HHS Secretary Tommy Thompson Orders Investigation of Claims Made by CMS Chief Actuary
HHS Secretary Tommy Thompson on Tuesday ordered the department's Office of Inspector General to investigate claims made by Richard Foster, CMS' chief actuary, that he was told by former CMS Administrator Tom Scully not to reveal to lawmakers his estimates for the Medicare legislation, the New York Times reports (Pear/Stolberg, New York Times, 3/17). Thompson told reporters, "There seems to be a cloud over this department because of this," adding, "We have nothing to hide, so I want to make darn sure everything comes out" (Sherman, AP/Las Vegas Sun, 3/17). The Philadelphia Inquirer last week reported that an e-mail from Foster to colleagues at CMS indicated he believed he might lose his job if he revealed his cost estimates for the Medicare legislation. Foster confirmed the allegations in interviews published in several newspapers Monday. According to Office of Management and Budget estimates released after Congress passed the legislation, the Medicare law will 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." Foster also said that he received a written note from Scully, ordering him not to respond to certain requests from lawmakers and instead to refer the responses to Scully. The message allegedly warned about the consequences of insubordination. 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. Scully said, "They were trying to be politically cute" and get Foster to give an estimate on the bill "and put something out publicly so they [could] walk out on the House floor and cause a political crisis, which is bogus" (California Healthline, 3/16).
"In a hastily scheduled, hourlong briefing with reporters," Thompson said that he asked the HHS inspector general to investigate two questions: whether Scully threatened Foster's job security if the actuary shared his cost estimates with lawmakers and whether the cost of the Medicare legislation was improperly withheld from Congress, CongressDaily reports (Rovner, CongressDaily, 3/16). Thompson said that he wants to "end the firestorm" concerning Foster's allegations, adding that Foster "isn't in danger of losing his job," the Wall Street Journal reports (Lueck/Rogers, Wall Street Journal, 3/17). According to the Washington Post, Thompson "predicted the agency would be exonerated" of any wrongdoing (Goldstein, Washington Post, 3/17). However, in a "sign that the administration is growing more concerned about bad press surrounding the Medicare law," Thompson had several high-level department officials present at the briefing "to knock down growing criticism," the USA Today reports (Wheeler, USA Today, 3/17). According to the Los Angeles Times, during the briefing, Thompson "downplayed the need for a formal investigation" (Kemper, Los Angeles Times, 3/17). He "suggested that the tempest over the actuary resulted from election year politics," the New York Times reports (New York Times, 3/17). He said that his department has been "honest in its dealings with Congress," adding, "There has been an attempt to politicize this bill from day one," USA Today reports (USA Today, 3/17). Thompson said he knew of one estimate from Foster that expanding private health plans' participation in Medicare would be more expensive than thought unless Congress approved a proposal by the administration to implement competitive bidding. Thompson said he "promptly relayed that information to lawmakers working on the bill," the Post reports (Washington Post, 3/17). He added that lawmakers who worked on the Medicare legislation last fall did not know "the exact amount, but [they knew it was] higher" than CBO's projection (Los Angeles Times, 3/17). Thompson said that he did not know the final estimated cost from the administration until right before Christmas.
According to the AP/Sun, Thompson "placed much of the responsibility for the controversy on Scully" (AP/Sun, 3/17). Thompson said, "Tom Scully was running this, and Tom Scully made those decisions" to withhold administration estimates from lawmakers (Los Angeles Times, 3/17). Thompson said, "I have no restrictions on [Foster's] dealing with members of Congress. Tom Scully did, but Tom Scully is no longer here" (CongressDaily, 3/16). Thompson said that he had assumed that Scully was sharing cost estimates with the group of lawmakers negotiating the final legislation and that he had never told Scully to withhold information from Congress (New York Times, 3/17). According to the Post, Thompson also suggested that Scully had been "an unmanageable employee," saying to reporters, "All of you know Tom Scully. Do you think [supervising him] is possible?" Scott Whitmaker, Thompson's chief of staff, said after learning of Scully's threats to Foster in June, he assured Foster that his job was not in jeopardy and "called Tom, as I had the job of doing from time to time, to remind him those threats were not appropriate" (Washington Post, 3/17). Thompson added that CMS would be run differently under Mark McClellan, whom the Senate last week confirmed as the new administrator of the agency (AP/Sun, 3/17).
In an interview Tuesday with CNBC's "Capital Report," Scully said that he did not threaten to fire Foster (Los Angeles Times, 3/17). He said that he had "merely joked about firing [him] and that he had only once barred him from quickly responding to a Democratic request that he believed was politically inspired," the Post reports (Washington Post, 3/17). He said, "We told everyone when Congress started writing their bill, 'We think your bill's going to be more.' We didn't know exactly how much," adding, "Look, this is all politics" (Los Angeles Times, 3/17). Scully said that Foster's role as CMS actuary is "not independent, and the whole issue is that he wants to be independent" (Wall Street Journal, 3/17). Scully said, "They can investigate 'til the cows come home, but I think I was right" (Washington Post, 3/17).
