GAO was requested to determine what the two governmentwide carriers, Blue Cross and Blue Shield and the Aetna Life Insurance Company, and the Civil Service Commission (CSC) are doing to control health care costs under the Federal Employees Health Benefits program.

Benefit payments have been made without conforming to contract or policy requirements and without enough information to determine whether payments were allowable. The contracts negotiated by CSC provide no incentives for the carriers to control benefit payments, and contain no provisions under which CSC, either through audit or other means, can exercise sufficient control over the allowability of benefits paid by the carriers.

Status Legend:

Review Pending-GAO has not yet assessed implementation status.

Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.

Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.

Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.

• Review Pending
• Open
• Closed - implemented
• Closed - not implemented

Recommendation for Executive Action

Recommendation: CSC should: (1) revise its health insurance contracts to provide incentives for compliance with CSC contract requirements; (2) it should include in its contracts specific cost-control programs that the carriers must follow; and (3) should clarify its audit authority, expand its audits, and act more effectively on its audit findings. If CSC does not adopt these recommendations, the Subcommittee on Retirement and Employee Benefits should consider developing legislation to this end.

Agency Affected:

Status: Closed

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