Review of Fee-for-Service Payments for Medicare Beneficiaries Enrolled in Managed Care Risk Plans

EXECUTIVE SUMMARY:

Our objective was to determine whether the fiscal intermediaries complied with Federal regulations in making fee-for-service payments to hospitals for inpatient services furnished to Medicare managed care organization (MCO) beneficiaries. Fiscal intermediaries did not always comply with Federal regulations in making fee-for-service payments to hospitals for inpatient services furnished to Medicare MCO beneficiaries. The intermediaries incorrectly paid 803 fee‑for‑service inpatient claims in calendar year 2003 and 2004 for beneficiaries who were enrolled in MCOs. We recommended that CMS: (1) direct the fiscal intermediaries to recoup the $4.6 million of duplicate payments and (2) periodically compare the Group Health Plan with the Common Working File, reconcile any discrepancies in enrollment data, and have the fiscal intermediaries take necessary action on apparent duplicate payments. CMS agreed.