Editorial: Secret deals are appalling

Friday, March 31, 2000 | 9:34 a.m.

Medicare is the federal government program that spends more than $200 billion a year to provide needed health care for 39 million Americans who are either elderly or disabled. But a report released this week by the General Accounting Office, Congress' investigating arm, raises disturbing questions about how Medicare settled three payment disputes from 1995 to 1997 with health care providers in New York and California.

The GAO reported this week that the three health care providers were overcharging Medicare by $332 million for their services, but during negotiations to recover what was owed, the agency agreed on a settlement that netted it only $120 million. That's not all. The GAO noted that these settlements were entered into secretly, because the Medicare administrator at the time, Bruce Vladeck, was worried that if they became public other health care providers would come rushing forward to get a similar deal. In addition, Medicare refused to seek a legal review of the settlements, even though the agency's own regulations require that any settlement of more than $100,000 get the Justice Department's approval.

The GAO also concluded that there were conflict-of-interest concerns in the largest settlement -- in which Medicare agreed to accept just $25 million out of $155 million that was owed by the Health and Hospitals Corp. of New York -- since Vladeck once served on the board of that corporation. Vladeck, who left the agency in 1997, insists he entered into these deals because he was concerned that if there wasn't a quick and fair resolution, the providers could be hurt financially, endangering their ability to continue caring for Medicare patients. But the GAO noted that its investigation determined these providers did, in fact, have the ability to pay the full $332 million owed to Medicare.

It's not uncommon for government agencies to enter into settlements for less money than they are due, but there is no excuse for secrecy, especially since taxpayer dollars are involved. It is encouraging, then, that the current administrator has issued new guidelines that settlements can no longer be kept confidential, which should deter these kinds of sweetheart deals from being agreed to in the future.