Legislative Reforms Substantially Increase HCFA’s Authority to Manage the Medicare Program

Two recent acts grant HCFA substantial authority and responsibility to reform Medicare. Specifically, managers were concerned that because of the concentrated efforts to implement BBA and solve computer problems that could arise in the year 2000, the quality of other work might be compromised or tasks might be neglected altogether. Over the past several years, we have reported that HCFA has not adequately ensured that contractors are paying only medically necessary or otherwise appropriate claims. They noted that HCFA’s traditional approach of hiring generalist staff and training them largely on the job is no longer well suited to the agency’s need to implement recent reforms expeditiously. HCFA’s Reorganization Is in Transition

In July 1997, HCFA restructured its entire organization. The new design reflected the agency’s intent to, among other things, (1) combine activities to redirect additional resources to the growing managed care side of the program, (2) acknowledge a shift from HCFA’s traditional role as claims payer to a more active role as purchaser of health care services, and (3) establish three components focused on beneficiaries, health plans and providers, and Medicaid and other activities conducted at the state level. HCFA Lacks a Comprehensive Plan to Accomplish Its Short-Term Agenda

We observed that managers appeared to be clear on top management’s expectations for completing BBA-related activities and for making sure that contractors’ claims processing systems would comply with the millennium changes. The illustration above and our discussions with agency officials suggest that while HCFA may be ready to assert its BBA-related resource needs, it is not likely to be in a position to adequately justify the resources it seeks to carry out its other Medicare program objectives. This observation calls to mind our July 1997 report on the adequacy of HHS’s draft strategic plan under the Government Performance and Results Act. Observations

HCFA is an agency facing many challenges. struggling to carry out Medicare’s numerous and challenging activities. In addition, they assert that the loss of experienced staff has further diminished HCFA’s capacity. We will also continue to monitor the progress of HCFA’s reorganization efforts.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed the Health Care Financing Administration's (HCFA) ability to meet growing program management challenges, focusing on: (1) HCFA's new authorities under recent Medicare legislation; (2) HCFA managers' views on the agency's capacity to carry out various Medicare-related functions; and (3) the actions HCFA needs to take to accomplish its objectives over the next several years.

What GAO Found

GAO noted that: (1) substantial program growth and greater responsibilities appear to be outstripping HCFA's capacity to manage its existing workload; (2) legislative reforms have increased HCFA's authority to manage the Medicare program; (3) simultaneously, however, other factors have increased the challenges HCFA faces, including the need to make year 2000 computer adjustments and develop a new, comprehensive information management strategy; manage transitions in its network of claims processing contractors; and implement a major agency reorganization; (4) in addition, officials report that the expertise to carry out HCFA's new functions is not yet in place and that HCFA has experienced a loss of institutional knowledge through attrition; (5) in this environment, agency managers are concerned that some of their responsibilities might be compromised or neglected altogether because of higher-priority work; (6) HCFA's approach for dealing with its considerable workload is incomplete; (7) heretofore, the agency lacked an approach--consistent with the requirement of the Government Performance and Results Act of 1993 to develop a strategic plan--that specified the full range of program objectives to be accomplished; (8) HCFA has developed a schedule for responding to recent legislative reforms but is still in the process of detailing the staffing and skill levels required to meet reform implementation deadlines; and (9) while addressing new mandates, the agency also needs to specify how it will continue to carry out its ongoing critical functions.