GAO calls for termination of Medicare Advantage bonus program

WASHINGTON, July 12, 2012—A 10-page letter from the Government Accountability Office’s (GAO) general counsel to the Department of Health and Human Services said the Centers for Medicare & Medicaid Services (CMS) failed to legally establish an $8 billion Medicare Advantage Quality Bonus Payment Demonstration, and it should be terminated.

The GAO said the project is costly and is poorly designed. The bonus program was instituted to offset cuts to Medicare Advantage programs mandated by the Patient Protection and Affordable Care Act of 2010. The program has provided extra payments to a vast majority of the private Medicare plans operated by insurance companies.

Critics of the bonus program have repeatedly raised questions about its legality, noting that it was the product of political pressure to avoid cutting popular Medicare Advantage programs, which are more costly to the government than traditional Medicare.