Summary: Pursuant to a legislative requirement, GAO: (1) monitored the status of the Health Care Financing Administration's (HCFA) implementation of the Medicare Insured Groups (MIG) demonstration group projects; and (2) reviewed the potential effects of the Omnibus Budget Reconciliation Act (OBRA) of 1987 requirements on the projects.
GAO found that: (1) HCFA entered into cooperative agreements with three non-government corporations to establish the authorized MIG projects; (2) as of March 1989, two projects were in the planning stage and the other was developing its health care delivery system but had not yet enrolled any Medicare beneficiaries; (3) HCFA continued to negotiate with other prospective sponsors because there was no certainty that all three projects would become operational; (4) HCFA interpreted the act's provision regarding restrictions on payments to MIG in a manner that could result in Medicare paying more for MIG enrollees than if they had stayed in the fee-for-service sector; (5) HCFA had not decided on how to apply the act's limits on the amount of surpluses in excess of 5 percent of the experience-based rate MIG could retain; and (6) MIG that were not paid on an experience-based rate could retain any surplus as profit or use it to reduce liability for supplemental health care benefits.
