GAO urges more Medicare plan oversight

WASHINGTON (AFX) - The Government Accountability Office said Tuesday that Medicare should exercise more oversight over how private plans transmit personal health records to ensure sensitive information is not intercepted by outside parties.

Nearly half of all Medicare Advantage contractors surveyed by congressional investigators reported breaches of private health records during the last two years, according to a report released today by GAO. Medicare Advantage contractors offer privately run plans as an alternative to traditional Medicare. Among the largest providers of such plans are UnitedHealth Group Inc., Humana Inc. and Aetna Inc.

Information breaches most often occur when private contractors outsource health records to other companies for additional processing. According to GAO, 90 percent of Medicare contractors reported outsourcing health records domestically in 2005.

The report recommends that government administrators require Medicare Advantage contractors, which administer government subsidized health care to more than 5 million people, to report privacy breaches to the government within 30 days of discovery, as is currently required for traditional Medicare programs.

"We don't see why there is a distinction between the reporting requirements for the different types of Medicare contractors," said Jenny Grover, an investigator with GAO's health financing and public health division.

Government officials from the Centers for Medicare and Medicaid Services responded to the report saying they have already entered into talks with private Medicare providers on ways to better safeguard personal health records, though the government does not have direct authority to require companies to report security breaches.

Copies of the report were sent to a number of lawmakers with oversight of Medicare, including Senate Finance Committee Chairman Charles Grassley (R-Iowa) and Rep. Henry Waxman (D-Calif.), ranking minority member of the House Committee on Government Reform. Calls to their offices were not returned Tuesday.

Shares of UnitedHealth Group fell $1.10 Tuesday to close at $50.70, while Aetna fell 63 cents to close at $36.16, and Humana Inc. fell one cent to $61.43, all on the New York Stock Exchange.

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