Improved Efforts Needed To Relieve Medicaid From Paying for Services Covered by Private Insurers

HRD-85-10: Published: Feb 12, 1985. Publicly Released: Feb 12, 1985.

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GAO reviewed six states' administration of Medicaid programs to assess the extent and effectiveness of their efforts to reduce Medicaid program costs by using other available health care resources. In addition, GAO described how state Medicaid practices for identifying and collecting private health insurance could be improved through more oversight by the Health Care Financing Administration (HCFA).

GAO found that: (1) when determining eligibility for Medicaid, three states asked only general questions about insurance resources; (2) in three other states, when recipients acknowledged having insurance coverage, caseworkers often failed to follow up and obtain the information necessary to use the insurance; (3) four states did not have ongoing programs to identify potential insurance coverage by computer-matching Medicaid files with other state data sources; (4) there was limited follow-up by the states to determine whether a liability insurer could be responsible for a claim; and (5) the Social Security Administration could help states better identify Medicaid recipient insurance resources by obtaining more insurance information for supplemental security income recipients. GAO also found that the administrative work involved in seeking recovery of Medicaid costs from liable insurers limits the amount states try to recover. Finally, GAO found that HCFA focuses its oversight of state practices related to recipient insurance resources on compliance reviews. These reviews have not identified some major weaknesses, and HCFA has not consistently gotten states to adopt the improvements which it suggested because there are no specific regulatory standards on how states should identify and use Medicaid recipients' insurance resources.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Consolidated Omnibus Budget Reconciliation Act of 1985 included a provision requiring the Secretary, HHS, to issue regulations for financially penalizing states for not collecting required insurance information or not following through with the agreed collection plan.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to implement one of two options. One alternative is to use the HCFA quality control program to influence states to improve their practices for identifying and applying health and liability insurance by: (1) developing quality control program sampling procedures that would determine the amount of erroneous payments due to unrecovered health and liability insurance; and (2) determining an acceptable level of performance, after a base error rate is established, and requiring that states not meeting these performance standards lose the federal share of erroneous payments exceeding the target error rates.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: The Consolidated Omnibus Budget Reconciliation Act of 1985 included provisions requiring HHS to publish regulations establishing the GAO recommended action. HHS also published regulations in November 1985 requiring states to use cost avoidance systems when the probable existance of third-party liability is established at the time a claim is made.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to implement one of two options. One alternative is to strengthen the HCFA oversight of state practices for using available health and liability insurance resources by issuing regulations that require specific practices that include: (1) using interview forms that ask the Medicaid applicants a series of questions designed to detect available insurance resources; (2) establishing procedures for obtaining needed information about the Medicaid applicants' insurance coverage; (3) requiring states to use their available state automated databases to identify sources of insurance available to Medicaid recipients; (4) using effective follow-up procedures to recover from insurers responsible for paying claims covering accident-related injuries; and (5) using a cost avoidance system that avoids paying claims where states have indications that health insurance resources are available to pay the claims.

    Agency Affected: Department of Health and Human Services

 

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