The Government Accountability Office said in its report that the Centers for Medicare and Medicaid Services (CMS) used $735 million of the $1 billion start-up for administrative costs given by Congress for contractual services that were "not compliant with contract terms" and "potentially improper." The agency added that of the 250 contractors used by CMS, 16 were awarded the most contracts for services such as answering the 1-800-Medicare help line, printing and mailing since the program began less than a year ago.
"CMS management has not allocated sufficient resources, both staff and funding, to keep pace with recent increases in contract awards and adequately perform contract and contractor oversight," the auditors said. "After contract award, pervasive internal control deficiencies increased the risk of improper payments."
The report was commissioned by the Senate Finance Committee to follow up on how the agency used the start-up appropriated by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which amends the original 1965 Medicare law by including prescription drugs among the benefits of senior citizens. The law does this through subsidies and tax incentives to companies who do not remove private prescription coverage for retirees.
The committee's chairman, Sen. Max Baucus (D-MT), has called the audit' s findings "alarming and intolerable."
CMS Acting Administrator Karen Weems argued that Congress had authorized the agency to deviate from its normal contracting procedures due to the short implementation period, and that the auditors had "examined a very small sample of CMS' contract actions."
