Increased HMO Oversight Could Improve Quality and Access to Care

HEHS-95-155: Published: Aug 3, 1995. Publicly Released: Aug 4, 1995.

Additional Materials:


William J. Scanlon
(202) 512-7114


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO reviewed federal oversight of health maintenance organizations (HMO) that enroll Medicare beneficiaries, focusing on: (1) the Health Care Financing Administration's (HCFA) monitoring of HMO compliance with federal quality assurance standards; (2) HCFA enforcement actions against HMO that do not meet federal standards; (3) the process available to beneficiaries to appeal HMO decisions to deny care; and (4) approaches the private sector is taking to assure HMO beneficiaries of quality care.

GAO found that although HCFA has instituted promising improvements, its process for monitoring and enforcing Medicare HMO performance standards still suffers because: (1) HCFA quality assurance reviews are not comprehensive; (2) HCFA does not adequately assess the financial risk arrangements that HMO have with providers that can create incentives to underserve beneficiaries; (3) HCFA has been reluctant to use available enforcement tools to correct HMO deficiencies and improprieties; and (4) beneficiaries who appeal HMO denials often wait 6 months or more for resolution, causing them to incur extraneous costs. In addition, GAO found that HCFA could improve its regulatory approach to ensuring good HMO performance by adopting private-sector practices, such as: (1) requiring that HMO undergo accreditation reviews to obtain contracts with Medicare; and (2) requiring information about the care provided to beneficiaries to evaluate HMO performance when making contract decisions.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Balanced Budget Act of 1997 incorporated GAO's recommendation, specifically mandating that the Secretary provide to beneficiaries comparative information on disenrollments, and plans' recent records of compliance with legally mandated requirements, as well as other quality and performance indicators to the extent available. HCFA has begun collecting other quality and performance information for the first time, in the form of HEDIS (Health Plan & Employer Data & Information Set), indicators of the frequency of specific preventative medical services. HCFA plans to begin disseminating some of this information in 1998.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to routinely publish: (1) comparative data it collects on HMO such as complaint rates, disenrollment rates, and rates and outcomes of appeals; and (2) the results of its investigations or any findings of noncompliance by HMO.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: HCFA has hired clinical staff with quality assurance and utilization management (QA/UM) expertise to oversee and conduct QA/UM audits of Medicare+Choice (M+C) contractors. The agency has developed a partnership with the Medicare+Choice Quality Review Organizations to provide technical assistance (utilizing one standard assessment tool) to its regional office staff doing evaluations of M+C organizations' quality assessment/performance improvement projects. Further, HCFA has incorporated into the M+C final rules the QA/UM deeming standards that were required under the BBA and BBRA.

    Recommendation: The Secretary of Health and Human Services should direct HCFA to verify the effective operation of all HMO quality assurance and utilization management practices, by applying sufficient trained staff during routine monitoring, and integrating peer review organization findings into HCFA compliance monitoring reviews.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: Interim final regulations for an expedited appeal process were issued April 30, 1997, citing GAO's study as supporting the need for an expedited process. HCFA issued implementation guidance to HMOs on July 22, 1997, and is implementing the new, expedited process with its risk-contract HMOs.

    Recommendation: The Secretary of Health and Human Services should direct HCFA to explore further options to streamline the appeal process.

    Agency Affected: Department of Health and Human Services


Explore the full database of GAO's Open Recommendations »

Jun 26, 2020

Jun 25, 2020

Jun 18, 2020

Jun 12, 2020

Jun 5, 2020

Jun 4, 2020

Jun 2, 2020

Jun 1, 2020

May 21, 2020

May 20, 2020

Looking for more? Browse all our products here