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Medicare: HCFA's Contracting Authority for Processing Medicare Claims

HEHS-94-171 Published: Aug 02, 1994. Publicly Released: Aug 02, 1994.
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Highlights

Pursuant to a congressional request, GAO reviewed how the Health Care Financing Administration (HCFA) contracts with insurance companies and the Blue Cross and Blue Shield Association (BCBS) to process Medicare claims, focusing on: (1) how HCFA sets contract prices and seeks to ensure that proper cost controls are in place; (2) how HCFA evaluates contractors' performance; and (3) whether payments for contractors' insurance association dues are permissible.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services The Secretary of Health and Human Services should direct the Administrator, HCFA, to develop criteria and evaluate the performance of the Blue Cross and Blue Shield Association in its role as the part A prime contractor to ensure that the Medicare program is being managed efficiently.
Closed – Implemented
HHS did not concur with the recommendation. HHS stated that HCFA's financial oversight of the Blue Cross and Blue Shield Association (BCBSA) was sufficient. However, HHS did say that proposed contract reform legislation might impact the need for a prime contract with BCBSA. The Kennedy/Kassenbaum health care legislation passed by the 104th Congress allows HCFA to contract with non-insurance companies to serve as intermediaries and carriers. HCFA is writing regulations for this new contracting authority. According to HCFA, this new authority may reduce the number of Blue Cross and Blue Shield plans serving as contractors, and thereby may diminish the need for a prime contract with BCBSA.

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Topics

BeneficiariesClaims processingCompetitive procurementContract administrationContract performanceContractor paymentsCost controlEvaluation methodsInsurance companiesMedical expense claimsMedicare