Third Status Report on Medicare Insured Group Demonstration Projects

HRD-92-53: Published: Jan 29, 1992. Publicly Released: Jan 29, 1992.

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Pursuant to a legislative requirement, GAO reviewed the status of: (1) the Health Care Financing Administration's (HCFA) implementation of the Medicare Insured Groups (MIG) demonstration projects; and (2) any projects awarded.

GAO found that: (1) two of the three MIG sponsors that completed feasibility analysis phases decided not to proceed to the development phase, while the third had submitted a proposal for it; (2) in 1989, one of the three sponsors completed its feasibility analysis phase and terminated its MIG project because it found that MIG could not operate at a profit; (3) in July 1991, another sponsor decided not to proceed past the feasibility analysis phase, because it was concerned about its ability to control enrollee health costs; (4) since September 1988, HCFA has extended the development phase five times for one sponsor and the phase was scheduled to end in December 1991; (5) the reason most often cited for the delay in completing the development phase was the difficulty in negotiating a contract for health care delivery; (6) another active MIG project involved a health care provider trying to pool a group of employers to form a MIG; and (7) as of November 1991, HCFA had not decided how to update experience-based payment rates, but was waiting for prospective MIG to present a payment updating method for the agency to evaluate.

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