On Tuesday, Sens. Chuck Hagel (R-Neb.) and Olympia Snowe (R-Maine) requested that the administration explain what it knew about the Medicare cost estimates (New York Times, 3/17). Hagel said in a letter to Thompson, "I am very concerned about these allegations," adding, "If your agency prossessed higher cost estimates, those estimates should have been disclosed" (USA Today, 3/17). Snowe said, "You undermine the credibility and integrity of the legislative process any time you deliberately withhold information from Congress," adding, "This is very troubling and disturbing." Rep. Gill Gutknecht (R-Minn.) said, "If members had known that there were already in hand estimates that were significantly higher than the one that was advertised, I think it would have been even harder to get the votes." Rep. C. L. Otter (R-Idaho), who voted for the bill after a last minute appeal by President Bush, said that "House Republican leaders had assured him in recent days that the $400 billion estimate remained valid," the New York Times reports. Rep. Nancy Johnson (R-Conn.) said that while she was aware of Foster's estimates, she thought his assumptions were flawed, adding, "At the time, they did not make a ripple" (New York Times, 3/17).
Democrats on Tuesday "largely praised" the move to have the HHS inspector general investigate, the Post reports (Washington Post, 3/17). Todd Webster, spokesperson for Senate Minority Leader Tom Daschle (D-S.D.), said that the probe "is a welcome acknowledgement that the administration's credibility has been badly damaged by this scandal and that an independent investigation is needed to uncover the nature and extent of the misconduct" (Pierce, Roll Call, 3/17). On Friday, Daschle and House Minority Leader Nancy Pelosi (D-Calif.) demanded a new vote on the Medicare legislation, saying that "members of Congress were called to vote under false pretenses" (American Health Line, 3/16). Sen. Edward Kennedy (D-Mass.) "applauded Thompson's request," but said he still has questions about "why the president, Thompson and other officials continued to say the legislation would cost $400 billion 'when their best estimate was that it would cost much more?'" the AP/Sun reports (AP/Sun, 3/17). Rep. Pete Stark (D-Calif.) said that Scully is "a perfect fall guy," adding that the administration is using him as a "scapegoat," the New York Times reports (New York Times, 3/17). Rep. John Dingell (D-Mich.) on Tuesday wrote Thompson a letter, demanding copies of Foster's estimates and records of communication between Foster and Scully. Dingell also requested that Thompson make Foster and other HHS officials who "played a role in determining which cost estimates to present to Congress" available for an interview. Dingell said in his letter that the administration's delay in responding to a request from the Government Reform Committee for Foster's estimates "suggests that this matter is now being covered up" (Heil/Rovner, CongressDaily, 3/16). Thompson responded that he is in the process of complying with the request (Schuler, CQ Today, 3/16).
Meanwhile, Thompson and "several of his top aides" on Tuesday met with reporters to defend video news releases used in a Bush administration campaign to promote the new Medicare law and answer questions about "various Medicare-related controversies," the Los Angeles Times reports. Thompson said, "There's been an intentional attempt to demonize this bill from Day One, to demagogue it" (Kemper, Los Angeles Times, 3/17). Earlier this month, the General Accounting Office completed an investigation into the campaign, which includes television advertisements and fliers mailed to beneficiaries. GAO, which conducted the investigation at the request of some lawmakers who had questioned the use of federal funds for the campaign, determined that the ads and fliers are legal despite "notable omissions and other weaknesses." However, GAO this week decided to reopen the investigation in response to concerns about the videos. The videos, produced to air during local TV news broadcasts, feature actors paid to read HHS-prepared scripts, according to officials at Home Front Communications, which produced them. Several of the videos feature President Bush as he signs the Medicare legislation into law. HHS also prepared introductions to the segments for local news anchors. As of Feb. 12, all or parts of the videos had aired 53 times on 40 stations in 33 media markets (California Healthline, 3/16). Kevin Keane, HHS assistant secretary for public affairs, on Tuesday addressed criticism that the videos end with "what sounds like a journalist saying, 'In Washington, I'm Karen Ryan reporting,'" the Washington Post reports. Keane said that Ryan "is a freelance journalist ... not an actor." Ryan formerly worked as a researcher at ABC and NBC and has since formed a communications consulting company, according to the Post. In defense of the videos, Keane and Thompson on Tuesday aired for reporters two similar video news releases produced by the Clinton administration in which former HHS Secretary Donna Shalala "appeared to explain Medicare changes that administration proposed," the Post reports (Goldstein, Washington Post, 3/17).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.