Summary

Pursuant to a congressional request, GAO reviewed the Health Care Financing Administration's (HCFA) regulations for contracts with health insuring organizations (HIO). HIO are entities that: (1) pay for medical services provided to recipients in exchange for fees paid by state Medicaid agencies; and (2) assume underwriting risks.

GAO found that: (1) state contracts with HIO are governed by Medicaid program regulations; (2) HCFA has not issued additional regulations governing state contracts with HIO; (3) HCFA regulations do not specify the minimum qualifications for HIO, procurement methods for HIO contracts, or disclosure requirements for HIO; and (4) federal procurement regulations covering minimum qualifications, procurement methods, and disclosure requirements are applicable to state Medicaid agencies' contracts with HIO. GAO also found that the applicable regulations do not specify: (1) the amount of Medicaid payments that HIO may retain; (2) quality assurance methods HIO must employ; (3) financial reporting requirements for HIO; (4) standards HIO must meet to ensure program beneficiaries' access to services to which they are entitled; (5) the frequency and content of utilization reports that HIO must submit to Medicaid agencies; or (6) the frequency and content of HIO cost accounting reports.