Problems in Administering Medicare's Health Maintenance Organization Demonstration Projects in Florida

HRD-85-48: Published: Mar 8, 1985. Publicly Released: Mar 8, 1985.

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In response to a congressional request, GAO reviewed the operations of Florida health maintenance organizations (HMO) to determine: (1) if Medicare beneficiaries were enrolled and disenrolled in HMO in a timely fashion; and (2) how a requirement that, except for emergency services, all health care services for enrolled beneficiaries must be provided or authorized by the HMO was administered.

GAO found that 6.4 percent of the beneficiaries had potentially received some out-of-plan physicians' services while they were members of an HMO. The beneficiaries had paid for about 14 percent of the services, and HMO had paid for about 53 percent because: (1) HMO had authorized the services and the doctors had sent the claim to Medicare by mistake; or (2) HMO decided to pay the claims when they learned of the circumstances of the denials. GAO found that the Medicare program correctly denied claims worth $1.9 million and incorrectly paid claims worth $700,000. Those payments represented duplicate payments because the costs of the services were included in the payment rates to HMO. GAO found that these problems resulted from HMO and Medicare coordination failures. In addition, GAO found that the internal controls for coordinating the hospital-related HMO services with the regular Medicare program were highly vulnerable to error. In about 20 percent of the hospital admissions that GAO reviewed, the Department of Health and Human Services had not advised the Medicare contractor that the beneficiaries were enrolled in individual HMO. One cause of the problem was recordkeeping delays during enrollment or disenrollment. Other problems occurred when out-of-plan services were obtained during enrollment waiting periods.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Verification of time lags between the effective date of enrollment for all Medicare HMO enrollees in South Florida and the dates the information was posted to the HCFA Health Insurance Beneficiary Master File showed no delays in recording enrollments as of November 1, 1985.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator of the Health Care Financing Administration (HCFA) to take action to identify and correct the systemic problems leading to the erroneous physician and hospital payments that GAO found. Corrective action should center on overcoming the problems of intermediaries' and carriers' not knowing when beneficiaries are enrolled in an HMO because of the delays in recording enrollments and problems with the computerized exchange of data among the carriers, intermediaries, HMO, and HCFA.

    Agency Affected: Department of Health and Human Services


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