United States G@neJgl~&ebunting Office 

Report to the Chairman, Special 

Committee on Aging, U.S. Senate 

January1989 : AGING ISSUES 

Related GAO Reports 

and Activities in 

Fiscal Year 1988 

GAO/HRD-8938 
About Our New Cover... The new color of our report covers represents the latest step in GAO'S 

efforts to improve the presentation of our reports. 
GAO United States 

General Accounting Office 

Washington, D.C. 20548 

Human Resources Division 

B-217195 

January 26,1989 

The Honorable David H. Pryor 

Chairman, Special Committee 

on Aging 

United States Senate 

Dear Mr. Chairman: 

This report is in response to the Committee’s September 21, 1988, 

request for a compilation of our fiscal year 1988 activities regarding 

older Americans. 

Appendix I lists our issued products-35 reports, 10 briefing reports 

(BR), and 3 fact sheets (FS). Some reports include conclusions and recommendations, but fact sheets contain only information and limited analyses. Appendix II lists 59 assignments in process as of September 30, 

1988. 

Appendix III summarizes our employment policies, which prohibit age 

discrimination. On September 30, 1988,53.1 percent of our work force 

was 40 years of age or older. We continue to provide individual retirement counseling and group preretirement seminars. 

As arranged with your office, we are sending copies of this report to 

interested congressional committees and subcommittees. Copies also will 

be made available to others on request. 

This report was prepared under the direction of Linda G. Morra, Associate Director. Other major contributors are listed in appendix IV. 

Sincerely yours, 

Lawrence H. Thompson 

Assistant Comptroller General 

Page 1 GAO/HRD-89-38 Aging Issues 
Contents 

Letter 1 

Appendix I 

GAO Reports Relating 

to Issues Affecting the 

Elderly Issued During 

Fiscal Year 1988 

Medicare: Comparison of Catastrophic Health Insurance 

Proposals-An Update (GAO/HRD-88-19BR, Oct. 16, 

1987) 

Medicare: Better Controls Needed for Peer Review 

Organizations’ Evaluations (GAO/HRD-88-13, Oct. 8, 

1987) 

Social Security: Payment Accuracy Rates Are Overstated 

(GAO/HRD-88-10, Oct. 29, 1987) 

Pension Plans: Possible Effects of Requiring Employers to 

Make Contributions Sooner (GAO/HRD-88-28, 

Oct. 30, 1987) 

Pension Plans: Vesting Status of Participants in Selected 

Small Plans (GAO/HRD-88-31, Oct. 30, 1987) 

Medicare: Uncertainties Surround Proposal to Expand 

Prepaid Health Plan Contracting (GAO/HRD-88-14, 

Nov. 2, 1987) 

VA Health Care: Assuring Quality Care for Veterans in 

Community and State Nursing Homes (GAO/HRD-88- 

18, Nov. 12, 1987) 

Medicare: Change in Contingency Reserve Funding Held 

Down Increase in Part B Premium (GAO/HRD-88- 

40BR, Nov. 30,1987) 

Social Security: Observations on Demonstration 

Interviews With Disability Claimants (GAO/HRD-88- 

22BR, Dec. 3,1987) 

Social Services: Implementation of Food and Shelter 

Programs Under the Mckinney Act (GAO/RCED-88- 

63, Dec. 8, 1987) 

Medicare: Laboratory Fee Schedules Produced Large 

Beneficiary Savings but No Program Savings (GAO/ 

HRD-88-32, Dec. 22, 1987) 

Social Security: Observations on Social Security’s Data 

Base Integration Program (GAO/IMTEC-88-19, 

Jan. 11,1988) 

Medicare: Share of Hospitals’ Inpatient Use and Revenue 

(GAO/HRD-88-44BR, Jan. 15,1988) 

Medicare: Physician-Sponsored Organizations Receive 

Priority for Peer Review Contracts (GAO/HRD-88-43, 

Jan. 21, 1988) 

8 

8 

8 

9 

9 

9 

10 

10 

11 

11 

11 

12 

12 

13 

13 

Page 2 GAO/HRW39-38 Aging Issues 
Contents 

Federal Funding: Information on Selected Benefit/ 

Mandatory Spending Programs (GAO/AFMD-88- 

31FS, Jan. 27,1988) 

Fund Accountability: Procedures Used for Selected 

Benefit/Mandatory Spending Programs Are 

Adequate (GAO/AFMD-88-30, Jan. 27, 1988) 

Medicare: Number of Rural Hospitals Terminating 

Participation Since the Program Began (GAO/HRD88-46, Jan. 29, 1988) 

Social Security: Additional Measures Could More Fully 

Indicate the System’s Financial Condition (GAO/ 

PEMD-88- 11, Feb. 5, 1988) 

Medicare: Contractor Services to Beneficiaries and 

Providers (GAO/HRD-88-76BR, Mar. 16, 1988) 

Veterans’ Pensions: Verifying Income With Tax Data Can 

Identify Significant Payment Problems (GAO/HRD88-24, Mar. 16, 1988) 

Social Security: The Notch Issue (GAO/HRD-88-62, 

Mar. 24, 1988) 

Medicare: Potential Effects of Shifting the Home Health 

Benefit From Part A to Part B (GAO/HRD-88-79, 

Mar. 25, 1988) 

401(k) Plans: Incidence, Provisions, and Benefits (GAO/ 

PEMD-88-15BR, Mar. 29, 1988) 

District’s Workforce: Annual Report Required by the 

District of Columbia Retirement Reform Act (GAO/ 

GGD-88-60, Mar. 30, 1988) 

Medicare: Performance of Blue Shield of Massachusetts 

Under the Tri-State Contract (GAO/HRD-88-8lBR, 

Mar. 3 1, 1988) 

Department of Labor: Pension Plans and Corporate 

Takeovers (GAO/HRD-88-58, Mar. 3 1, 1988) 

Social Security: Trends in S&A’s Information Technology 

Systems Budget (GAO/IMTEC-88-33FS, 

Apr. 20,1988) 

Medicare Claims: HCFA Proposal to Establish an 

Administrative Law Judge Unit (GAO/HRD-88- 

84BR), Apr. 20,1988) 

Medicare: Refinement of Diagnosis Related Groups 

Needed to Insure Payment Equity (GAO/HRD-88-41, 

Apr. 22, 1988) 

13 

14 

14 

14 

15 

15 

15 

16 

16 

17 

17 

18 

18 

19 

19 

Page 3 GAO/-S Aging Issues 
Contents 

Federal Workforce: Effects of Public Pension Offset on 

Social Security Benefits of Federal Retirees (GAO/ 

GGD-88-73, Apr. 27, 1988) 

401(k) Plans: Participation and Deferral Rates by Plan 

Features and Other Information (GAO/PEMD-88- 

20FS, Apr. 29,1988) 

Low-Income Energy Assistance: State Responses to 

Funding Reductions (GAO/HRD-99-92BR, Apr. 29, 

1988) 

Medicare: Improving Quality of Care Assessment and 

Assurance (GAO/PEMD-88-10, May 2, 1988) 

Social Security: Staff Reductions and Service Quality 

(GAO/HRD-88-97, May 13, 1988) 

VA Health Care: Monitoring of Cardiac Surgery and 

Kidney Transplantation (GAO/HRD-88-70, May 26, 

1988) 

HCFA Research: Agency Practices and Other Factors 

Threaten Quality of Mandated Studies (GAO/PEMD88-9, June 3, 1988) 

