Medicaid:

Oversight of Health Maintenance Organizations in the Chicago Area

HRD-90-81: Published: Aug 27, 1990. Publicly Released: Aug 27, 1990.

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Pursuant to a congressional request, GAO assessed the adequacy of the Health Care Financing Administration's (HCFA) and Illinois' oversight of the quality of care provided to Medicaid recipients by Chicago-area health maintenance organizations (HMO).

GAO found that: (1) Chicago's two largest HMO used incentive payments that could jeopardize the quality of care provided to Medicaid recipients; (2) stronger HMO management controls could help identify and prevent physician behavior that adversely affects quality of care; (3) unlike the Medicare program, Medicaid contractors do not have a minimum enrollment of Medicaid beneficiaries; (4) high turnover of Medicaid recipients enrolled in Chicago-area HMO could increase the incentives to inappropriately delay or deny care; (5) Chicago-area HMO made limited progress toward developing quality assurance programs; (6) HCFA, Illinois Department of Public Aid (IDPA), and Chicago-area HMO did not establish effective mechanisms to identify and correct potential underservicing and other quality-of-care problems; (7) Illinois did not take effective follow-up action after identifying potential quality-of-care problems during Medicaid compliance audits and other reviews; and (8) IDPA did not attempt to determine whether the problems previously identified through compliance reviews and peer reviews were caused by poor documentation or underservicing.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: A bill proposing reforms to Medicaid-managed care programs has been introduced in the Senate, but has not yet been acted on. However, HHS has moved on its own to tighten up the reporting requirements and now requires all capitalized health plans to report comprehensive encounter data.

    Matter: Because the Department of Health and Human Services (HHS) has no specific plans or timetable for improving utilization-reporting systems, Congress may wish to consider requiring HHS to: (1) develop criteria and screens for prepaid health systems; and (2) set a deadline for completion.

  2. Status: Closed - Implemented

    Comments: Bills to introduce reforms to Medicaid managed care programs have been introduced and debated in each of the last 4 years. None has passed and been enacted into law. It appears Congress is not inclined to make change consistent with the recommendation.

    Matter: Congress should amend the Social Security Act to: (1) establish a minimum enrollment requirement for HMO participating in the Medicaid program; and (2) require risk-comprehensive subcontractors serving Medicaid recipients and Medicare beneficiaries to meet the minimum enrollment requirement as well as risk-based contracting requirements relating to patient mix and financial solvency.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HHS and HCFA have revised the quality assurance requirements that HMO must meet and they include follow-up work.

    Recommendation: The Secretary of Health and Human Services, through the Administrator, HCFA, should require IDPA to establish procedures to help ensure that adequate followup is conducted when potential quality-of-care problems are identified.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: HHS and HCFA have revised the quality assurance requirements that HMO must meet.

    Recommendation: The Secretary of Health and Human Services should develop guidelines for peer review organizations to use in reviews of HMO and other prepaid health programs that require an assessment of potential underservicing of Medicaid recipients.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: HHS and HCFA have revised the quality assurance requirements that HMO must meet.

    Recommendation: The Secretary of Health and Human Services should: (1) develop standards for utilization-reporting systems for prepaid health systems; and (2) require states to include such reporting systems in their Medicaid management information systems.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Implemented

    Comments: HHS is now requiring more accurate and complete data from all state Medicaid managed care programs.

    Recommendation: The Secretary of Health and Human Services, through the Administrator, HCFA, should direct IDPA to review the accuracy and completeness of medical care utilization data and take necessary steps to improve utilization reporting.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Implemented

    Comments: Despite recommendations from many interested parties and the debate in Congress on the subject, HHS has shown no inclination in the past 4 years to adopt these recommendations.

    Recommendation: The Secretary of Health and Human Services, through the Administrator, HCFA, should direct IDPA to require HMO, when entering into contracts on a risk basis, to require their subcontracting health plans to comply with standards for risk-based contracting. Specifically, subcontracting health plans should be required, in writing, to: (1) prove their financial solvency; (2) have a plan for handling insolvency; and (3) hold the number of Medicaid recipients to less than 75 percent of total enrollment.

    Agency Affected: Department of Health and Human Services

  6. Status: Closed - Implemented

    Comments: HHS and HCFA have directed states to collect data to monitor for underservice by physicians.

    Recommendation: The Secretary of Health and Human Services, through the Administrator, HCFA, should direct IDPA to establish criteria for expected utilization and develop screens to detect possible underservicing by physicians, medical groups subcontracting with HMO, and HMO.

    Agency Affected: Department of Health and Human Services

 

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