HCFA Needs Authority to Enforce Third-Party Requirements on States

HRD-91-60: Published: Apr 11, 1991. Publicly Released: May 6, 1991.

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Pursuant to a congressional request, GAO reviewed the Health Care Financing Administration's (HCFA) efforts to ensure that states paid Medicaid funds only after beneficiaries' other health care resources were exhausted, focusing on whether HCFA: (1) identified state noncompliance with federal requirements; and (2) had adequate authority to enforce compliance.

GAO found that: (1) HCFA identified significant deficiencies in states' ability to comply with federal third-party requirements, with 45 of 49 states failing to comply with at least 1 of 9 federal requirements; (2) HCFA found that 23 of 49 states did not adequately seek payment recovery; (3) although HCFA did not estimate Medicaid program losses resulting from such noncompliance, GAO identified 2 states as having more than $175 million in backlogged claims for which third parties may have some liability; (4) while imposing additional third-party requirements upon states, the Consolidated Omnibus Budget Reconciliation Act (COBRA) severely limited HCFA authority to impose financial penalties on states that did not meet third-party requirements; and (5) HCFA authority to enforce third-party requirements with financial penalties was almost nonexistent.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: States will be more likely to comply with third-party requirements as a result of the passage of related amendments in the Omnibus Budget Reconciliation Act of 1993, thereby making this recommendation less of a priority.

    Matter: Congress should amend the Social Security Act to authorize HCFA to withhold federal matching funds when states do not comply with federal third-party requirements. To do so, current restrictions in the law should be removed.


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