Medicare: Simplified Processing of Deceased 

Beneficiaries’ Claims to Be Implemented (GAO/HRD88-99, June 21, 1988) 

Medicare: Improved Patient Outcome Analyses Could 

Enhance Quality Assessment (GAO/PEMD-88-23, 

June 27,1988) 

VA Hospital Care: A Comparison of VA and HCFA 

Methods for Analyzing Patient Outcomes (GAO/ 

PEMD-88-29, June 30,1988) 

Retirement Income: 1984 Pension Law Will Help Some 

Widows, but Not the Poorest (GAO/HRD-88-77, July 

11, 1988) 

Health Insurance: Hospital Indemnity and Specified 

Disease Policies Are of Limited Value (GAO/HRD-88- 

93, July 12, 1988) 

Medicare: Issues Concerning the Health Choice 

Demonstration Project (GAO/HRD-88-69, July 20, 

1988) 

Medicare and Medicaid: Updated Effects of Recent 

Legislation on Programs and Beneficiary Costs 

(GAO/HRD-88-85, July 26, 1988) 

Federal Retirement: Implementation of the Federal 

Employees Retirement System (GAO/GGD-88-107, 

Aug. 4, 1988) 

20 

20 

21 

22 

22 

22 

23 

23 

23 

24 

24 

24 

25 

25 

25 

Page 4 GAO/HRD89-38 Aging Issues 
Contents 

Medicare: Experience Shows Ways to Improve Oversight 

of Health Maintenance Organizations (GAO/HRD-88- 

73, Aug. 17, 1988) 

26 

Social Security: Little Overall Change in Telephone 

Accessibility Between 1985 and 1988 (GAO/HRD-88- 

129, Sept. 15, 1988) 

26 

Social Security: Decision to Implement Nationwide 800 

Telephone Service (GAO/HRD-88-120, Sept. 21, 1988) 

Pension Plans: Effect of the 1987 Stock Market Decline on 

Selected Large Plans (GAO/HRD-88-128BR, Sept. 26, 

1988) 

26 

27 

Appendix II 

GAO Reviews in 

Process as of 

September 30,1988, 

Relating to Issues 

Affecting the Elderly 

28 

Appendix III 

GAO Activities 

Affecting Older 

Persons 

32 

Appendix IV 

Major Contributors to 

This Report 

Page 5 GAO/HRD89-38 Aging Issues 
Contents 

Abbreviations 

ADP 

ALJ 

BR 

DMMS 

DRG 

FENA 

Fs 

GAO 

HCFA 

HHS 

HMO 

HUD 

LIHEAP 

Pps 

PRO 

RAM 

!3sA 

VA 

Page 6 

automated data processing 

administrative law judge 

briefing report 

decentralized medical management system 

diagnosis related group 

Federal Emergency Management Agency 

fact sheet 

General Accounting Office 

Health Care Financing Administration 

Department of Health and Human Services 

health maintenance organization 

Department of Housing and Urban Development 

Low-Income Home Energy Assistance Program 

prospective payment system 

peer review organization 

resource allocation methodology 

Social Security Administration 

Veterans Administration 

GAO/HID8938 Aging Issues 
Page 7 GAO/HFUN39-38 Aging Issues 
GAO Reports Relating to Issues Affecting the 

Elderly Issued During F’iscal Year 1988 

Following are brief descriptions, presented chronologically, of the GAO 

reports, including briefing reports (BR) and fact sheets (FS), relating to 

the elderly issued during fiscal year 1988. An asterisk after the report 

title indicates that the review was performed at the request of Committees or Members of Congress. Two asterisks indicate that the work was 

done because of statutory mandate. 

Medicare: Better 

Controls Needed for 

Peer Review 

Organizations’ 

Evaluations (GAO/ 

HRD-88-13, Ckt. 8, 

1987)* 

GAO reported that the instructions under the Health Care Financing 

Administration’s (HCFA'S) contract renewal evaluation process for peer 

review organizations (PRO) were inconsistent, incorrect, or not properly 

implemented by the panels, and documentation of the panels’ and HCFA'S 

decisions were not always adequate. In addition, GAO found that HCFA'S 

procedures for monitoring current contracts sometimes lacked criteria to 

enable monitoring personnel to distinguish between acceptable and 

unacceptable PRO performance. Also, GAO reported that HCFA set the 

overall funding for the program on the basis of the minimum amount 

allowed by law. 

Medicare: Comparison 

of Catastrophic Health 

Insurance ProposalsAn Update (GAO/ 

HRD-88-19BR, Oct. 16, 

1987) 

GAO reviewed two new proposals by the Congress-H.R. 2470 and 

S. 1127-to expand Medicare coverage for catastrophic illness and concluded that the proposals still would leave the elderly at risk of high 

out-of-pocket costs for two major reasons. First, Medicare provides only 

minimal coverage of long-term care services for the chronically ill elderly. Second, Medigap policies primarily cover only the deductibles and 

coinsurance for Medicare-covered services rather than expand coverage 

to other services. 

Neither bill would relieve Medicare beneficiaries of charges in excess of 

Medicare-approved rates by physicians not accepting the Medicaredetermined reasonable charge. Medigap policies generally will not pay 

for charges above the Medicare-approved rate. Providing further relief 

under the new bills to elderly who incur high out-of-pocket health care 

expenses would increase Medicare costs. 

Page 8 GAO/HRD-89-38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued Lhuing Fiscal Year 1988 

Social Security: Over 33 million beneficiaries received about $175 billion in Social SecurPayment Accuracy ity benefits during fiscal year 1986. These beneficiaries rely on the 

Social Security Administration (SA) to calculate and pay the correct 

Rates Are Overstated benefits. SSA’S sampling methodology and processes for measuring errors 

(GAO/HRD-88-10, and determining accuracy rates are adequate. But when the payment 

Oct. 29, 1987) 

benefits are incorrect, not all the detected errors are included in SSA’S 

error reports because of how SSA interprets errors. Consequently, actual 

error rates are about twice what SSA calculates, GAO believes. This means 

that in 1986 about 4.2 million persons were overpaid or underpaid benefits totaling $1.1 billion. GAO found almost two-thirds of the errors were 

underpayments and most would not have been detected by routine .%A 

processes. 

Pension Plans: 

Possible Effects of 

Requiring Employers 

to Make Contributions 

Sooner (GAO/HRD-88- 

28, Oct. 30, 1987)* 

The financial viability of the employee retirement income security program is threatened by large claims from some underfunded plan terminations. GAO reported that the administration’s proposal to require 

employers to pay contributions sooner could help alleviate this problem 

by (1) ensuring that employers make required contributions and (2) permitting quicker identification of employers who are not making required 

contributions, so that more timely action can be taken to help protect 

participants’ benefits and reduce potential insurance program claims. 

GAO found, however, that most plans are overfunded. To minimize the 

burden on employers to comply with the Employee Retirement Income 

Security Act’s funding standards, employers already sponsoring plans 

with funding levels sufficient to protect plan participants and the insurance program should not be required to pay contributions sooner. 

Pension Plans: Vesting 

Status of Participants 

in Selected Small Plans 

(GAO/HRD-88-3 1, 

Oct. 30, 1987) 

Minimum standards for private pension plans, first established by the 

Employee Retirement Income Security Act of 1974, required employersponsored pension plans to give participants a right to their pension 

benefits before retirement (vesting). In 1982, the Congress added “topheavy” rules to requirements the plans must meet to qualify for tax benefits. Top-heavy plans are those in which more than 60 percent of benefits or account balances go to owners or key employees. 

