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112715 1 (1980-06-30)

handle is hein.gao/gaobacxtb0001 and id is 1 raw text is: 





GAO
United States General Accounting Office         Human   Resources
Washington, DC 20548                               Division

                                                     JUN 3 0 1980


  Mr. Earl M. Collier Jr., Acting Administrator
  Health Care Financing Administration
  Washington, D.C.

  Dear Mr. Collier:

       We recently completed a review of  hospitals' use of
  contract management services   In particular,  we examined
  those arrangements where the management  firm provides full
  service management and assumes responsibility  for management
  of the day-to-day operation of the hospital.   The cost of
  these contracts can be significant and hospitals'  use of
  them is increasing at a rapid rate.

       There are a number of concerns we noted  in connection
  with the use of these contracts.  For example,

       --the contracts frequently covered excessively  long
         periods;

       --the fees for many of the contracts were  often based
         on a percentage of gross revenues;

       --the fees varied widely;

       --the documentation of the services actually  provided
         was inadequate;

       --the adequacy of controls over payments  to the firms
         was questionable;

       --Medicare intermediaries generally were  not reviewing
         the reasonableness of the fees charged; and,

       --the Health Care Financing Administration  (HCFA) had
         not developed adequate standards and instructions
         governing reimbursement for the costs of  the contracts.





                                                         112715

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