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GAO Concludes That Improvements Are Needed to Enchance Medicare's Secondary Payer Debt Recovery Process

 GOA concluded in a recent report that Medicare's system for recovering MSP debt from EGHP's is no longer cost-effective. CMS presentl;y is recovering only 38 cents for every dollar it spent on recovering activities in fiscal-year 2003. A major finding was that contractiors were funded at a rate that exceed their workload. The report also found that CMS failed to trnsmit cases to contractors and that inhibited recovery. CMS plans to launch a new recovery system that has been undevelopment for the last 6 years to increase the efficiency of its recovery operations.

Last year, employer-sponsored group health plans (EGHP) were responsible for most of the nearly $183 million in outstanding Medicare secondary payer (MSP) debt. MSP debts arise when Medicare inadvertently pays for services that are subsequently determined to be the financial responsibility of another. 

The Centers for Medicare & Medicaid Services (CMS) administers Medicare with the assistance of about 50 contractors that, as part of their duties, are required to recover MSP debt. 

GAO was asked to determine whether Medicare contractors are appropriately recovering MSP debt. 

(1) assessed the costeffectiveness of the current debt recovery system and 
(2) identified CMS’s plans to enhance the ecovery process. GAO analyzed workload and budget information and assessed plans to develop a new debt recovery system—the Recovery Management and Accounting System (ReMAS). 

GOS recommended that the administrator of CMS:
(1) improve the efficiency of MSP payment recovery activities by consolidating efforts under a smal r number of contractors and ensuring that contractor budgets for EGHP recovery activities more closely reflect their actual workloads and 
(2) expedite implementation of the EGHP component of ReMAS. 

CMS agreed with GAO's recommendations. 

GOA Report
Medicare Secondary Payer: Improvements Needed to Enhance Debt Recovery Process
August 2004

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