Had the Tax Reform Act of 1986 rules for quicker vesting applied to the 

128 plans we reviewed, (1) shorter-tenured workers would have had to 

work longer to achieve the same vesting status, (2) the proportion of 

Page 9 GAO/HRDW38 Aging Issues 
Appendix I 

GAO Reporta Relating to Issues Affectiug the 

Elderly Issued During Fiscal Year 1988 

nonvested women in the plans would have increased from 16 to 29 percent, and (3) the proportion of nonvested men would have increased 

from 8 to 15 percent. 

Medicare: 

Uncertainties 

Surround Proposal to 

Expand Prepaid 

Health Plan 

Contracting (GAO/ 

HRD-88-14, Nov. 2, 

1987)* 

The Department of Health and Human Services (HHS) has proposed to 

contract on a prepaid capitation basis with employer-based plans to provide Medicare benefits to their retirees. But GAO reported that there are 

many unresolved issues involved in implementing such a proposal. HHS 

would use an untried method to set capitation rates, and the mechanisms used under currently authorized capitation plans to ensure reasonable Medicare costs and benefits for enrollees would not necessarily 

apply to employer-based plans. Because the concepts in the proposal 

have not been tested and HHS had problems implementing capitation initiatives in the past, GAO urged caution in proceeding with the proposal. 

VA Health Care: 

Assuring Quality Care 

for Veterans in 

Community and State 

Nursing Homes (GAO/ 

HRD-88-18, Nov. 12, 

1987)* 

The quality of care that patients in nursing homes receive is an issue of 

national concern. In fiscal year 1986, the Veterans Administration (VA) 

sponsored nursing home care for about 55,000 veterans through community and state nursing home programs at a cost of about $350 million. To 

provide this service, each of VA'S 172 medical centers contracts with privately owned and operated community nursing homes in its service 

area. The centers do not contract with or place veterans in state homes, 

but are required to evaluate the quality of care provided to veterans in 

state as well as community homes. 

The eight VA medical centers that GAO reviewed generally complied with 

VA'S requirements for determining that state veterans’ homes could provide quality nursing home care. However, the centers were not fully 

complying with VA'S requirements for community nursing homes. Where 

noncompliance was found, typically some of the requirements had not 

been clearly communicated from VA central office to the field. 

Page 10 GAO/HRD439-38Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

Medicare: Change in 

Contingency Reserve 

Funding Held Down 

Increase in Part B 

Premium (GAO/HRD88-40BR, Nov. 30, 

1987)* 

In this report, GAO describes HCFA'S changes in the way it computed the 

amount in the 1988 Part B premium of Medicare necessary to ensure an 

adequate reserve to cover contingencies. This change produced a lower 

increase in the premium for 1988 than would have resulted had the computation been consistent with prior years’ practices. In previous years, 

HCFA viewed the trust fund as being composed of an aged portion and a 

disabled portion for purposes of setting contingency margins. In the 

1988 premium calculation, HCFA viewed the trust fund as one. 

Social Security: 

Observations on 

Demonstration 

Interviews With 

Disability Claimants 

(GAO/HRD-88-ZZBR, 

Dec. 3, 1987) 

Demonstration projects, mandated by the Social Security Disability Benefits Reform Act of 1984, require the opportunity for face-to-face interviews for applicants at the initial stage in the disability determination 

process and current beneficiaries during continuing disability reviews. 

Such interviews take place before a final decision is made. These demonstration projects are intended to test whether such early, face-to-face 

interviews result in more accurate evaluations of an applicant’s or beneficiary’s condition, assure that all relevant information is obtained, and 

simplify and expedite the decision-making process. For cases that are 

not part of a demonstration project, the interviews do not take place 

unless a final decision is appealed to an administrative law judge (AU). 

GAO'S report concludes that any changes to the current system should be 

carefully considered and should have merits that would justify revising 

it, such as more accurate decisions at a lower level. These merits should 

be objectively measured during the evaluation. 

Social Services: 

Implementation of 

Food and Shelter 

Programs Under the 

Mckinney Act (GAO/ 

RCED-88-63, Dec. 8, 

1987)** 

GAO reviewed implementation of the Stewart B. McKinney Homeless 

Assistance Act, that authorized over $400 million for fiscal year 1987 

for several existing and new federal programs. Appropriated funds were 

to be used mainly for food, rent and utility assistance, operation and 

maintenance of shelters, and assistance for establishing additional shelters. But none of the funds appropriated pursuant to the act were disbursed by the end of fiscal year 1987. GAO obtained information on the 

reasons the Department of Housing and Urban Development (HUD) and 

the Federal Emergency Management Agency (FEMA), administrators of 

the funds, have had difficulty in meeting legislatively mandated 

milestones. 

Page 11 GAO/HR.D-89-38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

Medicare: Laboratory 

Fee Schedules 

Produced Large 

Beneficiary Savings 

but No Program 

Savings (GAO/HRD88-32, Dec. 22, 1987)** 

GAO also identified several questions that need to be addressed concerning implementation of the McKinney Act: Under what conditions should 

HUD funds be used for capital improvements to facilities owned by religious organizations? Do HUD and FEMA target their programs to the segments of the homeless population specifically mentioned in the act? 

Should grantees be allowed to use other federal funds to satisfy matching requirements under the act? Do HUD and FEMA formulas for distributing funds accurately measure the need for funds in a given area? 

GAO examined the fee schedules for Medicare-covered clinical diagnostic 

laboratory services furnished by physicians, independent laboratories, 

and hospitals on an outpatient basis, GAO'S analysis showed that the fee 

schedules saved beneficiaries substantial amounts of money, but 

increased Medicare costs. The schedules had no effect on beneficiary 

access to laboratory services and no material effect on quality. GAO concluded that the fee schedule system met its objectives, except for saving 

Medicare money. 

If a national fee schedule is computed using the same methodology as 

was used to compute current fee schedules, GAO reported that rates will 

go up in some carrier areas and down in others and total Medicare program payments will increase. 

Social Security: 

Observations on Social 

Security’s Data Base 

Integration Program 

(GAO/IMTEC-88-19, 

Jan. 11,1988) 

SSA'S data base integration program was initiated to modernize the storage and management of the agency’s automated information files. GAO'S 

study found no analysis supporting the requirements that all data files 

be integrated and immediately accessible. According to SSA documents, 

these requirements comprise the primary advantage of SSA’S modernization strategy. 

However, a number of prospective data base contractors noted that SSA'S 

strategy (1) would go beyond the current state of the art for data base 

technology and (2) would result in a one-of-a-kind system. Should the 

latter happen, GAO noted that it would limit SSA'S ability to take advantage of technological advances in standard data base design. 

Page 12 GAO/HRD-W38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

Medicare: Share of Medicare is an important source of business for hospitals, representing 

Hospitals’ Inpatient an average 31.5 percent of revenues, 32.3 percent of discharges, and 

42.0 percent of inpatient days. GAO reported that Medicare is more 

Use and Revenue important to rural hospitals than urban hospitals as a source of pay- 

(GAO/HRD-88-44BR, ment, and to rural hospitals with less than 50 beds in particular. 

Jan. 15,1988) In its review of Arizona, GAO found that, as is the case nationwide, Medicare is important to that state’s hospitals in terms of inpatient hospital 

use and revenues. In Arizona, however, Medicare is slightly more important to urban hospitals than to rural hospitals. 

