Bonuses for Medicare stretch law, GAO says

Congress‘ nonpartisan investigators said Wednesday that President Obama is stretching the law to give bonuses to mediocre private Medicare plans - an $8 billion program the auditors already had urged the administration to cancel.

In a pointed letter, the Government Accountability Office’s chief attorney said the administration hasn’t shown that it can learn anything by a “demonstration” project to pay bonuses to average-performing Medicare Advantage plans. The attorney questioned “the agency’s legal authority to undertake the demonstration.”

Opponents have said the $8 billion project amounts to a slush fund designed to cover up the Medicare cuts in Mr. Obama’s health care law, at least until 2014, when the law kicks into full effect.

The administration counters that it’s trying to learn what kinds of incentives can spur private companies to offer better coverage.

The GAO, Congress‘ independent auditors, said that’s a stretch, since the demonstration seems designed to produce little useful data and could even reduce incentives for private plans to provide better care.

Because the demonstrations likely won’t produce results, Health and Human Services Secretary Kathleen Sebelius and the Center for Medicare and Medicaid Services, which is part of her department, don’t have the authority to enact them, GAO said.

“Although CMS stated its expectation that plans will use additional bonus payments to improve the quality of care provided to beneficiaries, it did not address the fact that current Medicare regulations preclude plans’ ability to do so,” GAO general counsel Lynn H. Gibson wrote.

HHS didn’t reply to a request for comment Wednesday afternoon.

Mrs. Sebelius previously had rejected GAO’s findings and said her department would move ahead with the demonstration project.

“We have no intention of canceling the project, and I think the good news is Medicare Advantage programs are stronger than ever, and actually cheaper than ever,” she told Congress in April.

The 2010 health law calls for Medicare Advantage plans to be cut by $145 billion over the next decade. Congress authorized bonus payments, but restricted those to high-performing plans - those scoring 4 or 5 stars.

The administration instead is using a different bonus payment program under Medicare to boost the private plans, and those bonuses would chiefly go to 3- or 3.5-star plans, GAO said.

Medicare Advantage private plans cover about one-quarter of Medicare beneficiaries, and during the health-care debate Republicans seized on the cuts to the program, charging it meant Mr. Obama was cutting Medicare and would cause seniors to lose their preferred coverage.

The administration responded that it was paying too much for the services Medicare Advantage plans were delivering and said the savings could spur better coverage.

On Wednesday, Sen. Orrin G. Hatch, Utah Republican, said GAO’s letter proves the administration is trying an illegal workaround to try to prop up Medicare plans so nobody’s coverage is cut at a politically critical time.

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