Medicare: Adequate Funding and Better Oversight Needed to Protect Benefit Dollars
Highlights
GAO discussed efforts to protect Medicare expenditures from waste, fraud, and abuse. GAO noted that: (1) the Health Care Financing Administration (HCFA) manages about 80 contractors who process claims and make payments to beneficiaries, but it does not ensure that program safeguards and payment controls are uniform and reduce unnecessary or inappropriate payments; (2) nonhospital claims have risen 55 percent since 1989, but contractors' per claim funding has decreased by 20 percent because of budget constraints; (3) contractors have not developed new payment controls because their staffs are overwhelmed by suspended claims waiting for review; (4) HCFA has reduced the number of required annual claim reviews from 20 percent to 5 percent and the number of required provider audits by one-third because of funding reductions; (5) program safeguards such as claim reviews have proven to be cost-effective; (6) HCFA does not effectively utilize its management reports and contractor-spending data to monitor contractor performance and payment controls; (7) HCFA has implemented a new data analysis approach that requires contractors to systematically address payment problems, but funding constraints have limited its effectiveness in controlling Medicare expenditures; and (8) HCFA plans to consolidate its multiple automated claims processing systems as part of its overall strategy to improve the efficiency and effectiveness of Medicare operations.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should continue to pursue efforts to modify budget procedures so that Medicare's safeguard funding could be increased without having to cut spending elsewhere. | Congress has considered legislation to modify the budget process but it has not been enacted. Continuing budget constraints make near-term action unlikely. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Health Care Financing Administration | HCFA should develop an effective strategy to manage contractors' payment safeguard activities. This would entail establishing the infrastructure needed to make identification and correction of payment problems a high agency priority. Such a strategy could help ensure that Medicare has the controls in place to aggressively fight waste and abuse. |
Budgetary constraints have precluded HCFA from taking such action. It is unlikely that funding will be made available in the coming year to staff a higher level of effort by HCFA in identifying and correcting payment problems.
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