Medicare Contractors:

Further Improvement Needed in Headquarters and Regional Office Oversight

HEHS-00-46: Published: Mar 23, 2000. Publicly Released: Mar 23, 2000.

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Leslie G. Aronovitz
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Pursuant to a congressional request, GAO reviewed the Health Care Financing Administration's (HCFA) recent efforts to address weaknesses in how the central office and regional offices work together to oversee Medicare contractors, and the continuing management challenges HCFA faces.

GAO noted that: (1) HCFA is taking a number of steps to strengthen contractor oversight by its central office and 10 regional offices; (2) these include: (a) clarifying accountability for contractor oversight at the central office; (b) establishing national review teams, which combine the expertise of central and regional office staff, to conduct evaluations of contractor performance; and (c) providing detailed direction to regional office overseers to improve the consistency of contractor reviews and reporting; (3) although central and regional office officials have stated that these changes will enhance contractor oversight, most of these actions are still in the planning or early implementation stages; (4) therefore, it is too early to assess their effects; (5) even if these efforts are successful, HCFA's central and regional offices are still likely to face difficulties in working together effectively to oversee Medicare contractors; (6) until very recently, HCFA regional overseers were not directly accountable to the central office group responsible for contractor oversight activities; (7) while HCFA was reviewing a draft version of this report, the agency announced that, to improve regional accountability, it is establishing a position within each consortium to consolidate responsibility for contractor management; (8) GAO did not have time to evaluate the impact of this initiative on strengthening headquarters and regional oversight; (9) other weaknesses in its oversight management have not yet been addressed; and (10) specifically, HCFA: (a) lacks adequate management information on regional office resources used or needed for evaluating contractors; (b) since 1995, has provided late annual instructions (or none at all) on what oversight must be conducted by regional office reviewers; and (c) does not effectively employ available management tools--such as routine feedback to regional offices--to ensure that adequate contractor oversight is performed.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In fiscal year 2001, CMS began to review and provide feedback on the timeliness and quality of CPE review reports prepared by the review teams. In addition, CMS established the Consortium Contractor Management Officer (CCMO) structure. There are 4 CCMOs with responsibility for the day-to-day management of the Medicare fee-for-service contractors. The 4 CCMOs report to their respective Consortium Administrator and the Deputy Director for Medicare Contractor Management. The CCMOs manage multi-regional contractor operations and systems staffs, and are accountable for resolving CMS management issues with the contractors. The creation of the CCMO structure enabled CMS to separate contractor management from contractor evaluation, thus enabling the CCMOs and their staffs to concentrate on management.

    Recommendation: To enhance HCFA's central and regional offices' effectiveness in overseeing Medicare claims administration contractors, the Administrator, HCFA, should improve accountability for contractor oversight by establishing a system to evaluate and hold regional staff accountable for their oversight activities.

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

  2. Status: Closed - Implemented

    Comments: CMS developed a risk assessment methodology that provides a documented approach to identifying Medicare contractors and the specific areas to be evaluated, as well as allocation of resources for CPE reviews at the national, consortium, and regional office level. This methodology was used extensively in developing the fiscal year (FY) 2000 national CPE review plan. A contractor reviewed the risk assessment methodology and developed suggestions for further refinements, and subsequently, CMS refined its risk assessment tool. In February 2000, HCFA noted in its comments on this recommendation that its Medicare Contractor Oversight Board has an important role in ensuring that resources are deployed for maximum effectiveness in the CPE process. It noted that during the formulation of the FY2001 CPE, the Oversight Board would review the plans to ensure that the CPE process included important HCFA initiatives, prioritize initiatives to maximize available resources, and review budget requests to ensure appropriate distribution of funding. In addition, HCFA initiated a short-term project to identify the staff in the regional offices currently involved with contractor management and oversight. HCFA intends to use this information to realign staff activities to a coordinated national and consortium approach. Finally, HCFA convened a work group to evaluate what resources are necessary for contractor management and is monitoring all the resources, including staff and travel, necessary for CPE.

    Recommendation: To enhance HCFA's central and regional offices' effectiveness in overseeing Medicare claims administration contractors, the Administrator, HCFA, should ensure that central and regional office resources are applied appropriately to the review the process by: (1) using a structured, documented risk assessment process for identifying specific contractors or evaluation areas to be reviewed each year; and (2) determining what resources are needed for effective contractor oversight and how they should be deployed for maximum effectiveness.

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

  3. Status: Closed - Implemented

    Comments: CMS has improved the timeliness of annual instructions to the regional offices regarding CPEs. In fiscal year (FY) 2001, the CPE strategy was issued in December 2000, and the Lessons Learned Conference was conducted in January, 2001. The Lessons Learned conference has become a yearly way to communicate best oversight practices to CPE reviewers. For FY 2002, CMS plans to conduct the conference in the first quarter so that reviewers will have guidance information before the start of CPE reviews. CMS has also established ongoing communications with the regional offices regarding contractor performance evaluations through the use of routine email issuances. CMS issued a revised version of its Regional Office Manual in May 2001, and is currently working to update certain portions of this. In addition, CMS established a CMS website, which it is using to publish the most current information regarding the CPE process and to ensure that all CPE reviewers have an accessible source of reliable information. HCFA's central office has established ongoing communication with the regional offices regarding contractor performance evaluations by electronically providing formal routine issuances to them as needed regarding various CPE issues. HCFA believes that this process has proven beneficial since it affords the central office the opportunity to address oversight issues as well as other problems in the process that are identified throughout the year. Furthermore, HCFA plans to issue its guidance for FY 2001 contractor performance evaluations in a more timely fashion to provide additional time for teams to plan and conduct reviews. In addition, HCFA is currently revising its Regional Office Manual instructions to provide more specific and current guidance on conducting evaluations of Medicare contractors. Finally, HCFA conducted a best practices/lessons learned conference in February 2000, with more than 100 staff in attendance.

    Recommendation: To enhance HCFA's central and regional offices' effectiveness in overseeing Medicare claims administration contractors, the Administrator, HCFA, should improve intra-agency communication and information sharing by: (1) ensuring that annual instructions to the regional offices for conducting Contractor Performance Evaluations are issued on a timely basis; (2) directing that regional offices be provided up-to-date, consolidated guidance in the regional manual, electronically, or through other means; and (3) establishing a formal program to identify and routinely communicate information on best oversight practices.

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


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