Examining Medicare Drug Benefit Contractor Payments

Armen Hareyan's picture

Medicare Drug Benefit

Summaries of two reports onthe Medicare prescription drug benefit and SCHIP recently released by the Government Accountability Office appear below.

  • Medicare prescription drug benefit: CMS might have made almost $90 million in questionable payments to contractors hired to help launch the Medicare prescription drug benefit, according to a report released recently by GAO, the Associated Press reports. According to the report, CMS paid about $735.4 million to more than 250 contractors, but 16 contractors received most of the payments. The report found that some of the payments did not comply with terms of the contracts. In some cases, payments exceeded caps included in the contracts, and in other cases, CMS did not obtain adequate documentation to confirm costs billed, the report found. CMS spokesperson Jeff Nelligan said that the agency disagrees with the conclusions of the report and that the launch of the Medicare drug benefit required some contract decisions outside of standard policy (Freking, Associated Press, 12/20).
  • SCHIP: States that cover adults under SCHIP are more likely to experience funding shortfalls than those that do not, according to a report released on Thursday by GAO, CQ HealthBeat reports. For the report, GAO examined 10 of the 14 states that cover adults under SCHIP. According to the report, adults accounted for 54% of combined SCHIP expenditures in the nine states for which GAO had fiscal year 2006 data. Individually, adults accounted for 1% of SCHIP expenditures in one state, 32% to 42% in three states and more than 50% in five states, the report found. The report also found that six of the 10 states had SCHIP funding shortfalls at some point during the 2005-2007 period, compared to 10 of the 41 states that did not cover adults under SCHIP. Jocelyn Guyer, deputy executive director of the Center for Women and Families at Georgetown University, said states expanded coverage to adults under SCHIP because "they were encouraged to by both the Clinton and Bush administrations," and the states that did so were in some cases those "that had already expanded coverage for children to modest-income families" (Carey, CQ HealthBeat, 12/20).

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