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Government Auditors Doubt Legality of Medicare Bonuses

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WASHINGTON (AP)—Government auditors Wednesday questioned the legality of a costly Medicare bonus program, escalating a running skirmish in the broader battle over President Barack Obama’s health care law and its consequences for seniors.

In a letter to the administration, Government Accountability Office General Counsel Lynn Gibson wrote that the nonpartisan agency remains concerned about Medicare’s legal authority to undertake the $8.3 billion Medicare Advantage quality bonus program.

Launched well after the overhaul passed, the bonus program effectively restored some of the cuts that the legislation made to popular private insurance plans within the giant health-care program for seniors and disabled people.

The sheer size of the bonuses immediately raised eyebrows, as did the fact that most of the money was going to plans rated about average. Sen. Orrin Hatch, R-Utah, called it a wasteful political ploy.

Medicare’s assertion that the program is fully legal “does not resolve our concerns,” the GAO’s Gibson wrote to Health and Human Services Secretary Kathleen Sebelius. The letter coincided with a partisan House vote to repeal the health care law. The GAO, however, is a nonpartisan agency that serves as the investigative arm of Congress.

In a statement, Medicare spokesman Brian Cook said there is “longstanding precedent for such programs with Republican and Democratic administrations using this authority in this way.”

A spokeswoman for Hatch said the senator is weighing his options in light of new legal questions about the bonuses.

If Republicans try to take away the money, it could backfire politically. That happened before with Democrats on the receiving end of seniors’ disapproval.

The health-care law trimmed Medicare Advantage to compensate for prior years of overpayments that had allowed the plans to offer attractive benefits—and pocket healthy profits. The savings were intended to help expand coverage for the uninsured.

But Republicans attacked those cuts during their successful campaign to take control of the House in the 2010 elections. And seniors responded by backing GOP candidates.

After the election, the administration announced what it called a “demonstration program” to test whether a generous bonus program would lead to faster, broader improvements in quality.

But earlier this year, the GAO called on the administration to cancel the bonuses, saying the program design is badly flawed and will not achieve its stated goal of finding better incentives to promote quality.

The Associated Press first reported on concerns about the bonus program last year. Administration officials said at the time it had nothing to do with politics.


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