HCFA Should Exercise Greater Oversight of Claims Administration Contractors

T-HEHS/OSI-99-167: Published: Jul 14, 1999. Publicly Released: Jul 14, 1999.

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Pursuant to a congressional request, GAO discussed the Health Care Financing Administration's (HCFA) oversight of its Medicare fee-for-service claims administration contractors, focusing on: (1) recently completed cases of criminal conduct or False Claims Act violations committed by Medicare contractors; (2) the deceptive contractor activities set forth in those cases or alleged by investigating agents and former contractor employees; and (3) how these activities were carried out without detection by HCFA.

GAO noted that: (1) although HCFA has taken recent steps to improve its oversight of claims and administration contractors, HCFA's oversight process has weaknesses that leave the agency without assurance that contractors are fulfilling their contractual obligations, including paying providers appropriately; (2) since 1993, at least six contractors have settled civil and criminal charges following allegations that they were not checking claims to ensure proper payment, were allowing Medicare to pay claims that should have been paid by other insurers, or were committing other improprieties; (3) for years HCFA left decisions about oversight priorities entirely in the hands of regional reviewers, did not evaluate regional oversight to achieve consistency, and set few performance standards for contractors to aid in holding them accountable; (4) this has led to uneven review of key program safeguards designed to prevent payment errors; (5) HCFA is also seeking new contracting authority that could help the agency increase competition and better ensure contractor performance; (6) GAO believes Congress may wish to consider amending the Social Security Act to allow the Secretary of the Department of Health and Human Services explicit authority to more freely contract with appropriate types of companies for claims administration; (7) even if such legislation were enacted, however, HCFA would need several years to carefully plan and properly implement any new contracting initiatives to avoid the types of problems it encountered in the past when it tried to make changes to its contracting methods; and (8) GAO further believes that HCFA should be required to report to Congress with an independent evaluation on the impact of any new authorities on the Medicare program.

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