CMS Did Not Violate Law by Barring Medicare Cost Estimates, HHS OIG Report Finds

The HHS Office of Inspector General on Tuesday concluded that former CMS Administrator Tom Scully "broke no law" when he "repeatedly" ordered Medicare chief actuary Richard Foster to withhold from Congress information about the cost of the Medicare legislation, the Philadelphia Inquirer reports (Pugh, Philadelphia Inquirer, 7/7). According to Office of Management and Budget estimates released after Congress passed the legislation, the Medicare law is projected to cost $534 billion over the next 10 years -- $134 billion more than estimated by the Congressional Budget Office. Foster has said that the higher cost projection was known before the final House and Senate votes on the legislation in November but that Scully told him, "We can't let that get out." In an e-mail to colleagues at CMS, Foster indicated he believed he might lose his job if he revealed his cost estimates for the Medicare legislation. Scully has said that he did not threaten to fire Foster if the higher estimates were released. Scully also said that he "curbed Foster on only one specific request" made by Democrats at the time of the first House vote on the Medicare bill (California Healthline, 5/4).

The OIG report by Dara Corrigan, acting principal deputy inspector general, says, "Our investigation revealed that CMS did not provide information requested by congressional members and staff, and that Scully threatened to sanction Foster if he disclosed unauthorized information" (Pear, New York Times, 7/7). The report lists eight instances in which lawmakers requested but did not receive from Foster information about the legislation, including its cost (Lueck, Wall Street Journal, 7/7). In five of the instances, Scully "blocked the efforts" of Foster to comply with the congressional requests about cost, the report says. However, the report states, "Our investigation failed to produce evidence that criminal statutes were violated in connection with the failure to respond to congressional requests" (Philadelphia Inquirer, 7/7). The report adds, "The administrator of CMS has the final authority to determine the flow of information to Congress" (Heil, CongressDaily, 7/7). However, the report says that if Scully was still CMS administrator "he might be subject to disciplinary action for possible violation of the department's standards of ethical conduct" (New York Times, 7/7).

OIG's finding that Scully's actions did not violate any laws seems to oppose findings in an April report by the Congressional Research Service, the Inquirer reports (Philadelphia Inquirer, 7/7). CRS is a branch of the Library of Congress that provides nonpartisan analysis and research to lawmakers. In a nine-page April memo to Rep. Charles Rangel (D-N.Y.), ranking member of the House Ways and Means Committee, CRS said that federal officials "do not have the right to prevent or prohibit" employees from sharing information concerning "relevant public policy issues" to members of Congress. Further, Congress' "right to receive truthful information from federal agencies to assist in its legislative functions is clear and unassailable," the analysis states.

According to CRS, since 1912, federal laws have protected federal employees' rights to communicate with lawmakers, and more recent laws have "reaffirmed and strengthened" those rights. Jack Maskell, a legislative lawyer at CRS, said that in 1997, when some legislators felt that the Clinton administration threatened the candor of federal health experts, House and Senate appropriations conferees wrote into health care legislation that the CMS Office of the Actuary serves both the administration and Congress. In addition, the legislation states that the actuary's independence to provide data to Congress is vital. Thus, Scully's order "would appear to violate a specific and express prohibition of federal law," according to CRS. However, CRS said that such an act "may not rise to [the] level of a criminal violation" (California Healthline, 5/4).

In an opinion attached to the OIG report, the Department of Justice wrote that "CRS was wrong," the AP/Las Vegas Sun reports (Sherman, AP/Las Vegas Sun, 7/7). Katherine Drews, associate general counsel at DOJ, wrote that Scully had the right to order Foster to withhold information -- as long as his directive was "not based upon an invalid or unlawful reason." According to the Inquirer, the "question Drews weighed was a narrow one: whether Foster could speak independently of his boss or needed to obey him." She concluded that Foster's position gave him "freedom from supervision in performing actuarial duties, not supervision of disclosure of department records or information to the Congress" (Philadelphia Inquirer, 7/7).

The OIG report took "no policy position on withholding information from Congress or the importance of any information that may have been withheld," according to CongressDaily (CongressDaily, 7/7). To resolve the issue, Corrigan said that she sent her findings to the General Accounting Office to determine if CMS officials violated the law protecting federal employees' right to communicate with Congress (New York Times, 7/7). GAO "will be the final arbitrators of the conflicting opinions," the Inquirer reports. GAO's report is expected to be released in a few weeks (Philadelphia Inquirer, 7/7).

HHS spokesperson Bill Pierce said, "The allegation that Scully acted outside of his authority is, according to the [OIG], not true" (Wall Street Journal, 7/7). Pierce added, "We hope that with the release of this report we can put behind us the political squabbling and move on to the important work of implementing the new law" (AP/Las Vegas Sun, 7/7). Foster said, "My perception remains that Scully withheld that information for political purposes," adding, "regardless of [Scully's] legal right to withhold it, I continue to believe that it's wrong and unethical to withhold technical information from Congress" (Philadelphia Inquirer, 7/7). Scully said, "The tension was and still remains -- is the CMS actuary part of the executive branch or the legislative branch? My strong feeling is the actuary works for the executive branch" (Wall Street Journal, 7/7).

According to CongressDaily, "Democrats greeted the report with outrage, claiming the [Bush] administration could not fairly investigate the politicized issue" (CongressDaily, 7/7). Rangel said, "The Congress did not have the best information available to make a judgment on vital legislation. The law is clear we were entitled to this information. We asked for it. We were not given it" (Kemper, Los Angeles Times, 7/7). Rep. Pete Stark (D-Calif.) said, "It sounds as though the Bush administration examined itself and found it did nothing wrong" (CongressDaily, 7/7). Sen. Edward Kennedy (D-Mass.) said, "The [OIG] report describes the extraordinary deception of Bush administration officials to cover up the true costs of the Medicare bill. What they did was clearly wrong by any definition" (AP/Las Vegas Sun, 7/7). Sen. Max Baucus (D-Mont.) said that with the limited scope of the investigation, "we cannot know about the involvement or knowledge of White House officials" in suppressing the information (New York Times, 7/7).

Sen. Chuck Grassley (R-Iowa) and some other Republican legislators on Tuesday "repeated their contention that Congress is bound to consider only" figures prepared by CBO, the Times reports (Los Angeles Times, 7/7). House Ways and Means Health Subcommittee Chair Nancy Johnson (R-Conn.) said that the report is a "major embarrassment to Democrats because it exposes and rejects their partisan motives" (CongressDaily, 7/7). NPR's "Morning Edition" on Wednesday reported on the OIG report. The segment includes comments from Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health; Pierce; and Stark (Rovner, "Morning Edition," NPR, 7/7). The complete segment is available online in RealPlayer.