WASHINGTON (AP) — The U.S. Government Accountability Office (GAO) officials is agreeing with congressional Republicans and saying the Obama administration should cancel an $8.3 billion Medicare Advantage plan quality incentive bonus program.
Congressional Republicans have called the program a wasteful political ploy.
The GAO, a nonpartisan arm of Congress, said one major problem with the program is that most of the bonus money would go to plans just rated average. The auditors did find, however, that the bonuses would temporarily ease the pain of Medicare Advantage budget cuts resulting from provisions in the federal Patient Protection and Affordable Care Act of 2010 (PPACA).
The administration defended the program, saying the bonuses give many plans their main incentive to improve.
Sen. Orrin Hatch, R-Utah, said the GAO report suggests that the administration abused its authority, pumping money to the plans to avoid more criticism over the cuts.
Medicare Advantage is a program that gives Medicare enrollees the option of replacing traditional Medicare coverage with private managed care plans, or private fee-for-service plans that make some use of preferred provider networks. The 3,000 Medicare Advantage plans now serve about 12 million people, or about one-quarter of Medicare enrollees.
Medicare Advantage plans typically offer lower out-of-pocket costs than the traditional Medicare program, based on the idea that the Medicare Advantage plans will use provider discounts and care coordination to hold down the cost of care rather than relying on co-payments, deductibles and coinsurance amounts.
Critics say the low out-of-pocket costs lead to expensive and possibly excessive use of medical care, and that traditional Medicare enrollees have ended up subsidizing Medicare Advantage enrollees.
Medicare Advantage program supporters say the private plans offer benefits that should be part of any health plan, protect seniors against big out-of-pocket bills, and, in many cases, appeal to Medicare enrollees who need more care and care management than the enrollees who stick with traditional Medicare.
Democrats included Medicare Advantage cuts in PPACA. Republicans attacked the cuts during their successful campaign to take control of the House in the 2010 midterm elections. Seniors in many states were more likely to vote for the GOP candidates in 2010 than they were in 2008.
PPACA provided for a small bonus program for the very highest-rated Medicare Advantage plans.
After the 2010 elections, the Obama administration announced what it called a “demonstration program” to test whether a generous bonus program would lead to faster, broader improvements in Medicare Advantage plan quality.
In the new report, the GAO does not address GOP allegations that the bonuses are politically motivated. GAO officials said the program is highly unusual, and they said it “dwarfs” all other Medicare pilots undertaken in nearly 20 years.