Review of Medicare Payments to Health Maintenance Organizations for End Stage Renal Disease Beneficiaries

EXECUTIVE SUMMARY:

This final report points out that between October 1990 and February 1995 approximately $35.7 million in overpayments have been made to health maintenance organizations (HMOs) and competitive medical plans (CMPs) for Medicare beneficiaries inappropriately identified as having end stage renal disease (ESRD). These overpayments are continuing, and are due primarily to systemic weaknesses in the Health Care Financing Administration's (HCFA) systems for classifying beneficiaries in certain high-cost categories that carry an enhanced payment rate. We are recommending that HCFA recover the $35.7 million in overpayments as well as subsequent overpayments that have occurred, make certain systemic and procedural changes to prevent future overpayments, and advise all HMOs and CMPs that ESRD rates are only effective for beneficiaries who currently are diagnosed as having ESRD. The HCFA concurred with our recommendations.