Medicaid: Oversight of Health Maintenance Organizations in the Chicago Area

Highlights

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).

Recommendations

Matter for Congressional Consideration

Matter	Status	Comments
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.	Closed – Implemented	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.
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.	Closed – Implemented	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.

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Health and Human Services	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.	Closed – Implemented 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.
Department of Health and Human Services	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.	Closed – Implemented HHS is now requiring more accurate and complete data from all state Medicaid managed care programs.
Department of Health and Human Services	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.	Closed – Implemented HHS and HCFA have revised the quality assurance requirements that HMO must meet.
Department of Health and Human Services	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.	Closed – Implemented HHS and HCFA have revised the quality assurance requirements that HMO must meet.
Department of Health and Human Services	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.	Closed – Implemented HHS and HCFA have revised the quality assurance requirements that HMO must meet and they include follow-up work.
Department of Health and Human Services	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.	Closed – Implemented HHS and HCFA have directed states to collect data to monitor for underservice by physicians.

See All 6 Recommendations

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