GAO Questions Legality of HHS' Medicare Advantage Bonuses

Government Accountability Office General Counsel Lynn Gibson wrote a letter to HHS Secretary Kathleen Sebelius expressing the GAO's concerns over whether CMS has the legal authority to run a Medicare Advantage bonus demonstration, according to a Washington Post report.

In April, the GAO released a report recommending Secretary Sebelius cancel the Medicare Advantage Quality Bonus Payment Demonstration. The project — expected to cost $8.35 billion over 10 years — is an alternative method for calculating and awarding payment bonuses to MA health plans, which are the managed care options for Medicare beneficiaries.

Under the Patient Protection and Affordable Care Act, MA payments would have been tied to the quality rating of the health plan. For example, only the highest-rated MA plans that have shown high clinical quality and patient experience (four- and five-star plans) would have received bonuses, while lower-rated plans would have received nothing with the expectation of improving quality. However, in November 2010, CMS introduced the MA Quality Bonus Payment Demonstration instead of instituting the PPACA's plan. This demonstration extended the bonuses to average-rated plans, accelerated the phase-in of the bonuses and increased the size of the bonuses.

Although CMS said the project is legal, Ms. Gibson said that did "not resolve our concerns," according to the report.

In response, CMS spokesperson Brian Cook said there is a "longstanding precedent" for these types of demonstration programs, according to the report.

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