Congress’s non-partisan investigators said Wednesday President Obama is stretching the law to give bonuses to mediocre private Medicare plans — an $8 billion program the auditors had already urged the administration to cancel.
In a pointed letter, the Government Accountability Office’s chief lawyer 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 lawyer 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 Government Accountability Office, Congress’s 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.
Ms. Sebelius had previously 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 called 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 four or five stars.
The administration is instead using a different bonus payment program under Medicare to boost the private plans, and those bonuses would chiefly go to three- or 3.5-star plans, GAO said.
Medicare Advantage private plans cover about a quarter of Medicare beneficiaries, and during the health 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 of Utah said GAO’s letter proves the administration is trying an illegal work-around to try to prop up Medicare plans so nobody’s coverage is cut at a politically critical time.
“Lacking the legal authority to undertake a project of this magnitude shows how the Obama administration tried to use a technicality to side step Congress and write itself a blank check to spend more money for political purposes leading into this year’s elections,” said Mr. Hatch, the ranking Republican on the Senate Finance Committee, who has been keeping a close eye on the matter.
Earlier this year GAO issued a report saying the program was likely doomed to fail. In unusually stern language the auditors urged the administration to cancel it altogether.
Wednesday’s letter went a step further in questioning the legal authority.
GAO answers to Congress and does not have independent authority to halt the demonstration project. Congress could withdraw funding, but Democrats have been wary of taking any action that would appear to undo major parts of the health law.