Over $1 Billion Should Be Recovered From Primary Health Insurers

HRD-92-52: Published: Feb 21, 1992. Publicly Released: Feb 21, 1992.

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Pursuant to a congressional request, GAO reviewed Medicare contractors' efforts to administer Medicare Secondary Payer (MSP) program provisions intended to ensure that primary insurers pay claims before Medicare.

GAO found that: (1) in response to a Health Care Financing Administration (HCFA) survey, Medicare contractors identified backlogs of over $1 billion in erroneously paid beneficiary claims, and identified over 1.1 million additional beneficiaries who had additional insurance; (2) insurers could owe Medicare an additional $1 billion in claims after the contractors research the additional 1.1 million beneficiaries; (3) a HCFA data match using Internal Revenue Service and Social Security Administration records to identify a beneficiary or a spouse with additional insurance could add several million more claims to the existing backlogs, but Medicare could lose millions of dollars in claims because of a Department of Health and Human Services (HHS) regulation that limits contractors' claim recovery time; and (4) although collections of erroneous MSP payments greatly exceed carriers' recovery costs, MSP budget reductions hinder carrier collection. GAO also found that the HHS fiscal year (FY) 1992 budget will not permit contractors to significantly reduce existing backlogs, since the budget is: (1) below the FY 1989 funding levels, when claims volume was about 27 percent less and contractors did not have huge MSP backlogs; and (2) about 22 percent less than Medicare contractors requested.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: OMB released $19.9 million to Medicare contractors for recovering amounts owed Medicare by private insurers. Backlogs of about $1 billion existed. Medicare contractors had reduced these backlogs to about $136 million as of March 31, 1993. As a result of GAO's work and Medicare contractors' efforts, about $278 million was recovered from primary health insurers.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to initiate a request to the Office of Management and Budget (OMB) to release the necessary contingency funds for use in recovering mistaken payments owed to Medicare.

    Agency Affected: Department of Health and Human Services


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