We examined two types of  Medicare debts:
Medicare secondary payer (MSP) debts. Of the approximately $6.4 billion of Medicare debts that CMS had reported  as eligible for referral by the end of fiscal year 2000, the agency reported  that about $4.3 billion of the debts had not been referred to Treasury or a  Treasury-designated debt collection center. Problems  with the debt-referral system contributed to the late referral of non-MSP  debts. Although CMS reached its $2 billion referral goal for fiscal year  2001, both the prospects for collection during the year and the collectibility  of the debts were likely diminished by the referral delays. Limited contractor efforts, coupled with inadequate  CMS monitoring of contractor performance, were primarily responsible for  the slow progress in referring MSP debts. One of the contractors held $255 million of Part A MSP debt more than 180  days delinquent as of September 30, 2000. Debts resulting from claims  adjustments are generally offset from subsequent Medicare payments  and require no further collection action. CMS also did not properly  report its exclusions from referral requirements. Treasury uses the information to monitor agencies’  implementation of DCIA. Recommendations for Executive Action

To help ensure that CMS promptly refers all eligible delinquent Medicare  debts to PSC, as we recommended in September 2000, and that all benefits  from closed-out debts are realized, we recommend that the administrator  of CMS establish and implement policies and procedures to monitor  contractors’ implementation of CMS’s May 2001 instructions to ensure  the prompt referral of eligible MSP debts;  implement changes to CMS’s non-MSP debt tracking systems so that  CMS personnel will be better able to monitor contractors’ referral of  eligible non-MSP debts as required by CMS’s April 2001 instructions to  contractors; develop and implement a comprehensive referral plan for all eligible  delinquent Medicare debts that includes time frames for promptly  referring all types of debts, including MSP liability and Part A claims  adjustments debts; perform an assessment of MSP debts being closed out because they are  more than 6 years and 3 months delinquent to determine whether to  pursue collection action on the debts, and document the results of the  assessment; establish and implement policies and procedures for reporting closed- out Medicare debts, when appropriate, to IRS; and validate the accuracy of debt-eligible amounts reported in the Medicare  Trust Fund TROR by establishing a process that ensures, among other  things, (1) accurate reporting of the aging of certain delinquent debts,  (2) accurate and complete reporting of debts excluded from referral  requirements, and (3) verification of data entry for referral amounts.
Why GAO Did This Study

The Debt Collection Improvement Act (DCIA) of 1996 requires that agencies refer eligible debts delinquent more than 180 days that they have been unable to collect to the Department of the Treasury for payment and offset and to Treasury or a Treasury-designated debt collection center for cross-servicing. The Centers for Medicare and Medicaid Services (CMS) made progress in referring eligible delinquent debts for collection during fiscal year 2001. Much of the referral volume was late in the year, however, and substantial unreferred balances remained at the end of the fiscal year. Inadequate procedures and controls hampered prompt identification and referral of both eligible non-Medicare Secondary Payer (MSP) and MSP debts. The delayed referral of non-MSP debts resulted from problems with the CMS debt-referral system and insufficient CMS monitoring of contractor referrals. The low level of MSP debt referrals resulted primarily from limited contractor efforts and insufficient CMS monitoring of contractor performance.

What GAO Found

Although GAO did not test whether selected CMS debts had been reasonably excluded from referral and reached no overall conclusion about the appropriateness of CMS exclusions, GAO found that CMS did not report reliable Medicare debt information to the Treasury Department as of September 30, 2000.