Summary: The Centers for Medicare and Medicaid Services (CMS) spent about $35 billion in 2000 on the Medicare+Choice program--the managed care alternative to Medicare's fee-for-service program. During that time, almost 6.3 million Medicare beneficiaries were enrolled in health plans offered by managed care organizations (MCO) that participate in the Medicare+Choice program. Each year, any MCO choosing to participate in the Medicare+Choice program must submit to CMS an adjusted community rate proposal for each plan that it intends to offer. The proposal identifies the health services the MCO will provide to its Medicare members and the estimated cost to provide those services. It also shows the estimated payments that the MCO expects to receive for providing these services. This report shows that CMS' approach in the first year met the requirements of the Balanced Budget Act of 1997 (BBA) and laid the foundation for future years audit process. The audits done by the Department of Health and Human Services' Office of Inspector General (HHS OIG) and three CPA firms in 2000 were in accordance with generally accepted auditing standards (GAAS) and generally followed CMS' audit program, including the submission of audit reports detailing their findings. However, the audit reports were not always complete or consistently prepared. CMS has now hired a contractor to reevaluate contract year 2000 audit reports in which possible overcharges were identified.
