Medical Review Saving

Pursuant to a congressional request, GAO evaluated a Medicare contractor's 1992 conversion to a shared part-B Medicare claims processing system, focusing on why the contractor's medical review savings decreased significantly between fiscal years 1991 and 1992. GAO noted that: (1) the contractor's reported medical review savings dropped from $51.2 million for 1991 to $24.3 million in 1992; and (2) the contractor and Health Care Financing Administration (HCFA) officials primarily attributed the decrease to a new fee schedule, a decrease in the percentage of claims receiving review, and the low volume of claims processed. GAO believes that: (1) factors additional to program changes are responsible for the savings decline; (2) the contractor processed more, not less, claims in 1992; and (3) a $25-million reduction in medical review savings signals a potential significant management problem that warrants HCFA investigation.