Summary: GAO reviewed Medicare's health maintenance organizations (HMO) program to determine: (1) the adequacy of financial and quality-of-care safeguards for Medicare beneficiaries; (2) the reasonableness of Medicare payments to HMO; and (3) the effectiveness of Department of Health and Human Services (HHS) oversight.
GAO determined that: (1) in network-type HMO, the beneficiary protections concerning HMO financial solvency and enrollment were substantially limited, since HMO delivered many services through subcontractors; (2) although the subcontractors assumed most HMO financial risk, legislative safeguards did not apply to them and they received little federal or state oversight; and (3) Medicare's payments to HMO were too high because the program did not adjust rates for enrollees' health status. GAO found that: (1) HMO enrollees were healthier than the average beneficiary, as measured by mortality rates; (2) HMO enrollees generally would need less medical care and cost HMO less overall; and (3) the HMO program is unlikely to achieve the intended Medicare savings. GAO also found that no Florida HMO were fully complying with federal requirements to inform Medicare enrollees of their rights to grieve and appeal denied claims or services.
