HMOs not improving services, GAO report states

Monday, December 31, 2001

WASHINGTON - Congressional auditors slammed the HMO industry last month, claiming the insurers did little to improve Medicare services despite millions in additional funding last year.

The GAO report stated that initially most healthcare plans said "some or all" of the additional money would be used to enhance benefits. Only about 29% improved benefits, the report found.

Lawmakers had hoped the money would lure health plans back to areas where service had been discontinued, but the GAO report said the payment increase "had little effect on the availability" of health plans.

"This GAO report is especially timely given the current push by the HMO industry to get additional ... funding," Rep. Pete Stark, D-Calif., told The Associated Press. "More money doesn't equal better benefits or a bigger or more stable program. This report makes that clear."

Karen Ignani, president of the American Association of Health Plans, said the report was "flawed and incomplete."

She said Congress targeted most of the money to the Mid- and Southwestern parts of the country, not in the areas where seniors live in large numbers, like Florida and California. The plans have also failed to receive all of the money promised by Congress, Ignani said.

CMS Administrator Tom Scully agreed, adding that the annual increases in federal funding have failed to reflect rising healthcare costs. HME