Lessons Learned From HCFA's Implementation of Changes to Benefits

HEHS-00-31: Published: Jan 25, 2000. Publicly Released: Feb 8, 2000.

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Pursuant to a congressional request, GAO provided information on the Health Care Financing Administration's (HCFA) efforts to implement changes to the Medicare program, focusing on HCFA's implementation of the: (1) expansion of the partial hospitalization benefit; and (2) more recent changes under the Balanced Budget Act of 1997 (BBA) to determine whether HCFA is acting upon lessons learned from the partial hospitalization program.

GAO noted that: (1) HCFA has a difficult task in overseeing the implementation of changes to Medicare, yet this oversight is essential to counteract the opportunities that sometimes arise for dishonest providers to abuse the program; (2) in the early 1990s, when HCFA implemented the expansion of the partial hospitalization benefit to include community mental health centers (CMHC), HCFA did not systematically evaluate the implications of the benefit's expansion; (3) as a result, Medicare paid claims that should not have been paid; (4) moreover, HCFA did not provide its contractors with timely and adequate guidance on the partial hospitalization benefit, and neither HCFA nor its contractors systematically monitored claims for the new benefit until it had been in effect for several years; (5) finally, although individual Medicare contractors detected some improper payments in the early years of the partial hospitalization program, HCFA did not take prompt action to investigate these problems or share this information with its other contractors; (6) taking advantage of its experience with CMHC, HCFA has done better in implementing the benefit changes required by the BBA, but more needs to be done to determine whether corrective actions are needed; (7) for example, HCFA created several internal groups to evaluate its implementation of certain changes under the BBA and to identify the potential for vulnerability to fraud and abuse that might result from these changes; (8) in addition, HCFA has provided more timely explanation of the benefit changes to its contractors and providers, but it still needs to provide contractors with more specific instructions on how to review claims and detect inappropriate billing; (9) although HCFA has recognized the need to develop baseline data for use in identifying questionable claims, it has not yet begun to do so; (10) finally, HCFA has made limited progress in addressing the recommendations of the groups that it charged with evaluating its implementation of several BBA benefit changes; and (11) for example, HCFA was advised to conduct a baseline study to determine the volume and type of services billed by nonphysician providers, but HCFA officials told GAO it had not yet done so largely because its resources were focused on year-2000 concerns.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: HCFA continues to refine its processes to ensure the programmatic integrity of legislated benefit changes. When the Balanced Budget Refinement Act suspended the BBA's annual reimbursement limits for therapy services for 2 years, HCFA expeditiously awarded to a Program Safeguard Contractor (PSC) a task order to assist in preparing mandated reports to Congress. The contractor will develop a coordinated strategy for the review of therapy services provided in all settings, excluding inpatient hospital, that decreases error rates and encourages the delivery of covered therapy services to Medicare beneficiaries. Consistent with GAO recommendations, this effort includes data collection and statistical analysis, development of evidence-based medical review protocols, educational materials, and a public relations effort to ensure appropriate claims payment. This recommendation should be considered completed.

    Recommendation: The Administrator, HCFA, should establish a process for implementing legislated Medicare benefit changes that will ensure: (1) careful assessment of the potential effects of benefit changes on the program; (2) sufficient explanation of the benefit changes to enable contractors to review and correctly pay claims; (3) adequate claims monitoring to detect irregularities, patterns of abuse, or other potential problems; and (4) timely corrective action should problems with the benefit arise.

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


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