Medicare test project is squandering $8 billion

Medicare is misusing more than $8 billion on an experimental program that rewards providers of mediocre health care and is not likely to produce practical results, according to federal investigators in a new report. The report, by the Government Accountability Office, a nonpartisan investigative arm of Congress, recommends the Obama administration to revoke the program, which pays bonuses to health insurance companies caring for millions of Medicare beneficiaries.

Administration officials however shielded the project that they would not cancel it as 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 allowed bonus payments to those that provide high-quality care. But investigators discovered that most of the money paid under the demonstration program went to “average-performing plans” rated lower than the benchmarks set by Congress.

The report mentions that the project would cost $8.3 billion over 10 years, with 80 percent of the cost occurring in the first three years. Federal investigators are trying to resolve whether Medicare Plan officials had the legal authority to make the changes.

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