White House Endorses HHS Probe Into Medicare Cost Estimates

The Bush administration on Wednesday endorsed plans for an HHS investigation into 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 AP/Dallas Morning News reports (AP/Dallas Morning News, 3/18). Thompson told reporters Tuesday that he has asked the HHS Office of 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 (California Healthline, 3/17). White House spokesperson Scott McClellan said Wednesday, "This is an appropriate step for the secretary to take," adding, "It's a serious allegation" (Fagan, Washington Times, 3/18). 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, 3/17).

McClellan on Wednesday said that the matter seems to be "a dispute between the former administrator of the CMS and the CMS actuary." When asked if the administration had been aware of Foster's cost estimates, McClellan "repeatedly declined to answer directly," CongressDaily reports. He did say that "the first full and precise estimate we did" was reported in February, when the president released his fiscal year 2005 budget proposal. McClellan added that "CBO was the official scorekeeper" for the Medicare legislation, CongressDaily reports (Rovner/Wegner, CongressDaily, 3/17). HHS spokesperson Bill Pierce said that the administration was not aware of OMB's $534 billion estimate until Dec. 24. However, Pierce said that lawmakers negotiating the legislation were "well aware" that administration officials believed that the estimate would be higher than what CBO had projected. White House spokesperson Trent Duffy said, "Everyone, including the administration, was relying on the CBO estimate" because Congress is required by law to base legislation on CBO cost estimates (Washington Times, 3/18). According to the New York Times, interviews with federal officials "make clear that the actuary's numbers were circulating within the administration, and possibly on Capitol Hill, throughout the second half of last year, as Congress voted on" the Medicare legislation (Stolberg/Pear, New York Times, 3/18).

The Wall Street Journal on Thursday examined e-mail correspondence between CMS officials and Foster that was provided by Foster. According to the Journal, the June 20 e-mail correspondence is "significan[t]" because "it is the clearest written proof yet of the pressure put on Mr. Foster," and it "clarif[ies] what information was being sought at the time" by members of the House Ways and Means Committee. The Journal reports that Jeffrey Flick, Scully's top aide, sent Foster an e-mail on June 20 saying, "Work on the numbers and share them with Tom Scully only. NO ONE ELSE." In a second warning in bold-type in the same e-mail, Flick wrote, "The consequences for insubordination are extremely severe." Flick also instructed Foster to answer a request for information made by a Republican, but to withhold answers to requests made by Democrats "until Mr. Scully authorizes the release," the Journal reports (Rogers, Wall Street Journal, 3/18). In June, some Democrats protested the decision to withhold an analysis by Foster about the House Medicare legislation (California Healthline, 3/12).

According to the New York Times, Cybele Bjorklund, an aide to Rep. Pete Stark (D-Calif.), a member of the House Ways and Means Committee, began to "pres[s]" Foster for his estimates in June when she learned that Republicans were drafting legislation to implement competitive bidding between private health plans and traditional, fee-for-service Medicare. She said that after sending Foster an e-mail on June 17 to request his estimates and receiving no response, she called him on June 24. In the phone conversation, Bjorklund said that Foster told her, "I cannot give it to you; I'm afraid I could be fired." After reminding Foster that he could be fired only for cause, she called Scully, who allegedly told her, "If Rick Foster gives that to you, I'll fire him so fast that his head will spin." Scully said that he recalls "a heated conversation, but says he never threatened to fire Mr. Foster," the New York Times reports. On June 25, Stark sent out a press release about the situation but did not mention Foster's name. Stark said that because the House was getting ready to vote on the legislation, the "accusations were lost in the bigger battle," the New York Times reports. Bjorklund told the New York Times that in January she received a fax revealing Foster's cost estimate for the Medicare legislation, the New York Times reports. The fax was dated June 11, 2003, and had "no hint of the sender" (New York Times, 3/18).

Members of the Government Reform Committee on Wednesday said that if Thompson does not release documents relating to Foster's estimates by March 26, they would pursue legal action (CongressDaily, 3/17). Earlier this month, 18 Democrats and one independent on the committee asked that President Bush submit by March 15 all estimates prepared by the Medicare actuary's office since Jan. 1, 2003. The letter also noted that Reps. John Dingell (D-Mich.), Charles Rangel (D-N.Y.) and Henry Waxman (D-Calif.) had made a similar request in February but received no response (California Healthline, 3/3). In separate requests on Wednesday, Rep. Peter Deutsch (D-Fla.), ranking member of the House Energy and Commerce Committee, and Waxman, ranking member of the Government Reform Committee, asked Reps. Jim Greenwood (R-Pa.) and Tom Davis (R-Va.), the committees' chairs, respectively, to hold hearings on the allegations (CongressDaily, 3/17). Waxman also said that he would sue Thompson if he fails to allow access to Foster's estimates. According to the New York Times, Sen. Edward Kennedy (D-Mass.) "put the issue in stark, Watergate-era terms," saying, "What did the president know; when did he know it?"

House Majority Leader Tom DeLay (R-Texas) on Wednesday said that he was not aware of the higher estimates for the legislation until January, when he attended a Republican leaders' retreat. Stuart Roy, an aide to DeLay, said that when Joshua Bolten, Bush's budget director, presented the $534 billion estimate to the leaders, they "about took his head off," adding, "It was very clear that none of the leaders in that room had ever heard these numbers before" (New York Times, 3/18). However, DeLay said, "Even if we did [have the OMB estimates], they're not the numbers we can use," adding, "These bean counter numbers -- whether they be CBO numbers or OMB numbers -- are irrelevant" (CongressDaily, 3/17). DeLay said that "Democrats don't truly care about the bill being too costly, since their prescription drug proposal would have cost around $1 trillion" (Washington Times, 3/17). However, Rep. Trent Franks (R-Ariz.) said, "If anyone was truly pressured by a superior to withhold information from Congress, that is profoundly unethical and inappropriate" (New York Times, 3/18).