August 31, 1999

Thompson letter on GPRA - HHS Attachment 1

MOST SIGNIFICANT OPEN GAO RECOMMENDATIONS ON HIGH-RISK AREA:

MEDICARE

Description of high-risk area: In 1990, Medicare was included on GAO’s original list of agencies that were vulnerable to waste, fraud, abuse, and mismanagement, and it has remained a high-risk program to the present. The Health Care Financing Administration (HCFA), within the Department of Health and Human Services, is responsible for administering the Medicare program, which pays about $200 billion in benefits for approximately 39 million beneficiaries annually. Medicare is now in what may be the most dynamic and challenging period of its history. Recent legislation, specifically the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the Balanced Budget Act of 1997 (BBA) have given HCFA new tools, as well as major new responsibilities, in its administration and oversight of the Medicare program. New contracting authority granted under HIPAA can lead to a significant restructuring of how HCFA and its contractors carry out the Medicare program. Medicare+Choice, created by the BBA, is a major new managed care initiative. The solvency of Medicare’s Hospital Insurance Trust Fund continues to be a serious concern; the Fund trustees’ 1998 annual report projects that the fund will be depleted by the year 2008. Overshadowing all of this is HCFA’s need to assure that its computer systems are ready for the year 2000, which has delayed HCFA’s efforts to improve systems operations in numerous areas.

GAO Report No. and Date	Recommendation
AIMD-98-284 Sept. 28, 1998	To minimize disruption of Medicare benefits and services, the Administrator, HCFA, should (1) identify the critical path for the Y2K program on the basis of a complete and integrated Y2K project schedule; (2) define the scope of an end-to-end test of the Medicare claims process, and develop plans and a schedule for conducting such a test, including testing procedures and a plan for executing the test, obtaining commitments from participating data exchange partners, and reaching an agreement on dates for conducting the test; and (3) accelerate the development of business continuity and contingency plans for the Medicare program to allow time to ensure that they are reliable and ready when they may be needed.
HEHS-95-155 Aug. 3, 1995	The Secretary of Health and Human Services should direct HCFA to verify the effective operation of all HMO quality assurance and utilization management practices, by applying sufficient trained staff during routine monitoring, and integrating peer review organization findings into HCFA compliance monitoring reviews.
T-HEHS-96-138 April 30, 1996	HCFA should target Medicare’s high-cost, high- utilization areas for running demonstrations to apply such strategies as the use of case management and companies specializing in utilization review.
HEHS-97-202 Sept. 26, 1997	The HCFA Administrator should profile physicians ordering laboratory tests for dialysis patients and notify the claims processing contractors of the providers whose test order rates are aberrant. The Administrator should instruct the contractors to review those cases and carefully scrutinize physicians who order too many or too few tests.
HEHS-98-17 Nov. 7, 1997	The Administrator of HCFA should (1) monitor trends in Medicare beneficiaries’ use of stationary liquid oxygen systems and liquid and gas portables and (2) advise the Secretary of HHS whether a budget-neutral restructuring of Medicare reimbursement for home oxygen is needed to improve patient access to home oxygen systems, and whether Medicare controls can be implemented to ensure that the use of such systems is limited to patients that can benefit from them.
HEHS-98-29 Dec. 16, 1997	The Administrator, HCFA, should (1) require that Home Health Agencies (HHAs) be certified to provide only those services for which they have been surveyed, (2) establish procedures for claims processing contractors to provide state survey agencies with information that would help them assess HHAs compliance with the Medicare’s conditions of participation, (3) require that branch offices be periodically surveyed to ensure that they provide quality care and monitor state surveyors to ensure that they conduct home visits with patients treated by HHA branch offices, and (4) issue implementing regulations for the intermediate sanctions authorized by the Congress that allow for penalizing and terminating HHAs that are repeatedly out of compliance with the conditions of participation.
HEHS-98-102 May 12, 1998	In order for HCFA to gather information needed to adjust Medicare fees for durable medical equipment, the Administrator, HCFA, should (1) ensure that HCFA’s contractors systematically gather and analyze market prices for medical equipment, supplies, and off-the-shelf orthotic devices by using commercial pricing databases and (2) require suppliers to identify the specific medical equipment, supplies, and devices they bill to Medicare by including universal product numbers on their Medicare claims.
HEHS-98-202 July 27, 1998	In order to better protect the health, safety, welfare, and rights of nursing home residents and ensure that nursing homes sustain compliance with federal requirements, the Administrator, HCFA, should revise federal guidance and ensure state agency compliance by (1) revising federal survey procedures to instruct surveyors to take stratified random samples of resident cases and review sufficient numbers and types of cases to better detect problems and assess their prevalence and (2) eliminating the grace period for homes cited for repeated serious violations and impose sanctions promptly.
HEHS-99-23 Jan. 29, 1999	To implement the BBA’s surety bond requirement for Home Health Agencies (HHAs), the HCFA Administrator should revise the present regulation so that all HHAs obtain one financial guarantee surety bond in the amount of $50,000 for the guaranteed return of overpayments for both Medicare and Medicaid.
HEHS-99-30 Feb. 24, 1999	In calculating the practice expense relative value units (RVUs) that will support revised Medicare physician fee schedules, the Administrator of HCFA should (1) use sensitivity analysis to target data collection and analysis to issues that have the greatest effect on new practice expense RVUs; (2) develop plans for updating the RVUs; and (3) monitor indicators of beneficiaries’ access to care, and consider access problems when evaluating the physicians’ payment system.