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Home > Politics > Medicare Cost Analyst Says He Was Ordered to Provide Skewed Figures

Medicare Cost Analyst Says He Was Ordered to Provide Skewed Figures

March 13, 2004, Knight-Ridder
by Tony Pugh

WASHINGTON – The nation’s top Medicare cost analyst confirmed Friday that his former boss, Thomas Scully, ordered him to withhold from lawmakers unfavorable cost estimates about the Medicare prescription drug bill. He said the estimates exceeded what Congress seemed willing to accept by more than $100 billion.

Richard Foster, the chief actuary at the Centers for Medicare and Medicaid Services, said Friday night that he received a handwritten note from Scully, then the centers’ administrator, in early June ordering him to ignore information requests from members of Congress who were drafting the drug bill.

Knight Ridder reported the episode in an exclusive story published Friday, but Foster’s comments were his first on the matter. On Friday, leaders in the House of Representatives and Senate called for investigations into the alleged muzzling. Senate Minority Leader Tom Daschle, D- S.D., said the allegations justified reopening the vote on the drug benefit. Sen. Edward M. Kennedy, D-Mass., wrote President Bush demanding to know what cost estimates he used in pushing the new drug benefit.

Scully’s note, according to Foster, “was a direct order not to respond to certain requests and instead to provide the responses to him and (to) warn about the consequences of insubordination.”

The note was Scully’s first threat in writing, Foster said, and came after at least three less formal threats. They “came in different forms,” he said. “Sometimes he would make a comment that `I think I need another chief actuary,’ or `If you want to work for the Ways and Means Committee (which was drafting the bill) I can arrange it.’ It was that sort of thing.”

Efforts to reach Scully at his office and home on Friday were unsuccessful. In a recent interview, he denied closing off Foster’s lines of communication with Congress. On only one occasion, Scully said, did he block Foster’s contact with lawmakers, in this case Democrats, saying their motives were purely political.

Foster said Scully insisted upon a pattern of withholding of information.

“Estimates that were supportive of the legislation were generally released and estimates that could be used to criticize the legislation were generally not released,” Foster said.

Foster said he believed higher-ranking members of the administration than Scully knew of the higher cost estimates that his office had computed.

“Did the president know? Did (Health and Human Services) Secretary Tommy Thompson know? I don’t know,” Foster said.

The White House press office didn’t respond to requests for comment.

At one point in his dispute with Scully last June, Foster wrote in an e-mail that he was considering resigning in protest.

“I fully intended to resign as I said in the e-mail,” Foster said. “My fellow managers talked me out of it with the argument that it was better to stay and work (for change) in the long run rather than to have a minor impact for a day or two and nothing thereafter.”

Knight Ridder reported Friday that Foster’s Office of the Actuary suggested that the drug benefit would cost at least $100 billion more than the $395 billion estimated by the Congressional Budget Office, whose job it is to project costs of legislation. One projection prepared in early June by Foster’s office and obtained by Knight Ridder concluded that a Senate version of the bill might cost as much as $551 billion.

At the time of the estimate, the House was sharply divided on the proposed new Medicare drug benefit, which the administration strongly backed. Ultimately, the House passed the measure, 216-215, on June 27. In November, House members endorsed a House-Senate compromise version by a 220-215 vote. Approving the version were 13 Republican fiscal conservatives who’d said they’d vote against it if it cost more than $400 billion for its first 10 years.

When Bush signed the bill in December the drug benefit bore a $395 billion price tag. In January, the president’s budget director, Joshua Bolten, upped the estimate by $139 billion.

Sen. Bill Frist of Tennessee, the Senate majority leader and one of the few Republicans to address the controversy Friday, noted that Foster’s estimates were based on different and more costly assumptions than those of the Congressional Budget Office.

Frist’s spokesman, Bob Stevenson, added: “If an individual’s job was threatened and if they were trying to shield information from Congress, that could be an issue of concern.”

Sen. Chuck Grassley, R-Iowa, chairman of the Finance Committee, said Foster’s estimates “should not have been withheld. Government analysts with relevant information should never be muzzled.”

In a grim-faced floor speech Friday, Daschle called for reopening the vote on the drug benefit. He also called for an investigation into the firing threat and assertions that the administration had withheld its cost estimates from Congress.

“Whether this is criminal or not is a matter we will certainly want to clarify,” Daschle said. “But if not criminal, it was certainly unethical. And I think we need to know the facts.”

A group of House Democrats concurred, asking that the Health and Human Services Department’s inspector general investigate the matter.

In his letter to the president, Kennedy asked Bush what he was told about the drug benefit’s cost. Kennedy also wants to know why the administration failed to inform lawmakers if it knew the $400 billion estimate was way off, and who in the administration knew that Foster’s boss had threatened to fire him if he released his cost estimates to Congress.

Kennedy is the senior Democrat on the committee that oversees health care legislation, the Health Education Labor and Pensions Committee.

Foster, a senior civil servant, remains on his job. He said he’s got new and strong support from Thompson and from Medicare’s new chief, Mark McClellan.

“They recognize the importance of providing technical information to policy-makers on a nonpartisan basis,” Foster said.

If the Army determined that all those deaths were suicides, the comparable rate would be 19.5 per 100,000, according to a calculation by UPI.

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