Medicare: Physician- There are two categories of peer review organizations-physician-sponSponsored sored and physician-access-that help assess the appropriateness and 

quality of hospital and certain other services to Medicare beneficiaries, 

Organizations Receive Physician-sponsored organizations must be composed of a substantial 

Priority for Peer number of the licensed physicians in the area served by the PRO and be 

Review Contracts 

representative of the practicing physicians in that area. Physicianaccess organizations are required to have available a sufficient number 

(GAO/HRD-88-43, of physicians to assure adequate peer review of services provided by 

Jan. 21,1988) the various medical specialties and subspecialties. 

GAO reported that as required by the Tax Equity and Fiscal Responsibility Act of 1982, HCFA gives physician-sponsored organizations priority in 

the award of PRO contracts and that, according to HCFA documentation, 

most PROS are physician-sponsored. 

Federal Funding: 

Information on 

The federal government annually budgets and spends billions of dollars 

for entitlement, benefit payment, and mandatory spending programs 

ranging from unemployment compensation to social service grants. This 

Selected Benefit/ GAO review identifies and describes over 100 of these programs and proMandatory Spending vides data on the appropriation authority and expenditures each had 

Programs (GAO/ 

during recent fiscal years. 

AFMD-88-3 lFS, 

Jan. 27,1988) 

Page 13 GAO/HRDW-38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

Fund Accountability: GAO surveyed seven major social welfare programs at HHS and the 

Procedures Used for Department of Education to determine if they had proper fund accountability frameworks. These programs had a proposed combined budget 

Selected Benefit/ authority for fiscal year 1988 of $49.3 billion. 

Mandatory Spending GAO found that (1) procedures established by HHS and Education for 

Programs Are these programs were sufficient to prevent overobligation of funds; (2) 

Adequate (GAO/ five of the programs provided grants to states in specific amounts, 

AFMD-88-30, Jan. 27, which limits the total payments that can be charged to the programs; 

and (3) for the other two programs, funding flexibility had been pro1988)* vided by the Congress through budget authority language contained in 

the appropriation acts. 

Medicare: Number of 

Rural Hospitals 

Terminating 

Participation Since the 

Program Began (GAO/ 

HRD-88-46, Jan. 29, 

1988)* 

In this review, GAO found that while the number of hospitals participating in Medicare fluctuates from year to year, the number of rural hospitals terminating participation each year has remained relatively 

constant since October 1974. 

As of December 1986, 2,918 rural hospitals were participating; a total of 

446 had terminated participation since Medicare began in 1966. Of the 

hospitals no longer participating, 48 are in counties that do not currently have a hospital participating in Medicare. 

The prospective payment system (PPS) was started in 1984. During the 3 

years immediately before the PPS implementation, 25 rural hospitals terminated participation, and 3 counties were left without a hospital participating in Medicare. During the 3 years immediately after PPS started, 

41 rural hospitals ceased participation, and 14 counties were left without a participating hospital. 

Social Security: The “imbalance year”-the year in which Social Security Trust Funds 

Additional Measures would go out of close actuarial balance for the subsequent 75-year 

period-was developed by GAO as an early warning indicator that measCould More Fully ures the financial condition of the funds. GAO also developed the 

Indicate the System’s “adjusted actuarial balance,” which gives a fuller representation of the 

Financial Condition 

financial position of the funds than is now available. 

(GAO/PEMD-88-11, These projections suggest. that (1) action will be needed soon if the trust 

Feb. 5,1988) funds are to remain in close actuarial balance and (2) options for the 

Social Security system are likely to include those that permit the 

Page 14 GAO/HRD-S9-38Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

accumulation of reserves in the near future, as well as those that limit 

the reserve buildup. 

Medicare: Contractor This GAO report on contractors’ performance in fiscal years 1983-87 

Services to 

includes data relating to (1) Medicare claims processing times and accuracy; (2) review of appealed claims cases; (3) processing of hearings 

Beneficiaries and related to appealed claims; (4) written, telephone, and walk-in inquiries 

Providers (GAO/HRD- by beneficiaries and providers; and (5) education of beneficiaries and 

88-76BR, Mar. 16, 

1988)* 

providers about Medicare coverage and requirements. 

Contractor performance improved during fiscal year 1987, following 

several years of decreasing performance. Whether this improved performance will be sustained, given an increasing number of claims, is 

unclear. Also unanswered is whether the decreased claims processing 

times in fiscal year 1987 came at the expense of accuracy. 

Veterans’ Pensions: 

Verifying Income With 

Tax Data Can Identify 

Significant Payment 

Problems (GAO/HRD88-24, Mar. 16, 1988)* 

Nearly $1 billion more in beneficiaries’ income was recorded in tax data 

files for 1984 than was reported to VA that year. By not including this 

income in its pension calculations, VA made potential overpayments of 

$182.5 million to nearly 149,000 beneficiaries. VA could not have identified most of these potential overpayments, GAO concluded, because it 

lacks access to tax data. 

Further, GAO indicated that allowing VA access to income data reported 

to the Internal Revenue Service is the most efficient, economical, and 

minimally intrusive way to obtain reliable, independently reported 

information to verify income data beneficiaries report to VA. Use of the 

tax data would (1) increase VA pension program efficiency and effectiveness, (2) potentially save millions of dollars, and (3) likely increase beneficiary compliance with VA'S income-reporting requirements. 

Social Security: The 

Notch Issue (GAO/ 

HRD-88-62, Mar. 24, 

1988)* 

Social Security retirees born just before 1917 generally receive higher 

benefits than those born in 1917 and after-a disparity commonly 

referred to as the notch. The higher compensation occurred beginning in 

1977 when a change was made to the benefit formula. The change 

decreased benefits to those who turned 60 after 1977. Because of the 

way increased inflation affected the formula, its continued use without 

modification would have jeopardized the solvency of the Social Security 

Trust Funds and required large future increases in payroll taxes to pay 

for the growing benefits. 

Page 15 GAOiHRDSS-38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

GAO reported that legislative proposals to lessen the benefit disparities 

could jeopardize the financial condition of the Social Security Trust 

Funds and SA'S ability to finance the coming retirements of the “Baby 

Boom” generation. Other options would require reducing the growth of 

benefits to those already retired. This report offers guidelines for any 

further congressional considerations. 

Medicare: Potential A GAO analysis showed that shifting home health care payments from 

Effects Of Shifting the Medicare’s Hospital Insurance Program (Part A) to its Supplementary 

Medical Insurance Program (Part B) should not directly affect coverage 

Home Health Benefit of services under the home health benefit, the amount of Medicare 

From Part A t0 Part B expenditures for these services, or the way in which the benefit is administered, 

(GAO/HRD-88-79, 

Mar. 25, 1988) This would, however, change the financing source for the benefit from 

social security payroll taxes, which fund Part A, to beneficiary premiums and general revenues, which fund Part B, GAO reported. 

401 (k) Plans: The Congress has provided incentives to encourage savings in the form 

Incidence, Provisions, of tax deferrals on contributions to retirement savings plans. Judging 

from responses to a nationally representative sample of 5,000 firms GA0 

and Benefits (GAO/ surveyed in 1987, only about 4 percent of all U.S. corporations (about 

PEMD-88-15BR, 35,000 out of 793,000 nationally) sponsor cash or deferred arrangement 

Mar. 29, 1988)* 

retirement plans, known as 401(k) plans. But incidence is closely related 

to firm size; nearly all firms with 5,000 or more employees sponsored 

such plans in 1986. Thus, almost 6 percent of all full-time civilian U.S. 

workers were eligible for 401(k) plans that year. The plans were used 

predominantly for retirement savings, not loan or hardship withdrawals, or as tax-favored ordinary savings or investment instruments. 

