HHS Secretary Kathleen Sebelius said overpayments to the private plans are coming down, even with the bonus program. "Even with the demonstration, we are on track to reduce overpayments," she said.
The Associated Press first reported on concerns about the bonus program last spring. Administration officials said at the time it had nothing to do with politics.
But another nonpartisan agency that advises lawmakers on Medicare also criticized the bonus plan as the administration was pursuing it.
The Medicare Payment Advisory Commission said it amounts to "a mechanism to increase payments" and its design "sends the wrong message about what is important to the program and how improved quality can best be achieved."
The bonuses are the costliest demonstration program in Medicare history. They'll be paid from the Medicare trust fund.
Online: GAO report - http://gao.gov/products/GAO-12-409R