Medicare:

Status Report on Medicare Insured Group Demonstration Projects

HRD-89-64: Published: Jun 27, 1989. Publicly Released: Jun 27, 1989.

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Pursuant to a legislative requirement, GAO: (1) monitored the status of the Health Care Financing Administration's (HCFA) implementation of the Medicare Insured Groups (MIG) demonstration group projects; and (2) reviewed the potential effects of the Omnibus Budget Reconciliation Act (OBRA) of 1987 requirements on the projects.

GAO found that: (1) HCFA entered into cooperative agreements with three non-government corporations to establish the authorized MIG projects; (2) as of March 1989, two projects were in the planning stage and the other was developing its health care delivery system but had not yet enrolled any Medicare beneficiaries; (3) HCFA continued to negotiate with other prospective sponsors because there was no certainty that all three projects would become operational; (4) HCFA interpreted the act's provision regarding restrictions on payments to MIG in a manner that could result in Medicare paying more for MIG enrollees than if they had stayed in the fee-for-service sector; (5) HCFA had not decided on how to apply the act's limits on the amount of surpluses in excess of 5 percent of the experience-based rate MIG could retain; and (6) MIG that were not paid on an experience-based rate could retain any surplus as profit or use it to reduce liability for supplemental health care benefits.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Health and Human Services (HHS) instructed HCFA to apply the 95 percent of experience limitation to all MIG projects.

    Recommendation: The Secretary of Health and Human Services should require HCFA to apply the 95 percent of the experience-based rate payment limitation and the surplus retention restrictions of OBRA to all MIG projects.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: HHS instructed HCFA to define surplus as the excess of Medicare payment over the costs of providing Medicare-covered services.

    Recommendation: The Secretary of Health and Human Services should require HCFA to define surplus as the excess of Medicare payments over the costs of providing Medicare-covered services.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: HHS instructed HCFA to require all surpluses to be used either for additional benefits not previously funded by the employer or be returned to Medicare.

    Recommendation: The Secretary of Health and Human Services should require HCFA to require that all surplus over that amount either be used for additional benefits not previously funded by the employer or be returned to the Medicare program.

    Agency Affected: Department of Health and Human Services

 

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