Medicare bonuses face skepticism

— Palm Beach County seniors have no top-flight, privately run Medicare Advantage health care plans.

An Obama administration program sought to change that by offering more generous bonuses for better plans. But now a nonpartisan government agency questions whether the $8.3 billion program will truly improve quality.

The U.S. Government Accountability Office last week found that the majority of the bonus money will go to Medicare Advantage plans with only mediocre ratings and has suggested the Department of Health and Human Services cancel the program.

It recommends replacing it with a comparatively scaled-down bonus system authorized under President Obama's health care law, which it says would cost $5.3 billion less over a decade. That program rewards only plans that earn at least four stars in a one- to five-star system. The bonuses are also smaller than those given in the HHS demonstration project.

If the HHS program is halted, plans that serve Florida seniors could lose millions of dollars in bonuses.

Roughly a quarter of Medicare beneficiaries nationwide choose a privately run Medicare Advantage plan over the original Medicare. But in Florida, penetration is even deeper, with about a third of beneficiaries - or 1 million seniors - enrolled in the private plans.

In Palm Beach County, a three-star plan would receive a bonus of $312 for each beneficiary, according to the Kaiser Family Foundation.

Not one plan in Palm Beach County would meet the higher standards suggested by the GAO. The top-rated programs in the county have only 3½ stars, barely better than average performance.

The GAO report questions whether it makes sense to reward plans such as those in Palm Beach County that don't offer superior service or medical outcomes.

In 2007, the Centers for Medicare and Medicaid Services began ranking plans offered by private providers to help seniors make more educated choices about their health care. The star ratings did not motivate companies to improve their plans, so starting this year the Obama administration sought to tie payments to the rankings.

Joe Baker, president of the Medicare Rights Center, said his group was generally critical of the idea of giving bonuses to three-star plans in the first place. But now that the program is in place, he believes it's too early to throw it out.

It should be monitored, instead, to see if the higher bonuses for four- and five-star plans are impetus enough for the average-rated plans to improve, he said.

"We are hopeful that the system could weed out the bad players by steering consumers toward the better plans," he said.

In Palm Beach County, two plans have a poor enough track record that the federal government has issued a warning against them to beneficiaries. The plans are Medicare Masterpiece PPO (H5429-001-0) and Aetna Medicare Value Plan HMO (H5414-019-0).

Medicare Advantage plans have been popular with seniors because plans tend to offer more services for the same price as original Medicare. "Cadillac" plans offer gym memberships and other perks that government plans don't offer.

But there's a price for the more comprehensive plans, and taxpayers are the ones paying it while the companies pocket the profits.

Medicare Advantage plans cost, on average, 111 percent of original Medicare. As part of the Affordable Care Act, Obama sought to end those taxpayer subsidies, bringing down reimbursement for the plans until they are nearly on par with original Medicare.

The HHS bonus plan would add back roughly a third of the cuts enacted by the health care law, according to the GAO report. Republicans used those cuts to campaign against Obama in the 2010 midterm elections.

What the GAO worries could become government waste has the ring of something more sinister to at least one Republican.

"The Obama administration seems to be using a technicality to sidestep Congress and write itself a blank check to spend more money for political purposes leading into this year's elections," said Sen. Orrin Hatch, R-Utah, the ranking member on the finance committee that requested the GAO report.

"The White House does not have the authority to green-light spending on whatever program it wants," Hatch added. "This report is just the beginning - I will be demanding answers."

The White House has said the report should be weighed in the context of the $200 billion in cuts to Medicare Advantage plans under the health care law.

"Absent this demonstration, we believe that many plans would not have an immediate incentive to improve the quality of care delivered," the HHS said in a response .

The Associated Press contributed to this story.