GAO Questions Legality of $8.3 Billion Medicare Test Program

(Newsroom America) – The Government Accountability Office on Wednesday sent a letter to the head of the Department of Health and Human Resources questioning the legality of a planned $8.3 billion test program for Medicare Advantage, which the agency had previously recommended be scrapped because it mostly rewarded weak performers.

The letter to HHS chief Katherine Sebelius from GAO general counsel Lynn Gibson said the Centers for Medicare and Medicaid Services had not sufficiently justified that it had the legal authority under the Social Security Act to employ the program, Law360.com, a legal news site, reported.

The program’s aim, CMS says, is to test an alternative method for calculating bonus payments for health care providers of Medicare Advantage, also known as Medicare Part C.

“To the contrary ... we remain concerned about the agency’s legal authority to undertake the demonstration,” Gibson wrote.

The Social Security Act gives the HHS chief broad authority as an executive branch agency to run test programs as a way to find more efficient ways of providing Medicare payments. But any such program has to meet a number of criteria; they include providing more incentives to Medicare Part C plans as a way to increase economy of Medicare services and allowing HHS to find out whether such alternatives actually increase the efficiency of Medicare services.

Gibson, in her letter, said “CMS has not established that either” of those criteria were met.

An audit of the test program released in April by the GAO said more than $5.3 billion of the estimated $8.3 billion cost of the program over the next decade – an amount that dwarfed the cost of all Medicare demonstration programs since 1995 – would mostly be used to pay bonuses to Medicare Part C plans that had only average performance histories in terms of clinical quality, contract performance and patient experience, the legal site reported.

The GAO said the program’s design is also flawed, which prevents a credible evaluation of its effectiveness. Instead, the GAO recommended that CMS stay with a bonus system mandated by the Patient Protection and Affordable Care Act – President Obama’s signature health reform law – which only rewards above-Average Part C performers.

CMS officials dismissed the GAO’s legal concerns Thursday.

“There is long-standing precedent for this type of demonstration, with Republican and Democratic administrations using this authority in this way,” a CMS spokesman said in an email to the legal Web site. “This demonstration will give Medicare Advantage plans incentives to improve quality of care for millions of seniors and people with disabilities.”

The original GAO report was requested by Sen. Orrin Hatch, R-Utah, who claimed the CMS program was just a political ploy by the White House to divert attention from cuts to the Medicare Advantage program. He also questioned its legality.

© 2012 Newsroom America.

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