.4 million Part D beneficiaries (40 percent of all Part D beneficiaries) received a low-income subsidy (LIS) under Part D. Most of these beneficiaries received the full LIS so do not pay premiums or deductibles if they enrolled in a "benchmark" stand-alone prescription drug plan (PDP), which has premiums at or below a specified benchmark for a given geographic region. Although beneficiaries may also enroll in other Part D plans, they must pay the difference in the premium of the nonbenchmark plan with the benchmark for their region. Compared to nonbenchmark PDPs, we found that benchmark PDPs had somewhat more limited drug coverage and that drug coverage became gradually more restrictive for all PDPs from 2007 through 2010, while pharmacy access was comparable. Additionally, if an LIS beneficiary is enrolled in a plan that was a benchmark PDP in one year but not in the following year, CMS randomly reassigns these beneficiaries to a new plan that is a benchmark PDP, raising the concern that these beneficiaries may experience greater changes in their drug and pharmacy utilization compared to other LIS beneficiaries. We found that the extent to which randomly reassigned LIS beneficiaries experienced changes in their drug and pharmacy utilization after reassignment was comparable to the extent of such changes among other LIS beneficiaries.
  

  Full Report of GAO-11-546R (PDF)

• In regard to CMS's management of its contracting function, GAO found pervasive internal control deficiencies that put billions of taxpayer dollars at risk of improper payments or waste and recommended that CMS take actions to address them. Recently, CMS management has taken several actions to address the recommendations and correct certain deficiencies we noted, such as revising policies and procedures, and developing a centralized tracking mechanism for employee training. However, CMS has not made sufficient progress to complete actions to address recommendations related to clarifying the roles and responsibilities for implementing certain contractor oversight responsibilities, clearing a backlog of contracts that are overdue for closeout, and finishing its investigation of over $70 million in payments GAO questioned in 2007.
  

  Highlights of GAO-10-60 (PDF)

^ Back to topWhat Needs to Be Done

With regard to Medicare program management, CMS should

• Encourage physicians and other providers in the Electronic Prescribing Program to adopt certified technology, and expedite efforts to remove the overlap in reporting requirements for physicians who may be eligible for incentive payments or subject to penalties under both programs.

  Highlights of GAO-11-159 (PDF)

• Gather more information on the extent of inappropriate marketing of MA organizations; and

  Highlights of GAO-10-36 (PDF)

• develop policies to improve contract oversight and strengthen CMS's control environment.
  

  Highlights of GAO-10-60 (PDF)

^ Back to topKey Reports

Medicare Part D Formularies

Medicare Part D

Medicare

Electronic Prescribing

Medicare Contracting Reform

Medicare Advantage

Medicare

Centers for Medicare and Medicaid Services

More Reports