Management of the Risk-Based HMO Program

T-HRD-88-10: Published: Mar 10, 1988. Publicly Released: Mar 10, 1988.

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GAO discussed the Health Care Financing Administration's (HCFA) management of the Medicare Health Maintenance Organizations (HMO) Program. GAO found that: (1) HCFA has not effectively ensured that if payment rates overcompensate HMO, the Medicare program and its beneficiaries would gain either through rate reductions or additional services; (2) HCFA has limited data for centrally monitoring HMO quality of care, since the only data HCFA receives are those needed to monitor compliance with federal financial solvency requirements; and (3) in many cases where HMO are unable to resolve financial solvency compliance problems, the only HCFA alternatives are either to terminate the contract or tolerate the continued noncompliance. GAO believes that: (1) Congress may want to consider giving HCFA broad discretion to use its sanction authority to suspend Medicare enrollments; and (2) HCFA should develop a new payment method and beneficiary safeguards before Congress grants it authority to contract with employer- and union-sponsored prepaid health plans nationwide.

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