Medicare: Reasonableness of Health Maintenance Organization Payments Not Assured

摘要

Medicare law provides a payment safeguard to help ensure the accuracy of the methods used to calculate capitation rates. This safeguard, the adjusted community rate (ACR) process, is intended to prevent HMOs from retaining excessive profit from Medicare's payments. An HMO's ACR is its estimate of the premium it would receive from commercial enrollees with the same characteristics and benefit package as Medicare enrollees. Health Care Financing Administration (HCFA'S) process for reviewing, validating, and approving ACR submissions provides little assurance that the ACR process is meeting its payment safeguard objective. Judging from GAO'S case studies of ACRs submitted by 4 HMOS and reviews of a random sample of ACRS submitted by 15 other HMOS, the process is susceptible to HMO manipulation and error. This is because HCFA does not always enforce its requirements that an HMO (1) Use its own historic cost and utilization data as a basis for calculating its ACR, (2) Follow the prescribed computational methods to account for differences between Medicare and commercial members' volume and cost of services, and (3) Document the calculations. HCFA, constrained in its review of HMOS' ACR submissions by the brief time its has to approve them, has not compensated by developing an effective monitoring program. Such a program could identify past and help avoid future problems. Also, HCFA lacks specific authority to recover funds it has paid erroneously to HMOS because of inaccurate ACRS. Keywords: Medicare; Cost control; Payments. (kt)