The managed care program, which is funded from both the part A and part B trust funds, consists mostly of risk contract HMOs that enrolled nearly 5 million Medicare beneficiaries as of September 1997. Implementing New Laws Affecting Fee-for-Service Medicare Will Require Sustained Effort to Realize Benefits

The Congress provided important new resources and tools to fight health care fraud and abuse when it enacted HIPAA and BBA. First, HIPAA, enacted over a year ago, grants HCFA the authority to use contractors other than the insurers serving as Medicare intermediaries and carriers to conduct medical and utilization review, audit cost reports, and carry out other program safeguard activities. For example, prospective payment for skilled nursing facilities (SNF) should make it more difficult to increase payments by manipulating Medicare’s billing rules for ancillary services provided to beneficiaries in these facilities, an issue often raised in our reports and testimonies. To meet the requirements of BBA, HCFA will have to develop, concurrently, separate prospective payment systems for services delivered through inpatient rehabilitation facilities, home health agencies, skilled nursing facilities, and hospital outpatient departments. Conducting demonstration projects and reporting to the Congress constitute another portion of work mandated by the legislation. Medicare’s New Choice Plans Present Unknown Challenges for Program Managers

Among the more challenging of BBA’s provisions to implement are those establishing the Medicare+Choice program, which expands beneficiaries’ private plan options to include preferred provider organizations (PPO), provider sponsored organizations (PSO), and private fee-for-service plans. The reforms the Congress embodied in these provisions are major, helping Medicare adapt to and capitalize on changes in the health care market. Delays in Modernizing Medicare’s Claims Processing Systems Could Hamper Program Integrity Efforts

system for collecting payment and other information related to risk contract HMOs, but the MTS contract has been terminated. HCFA Dedicates Staff to Implement BBA Mandates

Aware of the need for agencywide coordination and planning to implement BBA’s multiple provisions, HCFA has established an infrastructure to track and monitor the tasks associated with BBA mandates. According to a HCFA official, the agency has plans to keep Department officials and the Congress routinely informed of the agency’s progress. Conclusions

With the enactment of HIPAA and BBA, the Congress has provided significant opportunities to strengthen several of Medicare’s areas of vulnerability. Now that many more requirements have been placed on HCFA, we are concerned that the promise of the new legislation to combat health care fraud and abuse could at best be delayed or not be realized at all without sustained efforts at implementation. Medicare: Control Over Fraud and Abuse Remains Elusive (GAO/T-HEHS-97-165, June 26, 1997}. Medicaid Fraud and Abuse: Stronger Action Needed to Remove Excluded Providers From Federal Health Programs (GAO/HEHS-97-63, Mar.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed recent legislative efforts to address fraud and abuse in the Medicare program.

What GAO Found

GAO noted that: (1) both the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Balanced Budget Act of 1997 (BBA) directly address Medicare fraud and abuse and provide opportunities to improve program management; (2) both acts offer civil and criminal penalties; (3) they also introduce opportunities to deploy new program safeguards; (4) for example, on the fee-for-service side of the program, BBA introduces prospective payment methods for skilled nursing facility and home health services, in part to halt opportunists from overbilling Medicare; (5) these are among Medicare's fastest-growing components: from 1989 to 1996, spending for home health care and skilled nursing facility care averaged, respectively, a 33-percent and 22-percent annual rise; (6) HIPAA also ensures a stable source of funding for anti-fraud-and-abuse activities, authorizes the Health Care Financing Administration (HCFA) to contract for improved claims reviews, enhances law enforcement coordination, and calls for data collection improvements; (7) on the managed care side, BBA's Medicare+Choice program, which broadens beyond health maintenance organizations (HMO) the private health plans available to Medicare beneficiaries, includes several provisions addressing the marketing, enrollment, and quality of care issues raised in GAO's reports and those of the Inspector General; (8) as always, however, the success of any reform legislation is contingent on its implementation; (9) the Congress has provided the Department of Health and Human Resources (HHS) and HCFA, the Department's administrator of the Medicare program, with many new statutory requirements governing traditional fee-for-service Medicare; some require little effort to carry out, whereas others, such as prospective payment system development, will require extensive time and resources to implement effectively; (10) in addition, the Medicare+Choice program will add considerably to HCFA's private plan monitoring workload; (11) the project to modernize Medicare's claims processing systems, which are at the core of many fraud and abuse detection efforts, has recently been halted; (12) this brings into question the ability of HCFA and its contractors to perform expeditiously the data-intensive analyses needed to spot and counteract abusive billing schemes; and (13) HCFA agrees that the tasks associated with implementing HIPAA and BBA mandates are considerable and plans to report routinely to HHS officials and to the Congress on HCFA's progress implementing the legislation.