Medicare:

More Hospital Costs Should Be Paid by Other Insurers

HRD-87-43: Published: Jan 29, 1987. Publicly Released: Jan 29, 1987.

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In response to a congressional request, GAO provided information on whether the Department of Health and Human Services (HHS) could improve existing policies and procedures for identifying and billing insurers covering Medicare beneficiaries, which should pay medical claims before Medicare does.

GAO found that: (1) in 1985, Medicare paid $527 million in hospital costs that other insurers should have covered; (2) hospitals often gathered insufficient information about other insurance resources or billed Medicare even when they identified other insurance; (3) the six hospitals that GAO studied identified and billed primary insurance in only 17 percent of the cases where patients indicated that they had primary insurance coverage for the admission; (4) intermediaries had little incentive to increase training, monitoring, and auditing of hospitals to improve their performance in identifying and billing other insurers; (5) some employers were enrolling Medicare beneficiaries inappropriately in group insurance that treated Medicare as the primary payer; and (6) there is no federal requirement for attorneys or insurers to report actions taken to recover accidental damages for Medicare beneficiaries.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The Omnibus Budget Reconciliation Act of 1989 amended the Internal Revenue Code to provide tax penalties on employers who fail to meet secondary payer requirements for the working aged.

    Matter: Congress should consider enacting one of two alternatives. Congress could: (1) statutorily direct the Equal Employment Opportunity Commission (EEOC) to promulgate the regulations that it envisioned when it enacted section 4(g) of the Age Discrimination in Employment Act (ADEA); or (2) amend the Internal Revenue Code to deny employers a deduction for health insurance premiums or impose a tax on such premiums if the policies provided by the employers do not meet the requirements of the Medicare secondary payer provisions for aged beneficiaries.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: CPEP standards were revised and these changes meet the thrust of the recommendation.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to revise CPEP standards to provide the intermediaries with the needed incentives to improve hospital performance in identifying and billing other insurers. To do this, HCFA should establish new administrative requirements that would direct intermediaries to perform certain oversight and administrative tasks necessary to improve hospital performance in billing Medicare as primary payer.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Not Implemented

    Comments: The tax penalty provisions of the Omnibus Budget Reconciliation Act of 1989 eliminated the need for EEOC involvement.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to: (1) enter into a memorandum of understanding with EEOC on the type of cases to be referred; and (2) establish procedures for identifying and referring potential violations of provisions of ADEA to EEOC. This can be done, for example, by establishing procedures for monitoring intermediary and regional office case follow-up and referral actions.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: Regulations were published on October 11, 1989, effective on November 13, 1989, that expand the definition of no-fault insurance as recommended, and would permit recovery from the insurance company even if it had already paid the beneficiary.

    Recommendation: The Secretary of Health and Human Services should amend regulations implementing provisions of the Social Security Act to: (1) extend MSP provisions of the law to all forms of no-fault insurance coverage; and (2) require that accident insurers notify Medicare of medical payments or other settlements in instances in which it has reason to believe Medicare has an actual or possible right of recovery.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Not Implemented

    Comments: The Omnibus Budget Reconciliation Act of 1989 prohibits HHS from requiring Medicare contractors to cross-match data to identify secondary payer cases.

    Recommendation: To help ensure that intermediaries exercise diligent efforts at improving hospitals' performance in identifying and billing other insurers, the Secretary of Health and Human Services should direct the Administrator, HCFA, to require, as a contractual condition, that intermediaries screen Medicare claims against their own insurance policyholders when intermediaries do not meet CPEP secondary payer standards.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Implemented

    Comments: HHS instructed hospitals to ask every beneficiary a set of questions and keep a copy of the beneficiary's responses in the patient's file.

    Recommendation: HCFA should require its intermediaries to direct hospitals that are not taking the steps needed to identify and bill other insurers of Medicare beneficiaries to use a standard admission form designed to detect the availability of insurers that should pay before Medicare. The form should be signed by the Medicare patient and maintained in the hospital billing file.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  6. Status: Closed - Implemented

    Comments: HHS increased intermediary savings goals by $340 million for fiscal year 1989 and each intermediary's goal was calculated using that contractor's specific demographic data for beneficiaries served.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, Health Care Financing Administration (HCFA), to revise its Contractor Performance Evaluation Program (CPEP) standards to provide the intermediaries with the needed incentives to improve hospital performance in identifying and billing other insurers. To do this, HCFA should increase current savings standards to dollar amounts that intermediaries could not meet without significantly improving hospital performance.

    Agency Affected: Department of Health and Human Services

 

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