GAO Blasts CMS’ Medicare Advantage Bidding Program — Calls for Demonstration Program’s Cancellation

A GAO report, attached below, harshly criticized the Centers for Medicare and Medicaid Services’ (CMS’) Medicare Advantage (MA) quality bonus payment demonstration program.  The MA program, an alternative to traditional fee-for-service, is based on a bidding system established by CMS.  Congressional concerns about the program’s transparency and accountability may be found here.

GAO concluded:

Estimated to cost more than $8 billion, the MA Quality Bonus Payment Demonstration offsets a significant portion of PPACA’s MA payment reductions during its 3-year time frame. At the same time, the design shortcomings of the demonstration may undermine its ability to achieve CMS’s stated research goal—to test whether a scaled bonus structure leads to larger and faster annual quality improvement compared with what would have occurred under PPACA. Rather than rewarding only high performing plans, most of the additional payments made under the demonstration will accrue to average performing plans. In addition, the demonstration’s ability to test an alternative quality improvement incentive structure is compromised by its design. The reliance on predemonstration performance data, the absence of an appropriate comparison group of MA plans, and design features that are inconsistent with its research goal make it unlikely that the demonstration will produce meaningful results.

GAO concluded that, “The Secretary of HHS should cancel the MA Quality Bonus Payment Demonstration and allow the MA quality bonus payment system established by PPACA to take effect.”

Next, GAO should conduct a thorough evaluation of CMS’ DME competitive bidding program to assess whether agency success claims are misleading and need to be corrected.

GAO-589473