HCFA Should Improve Internal Controls Over Part B Advance Payments

HRD-91-81: Published: Apr 17, 1991. Publicly Released: Apr 17, 1991.

Additional Materials:


William J. Scanlon
(202) 512-7114


Office of Public Affairs
(202) 512-4800

GAO reviewed the Health Care Financing Administration's (HCFA) controls over Medicare internal control weaknesses, focusing on Georgia's and Florida's carriers' methods for recouping advance payments made to physicians, laboratories, and suppliers under part B regulations.

GAO found that: (1) HCFA lack of internal controls over advance payments to part B providers resulted in inappropriate officials approving such payments; (2) HCFA did not issue regulations or instructions regarding advance payments to part B providers; (3) because of this lack of guidance, the circumstances under which the carriers made advance payments differed; (4) one carrier advanced payments only to medical equipment suppliers, while the other carrier advanced payments available to all providers in that state; (5) by February 1990, one carrier recouped about 94 percent of the $1.3 million it advanced to suppliers; (6) the other carrier recouped advance payments by withholding 25 percent of subsequent payments and 50 percent of payments to other providers; (7) in February 1990, one carrier began more aggressive efforts to recoup advance payments, but about $34 million of the $80 million it advanced to providers remained outstanding; (8) by September 1990, about a year after providers indicated that their payments had returned to normal, one carrier had not recouped 18 percent of the advanced amount; and (9) one carrier encountered particular difficulty in recouping advanced payments it made to providers maintaining more than one Medicare payment account.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: HCFA's final rule incorporating the recommendation was published September 19, 1996.

    Recommendation: The Administrator, HCFA, should determine whether it is appropriate for carriers to make advance payments to Medicare part B providers. If the Administrator determines that it is appropriate to do so, then the Administrator should develop regulations and instructions for regional offices and carriers similar to those that govern part A advance payments. Those instructions should outline the: (1) circumstances under which regional offices may authorize carriers to make advance payments; (2) method to use in calculating the payment amounts; and (3) controls that should be in place to ensure that carriers recoup such payments in a timely manner.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration


Explore the full database of GAO's Open Recommendations »