Budget and Spending: Ways to Reduce the Cost of Medical Referral Programs in Micronesia and American Samoa: Nsiad-84-139

Pursuant to a congressional request, GAO examined the medical capabilities and medical referral problems in American Samoa, the Commonwealth of the Northern Mariana Islands, the Republics of Palau and the Marshall Islands, and the Federated States of Micronesia.

During the last 3 years, the local governments in the territories reviewed have incurred costs of about $15 million for referring patients for treatment in hospitals in Guam, Hawaii, and the U.S. mainland. At the start of fiscal year 1984, these governments owed $6.2 million for medical referral services. Unless the problem of unpaid bills is resolved, some U.S. and private hospitals threaten to suspend medical services to referred patients. The local governments are not sufficiently budgeting their own funds and funds received from the Department of the Interior to cover medical program costs. GAO found that medical referral costs can be reduced by: (1) limiting the amount of subsidized medical referral care provided by these governments to the referral patients; (2) strengthening the referral management process; and (3) improving local medical capabilities. GAO believes that the governments should reexamine their policies of providing heavily subsidized medical referrals and consider establishing and enforcing ability-to-pay standards, enforcing eligibility requirements, and improving billing and collection practices. Further, GAO believes that the localities should strengthen the role and authority of the local medical referral committees and consider greater use of part-time physicians to monitor patient progress at referral centers.