Medicare: HCFA Needs to Take Stronger Actions Against HMOs Violating Federal Standards

GAO discussed the Health Care Financing Administration's (HCFA) efforts to address violations of Medicare requirements at the largest Medicare health maintenance organization (HMO) contractor. GAO noted that: (1) the contractor's Medicare requirements violations involved marketing, claims payment, processing of beneficiary appeals, and implementation of an internal quality assurance system; (2) in fiscal year 1989, HCFA cited the contractor for violating Medicare requirements to provide members with current information on the plan's rules, benefits, and costs; (3) over the last 3 years, HCFA found that the contractor inappropriately denied or delayed payment of claims for emergency services and urgently needed services outside of the plan's service area; (4) HCFA found that the contractor did not always treat beneficiary appeals for claims as Medicare appeals; (5) the contractor violated quality assurance requirements by not collecting enough ambulatory care data to systematically identify individual physicians who underseved Medicare enrollees; and (6) HCFA has been reluctant to use its authority to impose sanctions on HMO that fail to comply with Medicare requirements because final regulations have not been issued. GAO believes that to become more effective in addressing violations, HCFA needs to: (1) adopt policies for determining the circumstances that warrant intermediate sanctions; and (2) develop a standard for HMO that would specify an acceptable performance rate for paying claims.