CMS Improperly Adopted Demonstration Program, Lawmaker Says

CMS officials exceeded their legislative authority by adopting a demonstration program in 2001 and 2002 that was intended to encourage preferred provider plans to offer coverage to Medicare beneficiaries, Sen. Max Baucus (D-Mont.) on Tuesday said a forthcoming General Accounting Office report, requested by his office, has found, CongressDaily reports. PPOs have been permitted to provide coverage to Medicare beneficiaries since 1997, but few did so because it is more difficult to control members' use of services in PPOs than HMOs, CongressDaily reports.

According to CongressDaily, former CMS Administrator Tom Scully "had Medicare agree to take most of the risk" if costs for Medicare beneficiaries were higher than PPOs anticipated. Some at the time questioned whether Scully had the authority to make such an agreement, but the GAO report is the "first official suggestion that Scully overstepped" his authority, CongressDaily reports (Rovner, CongressDaily, 9/15).