GAO says Medicare regulator followed the rules in Humana smackdown

Introduction

The Government Accountability Office is siding with Medicare administrators in a dispute with Humana Inc.— the nation’s largest private health insurer— that stems from the company’s 2009 attempt to influence health reform legislation then being debated in Congress.

While the health reform battle raged, a new GAO report says Humana sent letters to 930,000 members of its Medicare Advantage plan saying the proposal before Congress could curtail their benefits. The letters also encouraged members to contact members of Congress and ask them to protect funding for Medicare Advantage, a federal health insurance alternative to Medicare’s traditional fee-for-service program. About 11 million, or one in four Medicare beneficiaries, are enrolled in Medicare Advantage plans.

But when Medicare’s oversight agency, the Centers for Medicare and Medicaid Services (CMS), caught wind of Humana’s mailings, the agency told the insurer to stop sending the letters. The agency also investigated whether Humana, and other Medicare Advantage insurers, broke federal laws or agency rules, including a ban on using federal funds to lobby Congress.

CMS ultimately found that six Medicare Advantage plans violated agency rules, and three of the six improperly used federal funds to lobby lawmakers on pending legislation. According to the GAO, CMS asked several unidentified insurers to reimburse Medicare for inappropriately used funds.

The GAO looked into the issue after three Republican lawmakers requested a review of CMS’s actions. The GAO concluded that the agency generally followed its own rules and procedures, although the watchdog described as “unusual” a September 2009 CMS memo ordering Medicare Advantage insurors to suspend letters and communications about the pending health reform bill.

FAST FACT: Humana’s controversial letter to Medicare Advantage enrollees claimed “millions of seniors and disabled individuals could lose many of the important benefits and services that make MA health plans so valuable.” Specifically at risk, it said, were low premiums, low deductibles and co-payments, and wellness and preventive benefits.

Following are other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities. Congressional Research Service reports, which prepared for lawmakers but not made public, were provided by the Center for Democracy and Technology.

FINANCE

• Most work on Treasury Dept’s Troubled Asset Relief Program is handled by private contractors with 91 different contracts worth up to $434 million (Congressional Oversight Panel).

• No evidence that the Securities and Exchange Commission’s announcement of a controversial settlement with Goldman Sachs Inc. was deliberately timed for release on the same day the U.S. Senate approved a massive financial regulatory reform bill (OIG).

• Nearly 40 lender-approved loans worth a combined $1.2 million were made to apparently affiliated companies that were not approved by the Small Business Administration, as required by the 2009 stimulus law (OIG).

• Some 82 percent of defaulted or early-problem loans made with stimulus money by the Small Business Administration had “material deficiencies,” resulting in about $5 million in loans to to borrowers who could not repay or were ineligible for the loans (OIG).

ENVIRONMENT

• Human activity causes an estimated $6.6 trillion in environmental damage each year, equal to about 11 percent of global GDP, and over half of all corporate profits could be at risk from environmental damage (U.N. Environmental Program Finance Initiative).