Language of the HEW Appropriation Bill

B-164031(3).91: Sep 6, 1974

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This report is in response to a Congressional request to GAO staff to provide assistance in drafting language to the HEW appropriation bill which would serve to meet Congressional intention of preventing carriers under the Medicare program from converting from a subcontract to an in-house EDP claims processing operation, unless such a change meets some reasonable standard of cost effectiveness.

As discussed in a meeting with our staff, our technical problems with the proposed amendment were as follows: (1) the language would impact on subcontracted services in addition to those intended to be covered, (2) the proposed amendment would be difficult to administer because the language would limit reimbursement to some hypothetical amount based on fixed-price competitive bidding which would be virtually undeterminable if a carrier brought its data processing operation in-house, and quite properly, did not go through the motions of obtaining competitive proposals without the bona fide intention of making a subcontract award, and (3) the proposed amendment and related limitation on reimbursement might not have been enforceable without amending the existing carrier contracts with HEW.