After awarding a Medicare contract to an HMO, HCFA monitors its performance for continued compliance with federal requirements. HCFA has a variety of tools available to enforce compliance with standards. Private Sector Building on Federal Standards

HMO care has become widespread in the private sector. Since 1987, HCFA repeatedly found that the HMO’s South Florida operations did not meet federal standards for quality assurance. Limited Oversight of Medicare HMO Quality Assurance

HCFA’s monitoring and certification process has not been adequate to ensure that Medicare HMOs comply with standards for ensuring quality care. The agency does not routinely assess whether HMO risk-sharing arrangements create a significant incentive to underserve, although the Congress gave the Department of Health and Human Services (HHS) authority, beginning April 1, 1991, to limit arrangements that it found provided excessive incentive to underserve. One HMO that a PRO identified as having an unusually high number of quality of care problems has been a concern to HCFA reviewers for several years because of its financial risk arrangements with providers. About 45 percent required about 3-1/2 months. The HMO denied the beneficiary’s request. Although HCFA, to its credit, has taken a number of positive actions, it has not adequately developed and staffed routine monitoring of HMOs’ quality assurance and other key operations to protect beneficiaries’ interests; taken actions to obtain prompt compliance with existing quality-of-care or other beneficiary protection standards from those HMOs that are slow to correct problems; or given Medicare beneficiaries available information that could help them decide to enroll or to remain enrolled in an HMO. In addition, HCFA could strengthen its quality assurance review efforts and streamline its beneficiary appeal process. But HCFA has remained reluctant to take strong enforcement actions and continues to rely on reviews of HMOs’ quality assurance practices that do not verify their effectiveness. Our report also highlights another method of enforcing HMO compliance, which focuses on providing comparative HMO performance information to Medicare beneficiaries, who make marketplace decisions in selecting particular HMOs. HCFA evaluates HMO’s response. Medicare: Issues Raised by Florida Health Maintenance Organization Demonstrations (GAO/HRD-86-97, July 16, 1986).
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed federal oversight of health maintenance organizations (HMO) that enroll Medicare beneficiaries, focusing on: (1) the Health Care Financing Administration's (HCFA) monitoring of HMO compliance with federal quality assurance standards; (2) HCFA enforcement actions against HMO that do not meet federal standards; (3) the process available to beneficiaries to appeal HMO decisions to deny care; and (4) approaches the private sector is taking to assure HMO beneficiaries of quality care.

What GAO Found

GAO found that although HCFA has instituted promising improvements, its process for monitoring and enforcing Medicare HMO performance standards still suffers because: (1) HCFA quality assurance reviews are not comprehensive; (2) HCFA does not adequately assess the financial risk arrangements that HMO have with providers that can create incentives to underserve beneficiaries; (3) HCFA has been reluctant to use available enforcement tools to correct HMO deficiencies and improprieties; and (4) beneficiaries who appeal HMO denials often wait 6 months or more for resolution, causing them to incur extraneous costs. In addition, GAO found that HCFA could improve its regulatory approach to ensuring good HMO performance by adopting private-sector practices, such as: (1) requiring that HMO undergo accreditation reviews to obtain contracts with Medicare; and (2) requiring information about the care provided to beneficiaries to evaluate HMO performance when making contract decisions.