The Health Care Financing Administration (HCFA) chose 12 claims administration contractors in 1999 to act as program safeguard contractors (PSC) for Medicare. This report examines (1) HCFA's progress in implementing its PSC contracting authority and (2) whether HCFA could better manage the PSCs to ensure their most effective use. GAO found that HCFA is experimenting with different options for integrating the PSCs into Medicare's program safeguard activities. Between September 1999 and March 2001, HCFA issued 15 task orders that include different ways of using PSC services. HCFA lacks a long-term strategy to determine how best to use the PSCs. Instead, it has issued task orders in an ad-hoc manner, which has afforded HCFA certain flexibilities, such as targeting its task orders on known problem areas. Although this experimental approach may be prudent in the short-term, it does not represent a process for systematically testing different options for using PSC services in the long-term. Also, HCFA has not set formal criteria and timeframes for determining how the PSCs should be integrated into Medicare's existing program integrity efforts. Finally, HCFA has not established clear, measurable performance criteria to assess the PSCs' performance on individual task orders.
Recommendations for Executive Action
|Health Care Financing Administration||1. To assist HCFA in determining if the PSCs are an effective approach to safeguarding Medicare payments, the Acting Deputy Administrator of HCFA should define the strategic direction for future use of the PSCs. This should include setting goals and objectives for the PSC program, devising evaluation criteria for assessing the overall effectiveness of the PSCs in promoting program integrity, and establishing timeframes for evaluating the PSC program.|
|Health Care Financing Administration||2. As HCFA gains experience with PSC performance, the Acting Deputy Administrator should begin to develop clear, quantifiable performance measures and standards tied to well-defined outcomes for each of the task orders.|