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1/6/2009
Tuesday morning

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Brown, the inspector general, said the overpayments were cause for concern because of the precarious financial condition of the Medicare program, which finances health care for more than 38 million people, including 6 million in HMOs. Under current law, with no action by Congress, the Medicare trust fund is expected to run out of money in 2008, three years before the first baby boomers reach the age of 65.

The report came at a delicate time for the managed care industry, which is being encouraged by Congress to play an increasing role in serving the nations 38 million Medicare beneficiaries. Spokesmen for many HMOs have complained in recent months that the federal government did not pay them enough to care for Medicare patients, but this and other studies suggest that in some cases they have been paid too much.

Examining the financial records of HMOs with Medicare contracts in 1996, Brown found that Medicare paid 31.7 percent of their administrative expenses, but accounted for only 8.9 percent of their enrollment.