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Medicare+Choice Audits: Lack of Audit Follow-up Limits Usefulness

GAO-02-33 Published: Oct 09, 2001. Publicly Released: Oct 09, 2001.
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Highlights

The Centers for Medicare and Medicaid Services (CMS) spent about $35 billion in 2000 on the Medicare+Choice program--the managed care alternative to Medicare's fee-for-service program. During that time, almost 6.3 million Medicare beneficiaries were enrolled in health plans offered by managed care organizations (MCO) that participate in the Medicare+Choice program. Each year, any MCO choosing to participate in the Medicare+Choice program must submit to CMS an adjusted community rate proposal for each plan that it intends to offer. The proposal identifies the health services the MCO will provide to its Medicare members and the estimated cost to provide those services. It also shows the estimated payments that the MCO expects to receive for providing these services. This report shows that CMS' approach in the first year met the requirements of the Balanced Budget Act of 1997 (BBA) and laid the foundation for future years audit process. The audits done by the Department of Health and Human Services' Office of Inspector General (HHS OIG) and three CPA firms in 2000 were in accordance with generally accepted auditing standards (GAAS) and generally followed CMS' audit program, including the submission of audit reports detailing their findings. However, the audit reports were not always complete or consistently prepared. CMS has now hired a contractor to reevaluate contract year 2000 audit reports in which possible overcharges were identified.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Centers for Medicare & Medicaid Services To improve the utility of the audit reports and usefulness of their findings, the Centers for Medicare and Medicaid Services (CMS) Administrator should fully implement plans to calculate the net effect by plan and potential impact of Adjusted Community Rate Proposal (ACRP) audit findings and adjustments.
Closed – Not Implemented
This recommendation is closed not implemented because CMS has not substantially completed actions to address this recommendation. We reiterated the recommendation in our July 2007 follow-up report (GAO-07-945) because CMS officials had not made a decision about how ACRP audit results would be addressed and closed. We recommended that CMS finalize a decision and establish implementing procedures on how the prior ACRP audit results will be addressed and closed. We will follow-up on the status of this recommendation under GAO-07-945.
Centers for Medicare & Medicaid Services To improve the utility of the audit reports and usefulness of their findings, the CMS Administrator should develop and implement a follow-up mechanism to address the audit findings in a timely manner.
Closed – Not Implemented
This recommendation is closed not implemented because CMS has not substantially completed actions to address this recommendation. We reiterated the recommendation in our July 2007 follow-up report (GAO-07-945) because CMS officials had not made a decision about how ACRP audit results would be addressed and closed. We recommended that CMS finalize a decision and establish implementing procedures on how the prior ACRP audit results will be addressed and closed. We will follow-up on the status of this recommendation under GAO-07-945.
Centers for Medicare & Medicaid Services To improve the utility of the audit reports and usefulness of their findings, the CMS Administrator should communicate to each Managed Care Organizations (MCO) specific corrective actions needed for future ACRP submissions.
Closed – Not Implemented
This recommendation is closed not implemented because CMS has not substantially completed actions to address this recommendation. We reiterated the recommendation in our July 2007 follow-up report (GAO-07-945) because CMS officials had not made a decision about how ACRP audit results would be addressed and closed. We recommended that CMS finalize a decision and establish implementing procedures on how the prior ACRP audit results will be addressed and closed. We will follow-up on the status of this recommendation under GAO-07-945.

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Topics

Health care costsHealth care facilitiesHealth care programsManaged health careMedicareAudit reportsUnderwriting standardsData errorsProgram beneficiariesMedical copayments