Uncertainties Surround Proposal To Expand Prepaid Health Plan Contracting

HRD-88-14: Published: Nov 2, 1987. Publicly Released: Nov 17, 1987.

Additional Materials:


Michael Zimmerman
(202) 275-6195


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO reviewed a Department of Health and Human Services (HHS) proposal seeking legislative authority to contract with employer-based health plans to provide Medicare benefits to the employers' retirees.

GAO found that: (1) the proposed methods for reimbursing employer-based plans differ significantly from those HHS uses to reimburse risk-based health maintenance organizations; (2) HHS has had problems implementing prior capitation initiatives; (3) HHS should develop safeguards to ensure that payment rates do not result in overcompensating health service plans; and (4) HHS plans to research the proposed legislation's effect on existing Medicare prepaid plans.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Section 4015 of the Omnibus Budget Reconciliation Act of 1987 limited HHS to funding three Medicare insured group demonstration projects and required that they be evaluated before program expansion.

    Matter: If the House Ways and Means Committee, Subcommittee on Health, considers the HHS Medicare-insured group proposal, it should consider deferring authorizing implementation until HHS demonstrates that the Medicare-insured group rate-setting methods and beneficiary and program safeguards are reasonable and adequate.


Explore the full database of GAO's Open Recommendations »

Mar 8, 2018

Feb 20, 2018

Feb 8, 2018

Feb 5, 2018

Jan 30, 2018

Jan 23, 2018

Jan 17, 2018

Jan 16, 2018

Looking for more? Browse all our products here