GAO: Medicare’s wasteful quality bonus program

I returned late last week from Disney World. My kids and I enjoyed it, but I don’t appreciate the cold virus that hitched a ride home with me. Aaron is right, one could easily write a post about Disney World. Or, one could write one about my horrible cold. This post is neither of those, for which you may be grateful. Back to reality!

As reported today by Robert Pear in the New York Times:

Medicare is wasting more than $8 billion on an experimental program that rewards providers of mediocre health care and is unlikely to produce useful results, federal investigators say in a new report.

The report, to be issued Monday by the Government Accountability Office, a nonpartisan investigative arm of Congress, urges the Obama administration to cancel the program, which pays bonuses to health insurance companies caring for millions of Medicare beneficiaries.

Administration officials, however, defended the project and said they would not cancel it because it could improve the quality of care for older Americans.

In the 2010 health care law, Congress cut Medicare payments to managed care plans, known as Medicare Advantage, and authorized bonus payments to those that provide high-quality care. Investigators found that most of the money paid under the demonstration program went to “average-performing plans” rated lower than the benchmarks set by Congress.

Does this sound familiar? If so, perhaps you’re vaguely recalling that Steve Pizer said as much well over a year ago right here on TIE:

Q: When is a quality bonus not for quality?

A: When everybody gets it.

This is what’s happening with the Medicare Advantage quality bonus expansion I posted about this morning. You may recall that CMS announced on Veterans’ Day that bonus payments originally targeted to high-quality plans (those enrolling about 24% of beneficiaries) would be expanded to plans with lower quality scores too. Under the proposed expansion, at least 84% of beneficiaries will now be in plans qualifying for bonuses—more than tripling the size of the bonus program.

There’s more by Steve at the link and more by Pear in his article. The GAO report is available here.

You’ll notice that Steve estimated a $16B price tag and GAO’s is closer to half that. I don’t know what accounts for the difference, and I probably won’t investigate further to find out. In part that’s because I have work to do, work for which I am paid.

Unfortunately, I am no longer paid to study Medicare Advantage issues such as this. That’s not for lack of trying. Steve and colleagues (including me), sought funding for a study of this very issue, but were unsuccessful. Policy-relevant research is hard to fund. (Aaron says so too.) For those of us who desire more evidence-informed policy deliberation, and especially for those of us willing and able to do such work, this is more than a little upsetting.


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