Medicare:

Better Controls Needed for Peer Review Organizations' Evaluations

HRD-88-13: Published: Oct 8, 1987. Publicly Released: Oct 8, 1987.

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In response to a congressional request, GAO reviewed the Health Care Financing Administration's (HCFA) evaluation of peer review organizations' (PRO) contract performance for contract renewal, to assess: (1) whether HCFA properly evaluated PRO performance; and (2) how HCFA determined the level of funding for new PRO contracts.

GAO found that: (1) the evaluation process was internally inconsistent, and HCFA inconsistently applied it; (2) HCFA did not adequately document evaluation decisions; (3) HCFA internal controls were not sufficient to identify and correct instances of poor PRO performance before contract renewal evaluations; (4) although HCFA identified its monitoring problem during the evaluation process and redesigned its monitoring program, the program might not provide adequate criteria to differentiate between acceptable and unacceptable performance; and (5) although the methodology HCFA used to estimate the contract costs to individual PRO contained many uncertainties, the contract negotiation process may have compensated for the uncertainties because most of the contract costs differed from the original estimates.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Health and Human Services (HHS) agreed with this recommendation and took several actions to tighten controls over the evaluation process.

    Recommendation: The Secretary of Health and Human Services should instruct the Administrator, HCFA, to ensure that in future PRO evaluations, the evaluation process has sufficient internal controls to ensure that evaluations are consistently applied and that decisions resulting from them are adequately documented.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: HHS stated that it was in general agreement with this recommendation and would provide additional training to the project officers who monitor PRO performance.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to provide criteria to enable HCFA personnel to differentiate between acceptable and unacceptable performance in the routine monitoring of PRO activities.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Not Implemented

    Comments: HHS commented that it believed its PRO budget process was already meeting the intent of the recommendation.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to determine the scope of review needed to adequately meet the program's intent and use this as the starting point for determining the program's funding level.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Implemented

    Comments: HHS agreed with this recommendation and stated that it would be collecting better data to use in setting individual PRO funding levels. HHS has actions in the latest round of PRO contracts to accomplish this.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to collect and use adequate cost and performance data to set each PRO contract funding at a level sufficient to provide the coverage determined to be necessary.

    Agency Affected: Department of Health and Human Services

 

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