Most of the 401(k) plan sponsors provided other retirement plans as 

well, and most made matching contributions to their 401(k) plans. Participants generally chose conservative investment options-over twofifths of plan assets were in guaranteed interest accounts or balanced 

funds. 

There is some evidence that 401(k) plan benefits are more concentrated 

among higher-paid rather than lower-paid workers. Participants earning 

$30,000 a year or more seemed better able to take advantage of the tax 

Page 16 GAO/HRD-89-38 Aging Ismma 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fi Year 1988 

deferral for plan contributions. They tended to make larger contributions and deferred a greater percentage of their pay than did lower-paid 

workers. 

Some provisions of the Tax Reform Act of 1986 could reduce employee 

participation in or contributions to 401(k) plans, perhaps more so among 

higher-paid workers. 

District’s Workforce: 

Annual Report 

Required by the 

District of Columbia 

Retirement Reform 

Act (GAO/GGD-88-60, ment to the fund. 

The District of Columbia Retirement Reform Act provides for annual 

federal payments to the District’s Police Officers’ and Fire Fighters’ 

Retirement Fund. The payments, however, are to be reduced when the 

disability retirement rate exceeds an established limit. An enrolled actuary determined the disability retirement rate to be 0.752 percent. Since 

this rate is less than eight-tenths of 1 percentage point, the current limit, 

GAO reported that no reduction is required in the fiscal year 1989 payMar. 30, 1988)** 

Medicare: The New Hampshire, Vermont, and Maine congressional delegations 

Performance of Blue cited numerous beneficiary and provider complaints about Medicare 

program services in their states. The areas of complaint included claims 

Shield of payment timeliness and accuracy, telephone service, reviews of denied 

Massachusetts Under claims, responses to written inquiries, and requests for information 

the Tri-State Contract 

already provided. 

(GAO/HRD-88-81BR, 

Mar. 31, 1988)* 

GAO reported that Blue Shield did not meet several contract requirements during fiscal year 1986. Blue Shield’s performance improved significantly, however, in fiscal year 1987, when it was in compliance with 

all but one of the contract requirements-telephone service. Blue Shield, 

in an effort to meet this requirement, provided HCFA with a corrective 

action plan. 

GAO found that the number of Blue Shield employees working on the tristate contract increased substantially, with staffing levels reflecting 

(1) a 76-percent increase over the level Blue Shield proposed in its 

response to HCFA'S request for proposal and (2) a 60-percent increase 

over its actual staffing levels when the contract became operational in 

October 1985. 

Page 17 GAO/HRD-89-38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

Department of Labor: The Employee Retirement Income Security Act is designed to protect the 

Pension Plans and rights of workers and their beneficiaries under private pension plans. In 

1987, the act covered some 915,000 private pension and 4.5 million 

Corporate Takeovers health and welfare plans, which combined had an estimated 75 million 

(GAO/HRD-88-58, participants and about $1.6 trillion in assets. Private pension plans hold 

Mar. 31, 1988)* 

about 17 percent of all corporate stock and 7.6 percent of taxable bonds 

traded in the financial markets. Some pension plans, when investing 

plan funds in stocks and bonds or voting stock held as plan investments, 

have become involved in corporate takeovers. 

GAO found that the Department of Labor, which enforces the act, generally learns informally of corporate takeover transactions that involve 

pension plans. Since March 1985, Labor has investigated 27 instances of 

potential abuse of pension assets in corporate takeovers, taking legal or 

other action in two of the cases. Also relative to such matters, Labor has 

issued one advisory opinion and three advisory letters and filed four 

civil lawsuits and two friend-of-the-court briefs. 

The Department has not acted on certain congressional recommendations (with which it disagrees) concerning possible conflicts of interest 

faced by fiduciaries (plan managers) during corporate takeover situations. Labor cited its lack of authority as well as other actions it has 

taken in regard to fiduciaries’ responsibilities in corporate governance, 

and stated it has not issued a policy statement on this matter. 

Social Security: Trends SSA’S Information Technology Systems account is composed of funds for 

in SSA’s Information automatic data processing (ADP) acquisitions, ongoing ADP operations 

Technology Systems 

and maintenance, telephone equipment purchases, and telephone operations and maintenance. While expenditures for the overall account have 

Budget (GAO/IMTEC- only increased from $196 million in fiscal year 1985 to $22 1 million for 

88-33FS, Apr. 20, 

1988) 

fiscal year 1989, GAO found that the percentage of funds allocated to the 

individual components has changed significantly. Telephone system 

expenditures increased from 34 to an estimated 47 percent, while ADP 

expenditures decreased from 66 to 53 percent. 

For fiscal year 1988, SSA'S carryover authority (unobligated funding 

authority from a previous fiscal year) reached a high of $220 million. 

The Congress, concerned that SSA had not adequately demonstrated the 

need for the large accumulated carryover amount, reduced SSA'S new 

Page 18 GAO/HRD-8938 Agiug Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

budget authority to $53 million for fiscal year 1988. SSA later determined that the $220 million was sufficient to fund Information Technology Systems activities and plans to use the $53 million to fund activities 

under the administrative expenses appropriation. 

Medicare Claims: 

HCFA Proposal to 

Establish an 

Administrative Law 

Judge Unit (GAO/ 

HRD-88-84BR), 

Apr. 20, 1988)** 

HCFA has proposed to establish, at a cost of about $15 million, its own 

hearings and appeals unit to handle Medicare cases, using 42 administrative law judges and operating from one central location. HCFA believes 

that its proposed ALJ unit will provide faster and less expensive hearings than are currently experienced. Also, it believes that its proposed 

central location concept will lead to improvements in the management of 

the caseload of the ALJS, facilitate ALJ training, and promote consistency 

in the application of Medicare law and regulations. 

GAO found, however, that HCFA has little documentation for its proposal 

and no experience or assurance that the program will operate as envisioned. Given these uncertainties, GAO recommended that HCFA test and 

evaluate the proposal before implementation. 

Medicare: Refinement 

of Diagnosis Related 

Groups Needed to 

Insure Payment 

Equity (GAO/HRD-88- 

41, Apr. 22, 1988) 

One of the primary concepts behind Medicare’s prospective payment 

system is to encourage hospitals to operate efficiently while providing 

quality care. To work as intended, it is essential that diagnosis related 

group (DRG) patients are classified with patients with similar resource 

needs. 

GAO'S review found that the concept is not being achieved. Rather, 

expected treatment costs for the diagnoses and procedures falling under 

certain DRGS vary greatly. Moreover, high and low expected treatment 

cost cases are not evenly distributed among hospitals. 

As a result, GAO reported (1) hospitals profit or lose on the widevariation Daos-contrary to the premise of PPS that hospitals should be 

rewarded for efficiency, and (2) wide variations in treatment costs 

within DRGS give hospitals financial incentives to seek patients with 

diagnoses in the low expected treatment cost range and avoid those at 

the high end. This in turn could adversely affect access to care for 

patients with high expected treatment costs and/or result in financial 

burdens from inequitable PPS payments for hospitals that treat such 

patients. 

