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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Medicare Prescription Drug Improvement and Modernization Act Modifications to Calendar Year 2004 Proposal for HealthAmerica, Incorporated, Harrisburg, Pennsylvania" (A-03-05-00011)

December 22, 2005

Complete Text of Report is available in PDF format (200 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objective of our review was to determine whether HealthAmerica’s use of its Medicare Prescription Drug, Improvement, and Modernization Act (MMA) payment increase was adequately supported and allowable under MMA.  HealthAmerica proposed to use the increased capitation payments provided under MMA to reduce beneficiary premiums, reduce beneficiary cost sharing, and stabilize beneficiary access to providers.  HealthAmerica reduced the enrolled beneficiary premium from $58 to $50 and eliminated the $100 beneficiary copayment for inpatient stays.  By eliminating the beneficiary copayment for inpatient stays, plan officials anticipated that increased use of inpatient services would eventually result in increased payments to providers.  HealthAmerica classified this potential increase in payments as “stabilizing beneficiary access to providers,” but The Centers for Medicare &  Medicaid Services (CMS) defined stabilizing beneficiary access to providers as “retaining providers in the Medicare Advantage Organizations network.”  CMS instructions do allow cost projection updates as allowable non-MMA modifications.  Therefore, this report contains no recommendations for corrective action.