Summary: Pursuant to a congressional request, GAO reviewed a Health Care Financing Administration (HCFA) Medicare demonstration project to determine whether: (1) HCFA should have funded the project, which promoted private companies; (2) the contractor promoted all health maintenance organizations (HMO) equally; and (3) HCFA and the contractor properly safeguarded Medicare beneficiaries' names and addresses.
GAO found that: (1) the legislation which HCFA cited as its funding authority did not clearly authorize the project; (2) HCFA improperly paid for part of the HMO marketing costs, since HMO should pay such costs out of their Medicare reimbursements; (3) the contractor did not promote all HMO equally, since it provided little or no information to Medicare beneficiaries about nonparticipating HMO; (4) the contractor's use of a HCFA transmittal letter with its promotional mailings may have violated regulations against federal endorsement of HMO; and (5) although HCFA and the contractor did not follow applicable Privacy Act rules governing confidential beneficiary data release and disposal, there was no indication that the contractor used the information for any purpose other than to mail HMO promotional material.