Page 19 GAO/HRD8938 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

Federal Workforce: 

Effects of Public of 1977 applies to federal, state, and local government retirees who 

were not covered by Social Security during their government employPension Offset on ment, but became eligible for such benefits as the spouse or surviving 

Social Security spouse of a Social Security recipient. This provision prevents the 

Benefits of Federal 

spouses of Social Security recipients from receiving a full spousal benefit in addition to a pension from their own work in government employRetirees (GAO/GGD- ment not covered by Social Security by requiring a spousal Social 

88-73, Apr. 27, 1988>* Security benefit to be reduced by $2 for every $3 of public pension received. 

GAO found that this provision is being applied to 104,608 retired government employees, 74 percent of whom were men. About 69,000 were federal retirees, 79 percent of whom were men. These federal retirees’ 

average monthly Civil Service annuity was $1,412. For 95 percent of 

them, Social Security spousal or survivor benefits were completely eliminated by the offset provision. 

401(k) Plans: According to GAO'S survey of 5,000 corporations, 70 percent of which 

Participation and responded, 4 percent of the firms sponsored 401(k) plans in 1986; of 

these, 31 percent offered employees no other retirement plan. Almost no 

Deferral Rates by Plan companies employing 500 or more used their 401(k) plans as the sole 

Features and Other retirement vehicle. Also called cash or deferred compensation arrangeInformation (GAO/ 

PEMD-88-20FS, 

Apr. 29, 1988)* 

ment plans, 401(k) refers to the section of the Internal Revenue Code 

that qualifies them for special tax treatment. Taxes on employees’ contributions to such plans are deferred until their retirement, death, or 

other specified circumstance. 

Of all the 401(k) plans GAO surveyed, 61 percent were established as 

new plans, not replacements for existing plans of other types. This was 

true especially among smaller firms. Where a 401(k) plan did replace 

another plan, the latter commonly was a profit-sharing plan. 

When employers also contributed to the plan, 88 percent of employees 

participated; when employers did not, participation was less than 50 

percent. Where the match was dollar-for-dollar, 99 percent of those eligible participated on average. 

Employees’ participation in a plan also was higher when they could 

change the percentage they contributed as often as they wanted, the 

plan did not permit participants to borrow from it (this was contrary to 

some expectations), or withdrawal by employees of the employer’s (but 

Page 20 GAO/HRD89-38Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

not the employee’s) contributions was allowed for hardship reasons. 

Whether the plan allowed employees to make added, nontax-deferred 

contributions or to direct investment of plan assets made no difference 

in the participation rate. 

Low-Income Energy Each year since fiscal year 1986, federal funds for the Low-Income 

Assistance: State Home Energy Assistance Program (LIHFAP) have declined. The President 

proposed a further reduction for fiscal year 1989, prompted by the 

Responses to Funding availability to states of hundreds of millions of dollars in oil overcharge 

Reductions (GAO/ settlements. 

HRD-99-92BR, 

Apr. 29, 1988) 

Five of 13 states GAO reviewed may have available oil overcharge funds 

that substantially exceed the proposed funding cuts, but 3 would not. 

For fiscal years 1986-88, oil overcharge funds mitigated, but did not 

replace federal funding cuts. 

On average, the 13 states have not used a large part (14-22 percent) of 

their oil overcharge funds to support LIHFAP. Unless the 13 states allocate more funds to LIHEXP from other sources than in the past, their 

1989 LIHEAP programs may have about 33 percent less funds than in 

1986. 

Over fiscal years 1986-88, the number of households receiving assistance in the 13 states fell by 6 percent. Eight of the 13 states reduced 

heating benefit levels (5 of the 8 states had received little or no oil 

funds). The other five states that did not reduce benefit levels received 

oil overcharge funds. For fiscal year 1987, when federal funds to LIHW 

first were cut significantly, five states reported negative effects (e.g., 

benefits reduced, eligibility criteria restricted, weatherization eliminated), while eight did not. The next year, seven states reported negative effects and six reported none. All 13 states predict a negative 

impact if proposed cuts occur. 

Page 21 GAO/HRD-89-38 Aging Issues 
Appendix I 

GAO Reporta Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

Medicare: Improving 

Quality of Care 

Assessment and 

Assurance (GAO/ 

monitor Medicare quality of care. This makes the accuracy of key information questionable. Further, HHS'S strategy for developing quality 

assurance methods is inadequate to meet future program needs. Shortterm efforts could lead to significant improvements. Developing a comPEMD-88-10, May 2, 

prehensive quality assurance research base and creating a program for 

incorporating this knowledge into Medicare quality assurance efforts, 

1988) however, would require a long-term commitment that cannot be supported adequately by current resources. 

Social Security: Staff 

Reductions and planned staff reduction, the quality of SSA service, as measured by SA 

indicators, for the quarter ending December 1987 improved in most 

Service Quality (GAO/ cases when compared with data for the December 1986 quarter. Two 

HRD-88-97, May 13, exceptions were the processing time for hearings and the Retirement 

and Survivors Insurance process accuracy for initial claims. Client satis1988)* faction remains high, GAO reported, but morale problems within the 

agency continue. 

VA Health Care: VA has established minimum standards for determining whether a mediMonitoring of Cardiac cal center performing cardiac surgery is maintaining an acceptable level 

of utilization and patient mortality. It does not use the standards as the 

Surgery and Kidney sole basis for judging a center’s performance, but to identify centers that 

Transplantation may be experiencing performance problems. GAO'S review found VA'S 

(GAO/HRD-88-70, 

May 26,1988)* 

monitoring inadequate to (1) help centers not meeting the standards to 

improve their performance or (2) assess the centers’ potential for meeting the standards. 

VA also has established a minimum utilization standard for assessing centers’ performance concerning kidney transplants. It has not, however, 

adopted standards for assessing the centers’ survival rates for patients 

with transplanted kidneys. GAO reported that VA needs to establish these 

survival rate standards and use them to evaluate each center’s performance so that those not performing at an acceptable level are identified 

promptly. 

Page 22 GAO/HRD89-38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued Lhu-ing Fiscal Year 1988 

HCFA Research: 

Agency Practices and Research and Demonstrations to the Congress on research, demonstrations, and evaluation of the Medicaid and Medicare programs were not 

Other Factors fully responsive to congressional mandates, frequently late, and varied 

Threaten Quality of in their technical adequacy. Not a single stage of the research manageMandated Studies 

(GAO/PEMD-88-9, 

June 3, 1988)* 

ment process-planning, project execution, or report review-was without problems. GAO indicated that overall, the relevance, timeliness, and 

technical adequacy of the office’s research and evaluation activities 

have improved little since the early 1980s. 

Medicare: Simplified GAO reported that processing of certain Medicare claims involving 

Processing of deceased beneficiaries is being delayed. However, HCFA is planning to 

simplify procedures for processing such claims in the near future, which 

Deceased would reduce the delays. 

Beneficiaries’ Claims 

to Be Implemented 

(GAO/HRD-88-99, 

June 21,1988)** 

Medicare: Improved 

Patient Outcome 

Analyses Could 

Enhance Quality 

HCFA'S 1987 hospital mortality analyses improved on the methods used 

Assessment (GAO/ 

in 1986 by including patient-level data, more clinically coherent diagnostic groups, and more appropriate techniques to adjust for severity of 

illnesses. These analyses have attracted widespread interest, as well as 

concerns about misinterpreting the results. For the analyses, HCFA used 

Medicare data it already collected on individual patients. 

PEMD-88-23, June 27, HCFA could make added improvements in the key area of patient severity 

1988)* adjustment. To make future analyses of patient outcome more credible 

and useful, GAO reported HCFA should more fully validate the analytical 

approaches it selected, systematically check its data for accuracy and 

completeness, and analyze outcomes from several years to reduce the 

effect of random variation. So far, HCFA'S application of Medicare patient 

outcome analyses has been limited and not notably effective in identifying quality problems. 

