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Medicare HMOs: HCFA Can Promptly Eliminate Hundreds of Millions in Excess Payments

HEHS-97-16 Published: Apr 25, 1997. Publicly Released: May 13, 1997.
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Highlights

Pursuant to a congressional request, GAO provided information on Medicare's rate-setting method for paying risk contract health maintenance organizations (HMO), focusing on: (1) the conditions under which Medicare's method can yield payment rates that are too high; and (2) a practical improvement to Medicare's method directed at the problems fostering excess payments.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services The Secretary of Health and Human Services should direct the Administrator, HCFA, to incorporate the expected FFS costs of HMO enrollees into the methodology for establishing county rates using the method GAO explains in this report and adjust Medicare payment rates to risk contract HMO's accordingly.
Closed – Implemented
The Balanced Budget Act (BBA) of 1997 includes provisions that will reduce the excess HMO payments reported by GAO. The BBA's provisions do not, however, incorporate GAO's method to target payment reductions to areas with the highest excess payments.

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Topics

Health care costsHealth care programsHealth insurance cost controlHealth maintenance organizationsMedicareManaged health careMedicaidMedical services ratesOverpaymentsProjections