The July 30, 1987, report accompanying the fiscal year 1988 appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies, requested us to determine the level of beneficiary and provider satisfaction with the administrative services received under the Medicare program. We agreed with Committee staff to examine and report on the changes that occurred from fiscal years 1983 through 1987 in the timeliness and accuracy of claims processing, the responsiveness to beneficiary and provider inquiries, and the processes available to beneficiaries and providers to dispute decisions about reimbursement and program coverage. Our report also presents the views of various officials responsible for the Medicare program and provider groups and organizations representing the elderly on the services provided under the Medicare program.

BACKGROUND

The Medicare program provides two types of health insurance to
about 32 million beneficiaries. Part A covers hospital,
nursing home, and home health agency services, while Part B
covers physician, outpatient, and certain other medical
services and supplies. Although the Health Care Financing
Administration (HCFA) in the Department of Health and Human
Services administers the Medicare program, it relies on
contractors to process and pay Medicare claims. In fiscal
year 1987 the contractors--fiscal intermediaries under Part A
and carriers under Part B--paid $48.0 billion in Part A
benefits and $28.7 billion in Part B benefits. Intermediaries
pay outpatient claims even though outpatient care is covered
under Part B.

In addition to paying claims, contractors provide other services to beneficiaries and providers--namely, responding to written, telephone, and walk-in inquiries; providing claims dispute processes; and educating beneficiaries and providers about program benefits and requirements. HCFA monitors contractor performance through annual contractor evaluations.

B-230510

The following presents claims and cost information for fiscal years 1983 through 1987.

Claims processing times increased each year from fiscal year 1983 through 1986, with the longest times generally occurring in fiscal years 1985 and 1986. According to contractor officials, program and policy changes, such as implementing a common claims coding system, and HCFA's directive to increase the average number of claims awaiting processing (pending claims), accounted for the increase in average processing times during these 2 fiscal years. HCFA's directive was intended to achieve Gramm-Rudman-Hollings budget reductions by delaying claims payments.

Claims processing times improved in fiscal year 1987. Beginning in fiscal year 1987, HCFA placed increased emphasis on timeliness during its annual contractor performance evaluations because of the claims processing times required by the Omnibus Budget Reconciliation Act of 1986. HCFA also provided contractors an additional $41 million in fiscal year 1987 to process the increase in claims volume and to meet the requirements of the act. We were told by HCFA and contractor officials that these were the reasons for the improved performance.

From fiscal years 1983 through 1985, the accuracy of carriers' claims processing decreased. During fiscal year 1985, both the frequency of contractor clerical errors and the average amount of an error reached their highest rates--a 6.7-percent

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