Page 23 GAO/HRW3938 Aging Issues 
Appendix I 

GAO Repurts Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

VA Hospital Care: A VA modeled its approach to analyzing hospital mortality data after the 

COmparkOn Of VA and 

method employed in HCFA'S 1987 analysis of Medicare hospitals. GAO 

found that VA made some changes, however, such as modifications in the 

HCFA Methods for diagnostic categories analyzed. VA also adjusted for two variables, race 

Analyzing Patient and total length of hospital stay, which under certain circumstances 

Outcomes (GAO/ 

could mask some differences in quality of care across hospitals. GAO 

reported that VA deserves credit for planning validation efforts in conPEMD-88-29, June 30, junction with the initial development of its approach. 

1988) 

Retirement Income: If the spousal consent requirement of the Retirement Equity Act of 1984 

had been applicable in 1980-81, GAO'S analysis showed that the wives of 1984 Pension Law Will ~OO,OOO newly retired men, who chose not to provide a private pension 

Help Some Widows, survivor benefit, would have had the opportunity to gain entitlement to 

but Not the Poorest the benefit. Had the men who did not elect survivor benefits done so, the 

(GAO/HRD-88-77, 

median survivor benefit would have been about $142 per month for all 

wives and $68 per month for those in the lowest third of the income 

July i 1, 1988)** distribution. 

While the increased access to survivor benefits from private pensions 

would increase the income of elderly widows, GAO indicated that it 

would have a negligible effect on their poverty rate, because widows 

most likely to become poor had husbands who lacked pensions. Even if 

they gained access to survivor benefits from private pensions, most lowand middle-income wives would continue to depend on social security 

benefits as their major source of income in widowhood. 

Health Insurance: Typically, hospital indemnity and specified disease policies pay only a 

Hospital Indemnity small portion of the policyholder’s costs for covered medical services. 

Several states have concluded that this insurance is of little value to 

and Specified Disease consumers. 

Policies Are of Limited 

Value (GAO/HRD-BBOf 12 states that GAO visited, 3 currently ban or restrict the sale of specified disease policies and 2 advise consumers against buying them. All 12 

93, July 12, 1988)* states had educational programs to help consumers choose health insurance and personnel who try to resolve consumer complaints about insurance, and 7 had procedures for reviewing insurance advertising 

material. GAO concluded that shopping around for a hospital indemnity 

or specified disease policy is advisable because available policies offer 

substantially different benefits at widely varying costs. 

Page 24 GAO/HRD-89-38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

Medicare: Issues HCFA awarded to HealthChoice, a nonprofit company, two contracts for a 

Concerning the demonstration project intended to (1) test the effect of educating Medicare beneficiaries on the HMO option by giving them comparative inforHealt hC hoice mation on participating HMOS in their community and (2) determine the 

Demonstration Project feasibility of using a broker as a marketing agent. 

(GAO/HRD-88-69, 

July 20, 1988)* 

GAO'S review found that combining the two components into a single 

project resulted in problems that HCFA should resolve before authorizing 

future broker projects. GAO indicated that HCFA should also determine 

whether sufficient authority exists to fund independent broker projects, 

Medicare and 

Medicaid: Updated 

Effects of Recent 

Legislation on 

Programs and 

Beneficiary Costs 

(GAO/HRD-88-85, 

July 26, 1988)* 

Major legislative changes in Medicare from 1980 through 1987 played 

an important role in slowing down the program’s cost growth, according 

to GAO. GAO also found that for Medicare beneficiaries, the average, 

inflation-adjusted, out-of-pocket cost per enrollee for covered services 

increased between 1980 and 1986 by about 73 percent for Part A services and about 36 percent for Part B services. Six major laws were 

expected to have a mixed effect on Medicaid program costs; two were 

expected to result in savings and the others to increase program costs, 

Changes in Medicaid recipients’ out-of-pocket costs could not be analyzed because of varying state cost-sharing requirements and the 

unavailability of state data. However, GAO found that 28 states have 

increased cost-sharing requirements for Medicaid recipients as a result 

of the Tax Equity and Fiscal Responsibility Act of 1982. This has held 

down Medicaid’s cost growth. 

Federal Retirement: GAO reported that the Office of Personnel Management implemented the 

Implementation of the Federal Employees Retirement System well, issuing information on the 

Federal Employees 

Retirement System 

(GAO/GGD-88-107, 

Aug. 4,1988)* 

policies and procedures necessary to have the pension plan in place by 

January 1987. Also the Office developed and made available substantial 

information to assist employees in making their decisions about transferring to the new retirement system. 

About 2.8 percent of eligible employees covered by the civil service 

retirement system transferred to the new plan, As of March 1988, about 

700,000 employees were in the plan. 

Despite delays in appointing members to the newly created Federal 

Retirement Thrift Investment Board and other start-up problems, the 

Board implemented the thrift plan in less than 6 months. Many of the 

Page 26 GAO/HRD-W38 Aging Issues 
Appendix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

start-up problems occurred because of coordination problems with over 

600 payroll offices, but the Board also carried out its responsibilities 

well. 

Medicare: Experience This report is the result of congressional concerns about the rapid 

Shows Ways to 

growth of Medicare HMOS, their compliance with federal standards, and 

the adequacy of federal oversight. 

Improve Oversight of 

Health Maintenance Although it has relatively limited data with which to monitor HMO qualOrganizations (GAO/ 

ity of care and the reasonableness of HMO capitation rates, HCFA could 

use available data more effectively. HCFA'S st,affing for compliance moniHRD-88-73, Aug. 17, toring has not kept pace with HMO growth. Most problems were resolved 

1988)* quickly after an HMO was notified, but a few HMOS did not respond to 

HCFA'S requests for corrective actions. While HCFA tried to resolve these 

problems, the practical effect often was little more than to document 

them. In each instance that GAO reviewed, HCFA could have acted more 

quickly and forcefully. GAO believes that additional sanction authority 

could prompt HCFA to do so. 

Social Security: Little Information in this report is based on test calls GAO made to SSA facilities 

Overall Change in in May 1988 to monitor SSA service to the public in light of continuing 

staff reductions. During the May 1988 test, GAO had easy access for 71 

Telephone percent of the calls compared to 73 percent of calls during a May 1985 

Accessibility Between test. Overall, 15.2 percent of its initial test calls got busy signals, as did 6 

1985 and 1988 (GAO/ 

of every 10 repeat calls. Also, as in the 1985 test, accessibility during 

the 1988 test varied widely among SSA phone facilities, among SSA 

HRD-88-129, Sept. 15, regions, and according to when the call was made. 

1988)* 

Social Security: GAO reported that implementation of the SSA’S 800 service will cost $34 

Decision to Implement million a year more than the current service, but $19 million less than 

improving the service in use now. GAO concluded that the decision to 

Nationwide 800 implement the 800 number in October 1988 appears reasonable, but 

Telephone Service poses some risk that service and efficiency might be less than planned, 

(GAO/HRD-88-120, 

at least temporarily. 

Sept. 21, 1988)* Phone service demand may exceed phone answering capabilities, creating excessive busy signals. Also, demands that toll-free service places on 

SSA’S computers could result in reduced operating efficiency and affect 

Page 26 
Appemdix I 

GAO Reports Relating to Issues Affecting the 

Elderly Issued During Fiscal Year 1988 

the timeliness of service. SSA is developing contingency plans for these 

events, which it believes will help mitigate these problems, should they 

materialize. 

