Drug-cost data kept from Congress

HHS review confirms intentional withholding, threat to sanction actuary


WASHINGTON -- An internal investigation by the Department of Health and Human Services confirms that top Medicare officials intentionally withheld data from Congress showing that Medicare drug benefits would probably cost much more than the White House acknowledged.

A report on the investigation, issued yesterday, says that the administrator of Medicare, Thomas A. Scully, threatened to fire the program's chief actuary, Richard S. Foster, if he provided the data to Congress while lawmakers were considering huge changes in the program last year.

But neither the threat nor the withholding of information violated any criminal law, the report said.

Scully, who resigned in December, had denied threatening Foster, but acknowledged having told him to withhold information from Congress.

The report, by Dara Corrigan, acting principal deputy inspector general, said, "Our investigation revealed that the Centers for Medicare and Medicaid Services did not provide information requested by congressional members and staff, and that Scully threatened to sanction Foster if he disclosed unauthorized information."

While Corrigan found "no criminal violations," she sent her findings to the General Accounting Office, an investigative arm of Congress, to determine if Medicare officials had violated a law that protects the right of federal employees to communicate with Congress. In May, the Congressional Research Service said that Scully's order to Foster apparently violated that law, which has been on the books in various forms since 1912.

William A. Pierce, a spokesman for the department, insisted yesterday that the threat was not illegal because the actuary was supposed to report to the head of the Medicare program and could be dismissed for insubordination.

"No laws were broken," Pierce said.

But Rep. Pete Stark of California, the senior Democrat on the Ways and Means Subcommittee on Health, said, "It sounds as though the Bush administration examined itself and found it did nothing wrong."

Sen. Max Baucus of Montana, the senior Democrat on the Finance Committee, said that, given the limited scope of the investigation, "we cannot know about the involvement or knowledge of White House officials" in the suppression of information.

When President Bush signed the Medicare bill on Dec. 8, he hailed it as "the greatest advance in health care coverage for America's seniors since the founding of Medicare" in 1965. Republicans were counting on the measure to help them win votes from the elderly in this year's elections. But Democrats, including Sen. John Kerry of Massachusetts, the party's likely presidential nominee, have waged a ceaseless campaign to discredit the law, which they say is more helpful to drug companies and insurers than to elderly and disabled people.

The internal investigation was ordered by Tommy G. Thompson, the secretary of health and human services, March 16, four days after House Democrats requested such an inquiry, and nearly four months after Congress approved the Medicare overhaul.

In recent weeks, Scully has registered as a lobbyist for major drug companies, including Abbott Laboratories and Aventis; for Caremark Rx, a pharmacy benefit manager; and for the American Chiropractic Association and the American College of Gastroenterology, among other clients. All are affected by the new Medicare law, which Scully helped write.

The inspector general's report said that if Scully still worked for the government, he might be subject to disciplinary action for possible violation of the department's standards of ethical conduct.

Scully did not return messages left at his office, home and on his cell phone. In an interview in March, he acknowledged having disagreements with Foster, but said, "I never told Rick he would be fired."

Corrigan said she had accepted the Justice Department's view that Scully had "the final authority to determine the flow of information to Congress." Moreover, she said, the actuary "had no authority to disclose information independently to Congress."

The Justice Department invoked the doctrine of executive privilege in insisting that federal health officials were entitled to withhold the documents sought by Congress. The Justice Department noted arguments made by President Richard M. Nixon in asserting that privilege before the Supreme Court in the Watergate tapes case 30 years ago.

Foster estimated that the Medicare legislation would cost $500 billion to $600 billion over 10 years. The White House told Congress the cost would not exceed $400 billion.

Corrigan said she had uncovered numerous requests from Congress for data and cost estimates prepared by the Bush administration. In many cases, she said, Scully did not recall the requests.

"On June 17 and Nov. 7, 2003," the report said, "the minority staff director for the House Ways and Means Subcommittee on Health made written requests to Foster for estimates of the total cost of the Medicare bill. Scully did not recall the staff director's requests."

Foster, a government actuary since 1973, has won several awards from federal officials and professional colleagues. Under a 1997 law, the chief actuary can be removed from office "only for cause" and is supposed to be independent in performing his duties.

In the conference report on that measure, Congress said the actuary should help lawmakers assess the effects of legislative proposals by providing "prompt, impartial, authoritative and confidential information."

However, Pierce said, the language of the report was "not legally binding" on the executive branch of government.

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