Cancel Medicare Advantage Demo, Says GAO

In response, CMS says it "does not concur" with the GAO recommendation to cancel the demonstration, which is scheduled to end in 2014. CMS contends that demo is intended to kick-start the process and "will lead to faster and larger quality improvements, as well as increased efficiency compared to the ACA."

It notes that the design features "are consistent with the overall goal of improving quality" in the Medicare Advantage program and do not "preclude a credible evaluation."

In an e-mail exchange, a CMS spokesperson added that the demonstration project has helped CMS improve its star-rating system "to place much greater emphasis on clinical outcomes and beneficiary experience measures. We are holding plans to higher standards of quality." He said Medicare Advantage plan payments today, including the costs of the demonstration, "are lower than what they would have been prior to the Affordable Care Act by $200 billion."

Nathan Goldstein, CEO of Gorman Health Group, a Medicare managed care consulting firm in Washington, DC, told HealthLeaders Media that the GAO report misses the carrot-and-stick aspect of the MA bonuses. "It's not all sunshine and roses. Sure, an average plan may get some bonus payments, but CMS has made it clear that a plan that remains at three stars or below for three years can be terminated from the program."