Pension Plans: Effect GAO reviewed 174 pension plans sponsored by 92 private employers and 

of the 1987 Stock unions whose combined assets decreased substantially when the stock 

market crash occurred in October 1987. The decreases, however, were 

Market Decline on more than offset by gains during the first 9 months of the year, with 

Selected Large Plans most pension plans experiencing increases in asset values for the year. 

(GAO/HRD-88-1 ZBBR, 

The extensive growth in the stock market from 1982 through 1986 

resulted in gains that far exceeded the losses from the October 1987 

Sept. 26,1988)* market decline. 

Page 27 GAO/HRD-89-38 Aging Issues 
GAO Reviews in Process as of September 30, 

1988, Relating to Issues Affecting the Elderly 

An asterisk after the assignment title indicates that the review is being 

performed at the request of a Committee or member of the Congress. 

Two asterisks indicate that the work is being done because of statutory 

mandate. 

Use of the Early Retirement Authority by the Department of Defense* 

Review of Patient Satisfaction With Care They Received at Military 

Medical Facilities* 

Review of Medicare Payments for Services Provided by HMOS 

Study of Variations in Medicare Payments to Teaching and Nonteaching 

Hospitals** 

Evaluation of Medicare Carriers’ Utilization Review Activities* 

Survey of Cost and Use of Contracting With Noncertified Nursing Agencies to Provide Medicare Home Health Services* 

Impact of Applying Home Health Cost Limits by Discipline** 

Evaluation of Medicare Hospice Program* 

Review of Physician Incentive Plans Used by HMOS With Medicare Risk 

Contracts* 

Evaluation of Medicare’s Part B Secondary Payer Program** 

Survey of HCFA'S Management of the Medicare Peer Review Organization 

Program** 

Survey of Transfer of Medicare Patients to VA Hospitals** 

Evaluation of Ophthalmologist/Optometrist Reimbursement Arrangements for Cataract Surgeries Paid by Medicare* 

Review of Medicare-Insured Group Demonstration Project** 

Review of Medicare Payments to Anesthesiologists** 

Survey of the Appropriateness of Medicare Fee Schedule Payments for 

Clinical Diagnostic Laboratory Services** 

Page 28 GAO/HRIM9-38 Aging Issues 
Appendix II 

GAO l&views in Process as of September 30, 

1988, Relating to Issues Affecting the Elderly 

Survey of Appropriateness of Medicare Payments for Durable Medical 

Equipment** 

Comparative Analysis of Hospital Costs and Revenues* 

Review of Medicare’s HMO Rate-Setting Methodology** 

Review of State Mandatory Assignment Programs Under Medicare* 

Review of Medicare’s Professional Review Organization Program for 

HMOS* 

Survey of the Paperwork Requirements Associated With Medicare 

Claims 

Survey of the Cause of Increase of Medicare Part B Payments** 

Study of Physician Ownership of Facilities to Which They Make 

Referrals* 

Evaluation of Existing Medicare Hospital Cost Reporting Systems** 

Evaluation of Impact of Medicare Secondary Payer Provisions on Disabled Beneficiaries* 

Review of Medicare Paying for Home Dialysis Care Services* 

Survey of Paperwork Requirements for Vermont Home Health Agency 

Claims 

Survey of Denials of Medicare Intermediaries of Home Health Care 

Claims* 

Medicaid Nursing Home Resident Savings Bond Holdings 

Transfer of Assets to Become Eligible for Medicaid Nursing Home Care 

Survey of Alternatives for Increasing Access to Nursing Homes for 

Medicaid Beneficiaries* 

State Regulations of Private Long-Term Care Insurance* 

Page 29 GAO/HID-W38 Aging Issues 
Appendix II 

GAO Reviews in Process as of September 30, 

1988, Relating to Issues Affecting the Elderly 

Compilation and Synthesis of Existing Information on Long-Term Care 

Issues for the U.S. Bipartisan Commission on Comprehensive Health 

Care* 

Limited Assurance That Board and Care Residents’ Needs Are Being 

Met* 

State In-Home Services for the Elderly* 

Survey of How Employee Stock Ownership Plans Are Designed to Benefit Participants* 

Effect of Stock Market Decline on Pension Plans* 

Survey of the Extent That Employers Provide Employee Health 

Benefits* 

Survey of Changes in Employer-Sponsored Retiree Health Plans With 

Over One Hundred Participants* 

Enforcement of the Employee Retirement Income Security Act of 1974’ 

Cost Estimates for Employer-Sponsored Retiree Health Benefits* 

Followup to the SSA Management Review 

SSA Employee Views on Social Security Service Changes* 

Review of the Solvency of the Railroad Retirement Board Trust Funds* 

What Are the Alternatives to the Combined Annual Wage Reporting 

Process? 

Characteristics of the Disabled Population: Observations and Policy 

Implications* 

Review of SSA’S Appeals Process* 

Attorney Fees Under SSA Programs* 

Evaluation of SSA’S Office of Hearings and Appeals* 

Review of the Black Lung Program* 

Page 30 GAO/IBIS89-38 Agiug Issues 
Appendix II 

GAO Reviews in Process as of September 30, 

1988, Relating to Issues Affecting the Elderly 

Review of the Low-Income Home Energy Assistance Block Grant** 

Evaluation of Medical Device Recalls: Case Study of the Cardiac 

Pacemake? 

Evaluating the Relative Effectiveness of Alternative Medical Review 

Protocols* 

Modeling Factors Associated with the Effectiveness of Quality Assessment of Medicare Peer Review Organizations* 

Statistical Analysis of Factors Associated with the Effectiveness of 

Medicare Peer Review Organizations’ Medical Review* 

An Assessment of the Methods Used in HCFA'S 1988 Analysis of Medicare 

Hospital Mortalityt 

Patterns of Use of Coronary Artery Bypass Surgery Among the Elderly 

Homelessness: HUD and FEMA Progress in Implementing the McKinney 

Act** 

Page 31 
Appendix III 

GAO Activities Affecting Older Persons 

GAO appointed 663 persons to permanent and temporary positions during fiscal year 1988, of whom 144, (21.7 percent), were age 40 and older. 

Of GAO'S total work force of 5,680 on September 30, 1988,3,015 (53.1 

percent) were 40 and older. 

GAO employment policies prohibit discrimination based on age. GAO'S 

Civil Rights Office continues to provide information and advice to persons regarding allegations of age discrimination. 

GAO continues to provide individual retirement counseling and preretirement seminars for employees nearing retirement age. The counseling 

and seminars are intended to assist employees in 

calculating retirement income available through the Civil Service and 

Social Security systems and understanding options involving age, grade, 

and years of service; 

understanding health insurance and survivor benefit plans; 

acquiring information helpful in planning a realistic budget based on 

income, tax obligations, and benefits, and making decisions concerning 

legal matters; 

gaining insights and perspectives concerning adjustments to retirement; 

increasing awareness of community resources that deal with preretirement planning, second career opportunities, and financial planning; and 

increasing awareness of lifestyle options available during the transition 

from work to retirement. 

Page32 GAO/HRD-8938 Aging Issues 
Appendix IV 

Major Contributors to This Report 

c Human Resources 

Division, 

Larry Horinko, Group Director 

Greta M. Tate, Evaluator-in-Charge 

Washington, D.C. 

.L’.s. G.F.O. :9t39-241-10h:90?7: 

(118267) Page 33 GAO/HRB89-38 Aging Issues 



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