Health agency head mistreats subcontractor, GAO finds
The Centers for Medicare and Medicaid Services will re-bid a contract to analyze results of nursing home quality surveys, following criticism from the General Accounting Office over the way the agency's administrator handled the original agreement.
CMS Administrator Tom Scully improperly instructed the RAND Corp., a nonprofit public policy research group, to fire the University of Wisconsin Center for Health Systems Research and Analysis as a subcontractor on a September 2002 agreement, GAO concluded in a new report (03-842). According to the watchdog agency, Scully ordered the termination because he held a grudge against the university research center's director for his criticism of a previous CMS project.
"[Scully's] action was improper and undermined the integrity of CMS' procurement process," the report said.
Because of the controversy surrounding Scully's actions, RAND has not yet begun "substantive" work on the contract, GAO reported. Scully instructed RAND to fire the Center for Health Systems Research and Analysis about the same time RAND won its contract to review nursing home quality of care survey results.
University of Wisconsin researchers were slated to help with at least half of the work. Further, the "center's expertise was a key factor in CMS' decision to select RAND's proposal over those submitted by two others," the GAO report said.
CMS plans to rectify the situation by holding a second competition for the contract, said Jacquelyn White, director of CMS' Office of Strategic Operations and Regulatory Affairs, in a June 25 letter responding to the report. Scully has "directed staff to re-bid the work as quickly as possible," she added.
A CMS spokesman on Tuesday declined to comment further.
In addition, CMS will consider the Center for Health Systems Research and Analysis for future contracts, White said. "The center is to be treated no better or worse than any other contractor-with a completely level playing field for all contractors that want to offer new ideas."
But the agency would not concede that Scully lacked objective reasons in directing RAND to terminate the contract with the university researchers. According to CMS, the center had performed poorly on previous contracts involving nursing home survey certification, making it a risky subcontractor for the RAND project. OMB encourages agencies to consider past performance when awarding contract work, CMS noted.
But GAO researchers said they found no evidence the center had performed poorly on previous CMS work. To the contrary, "strong past performance was a key factor in the decision to award the task order to RAND," the GAO report said.
The center's director did criticize one aspect of a former CMS project, according to GAO, angering Scully. The director had expressed "technical concerns" about nursing home quality indicators CMS planned to post on its Web site. The indicators were designed to help the public compare various nursing homes, and were "essentially numeric warning signs of potential care problems, such as greater-than-expected instances of weight loss, dehydration or pressure sores among a nursing home's residents," GAO explained.
GAO asked Scully to remedy his "improper" actions, either by holding another competition for the contract or by allowing RAND to again select the center as a subcontractor. The watchdog agency also asked the Health and Human Services Department, which oversees CMS, to review the agency's post-September 2002 procurement decisions involving the center, to make sure the university researchers received fair treatment.
Sen. Chuck Grassley, R-Iowa, who requested the report, on Tuesday demanded an update no later than Aug. 15 on HHS' plans for addressing GAO's recommendations. "Based on my experience, I know Mr. Scully values free and frank discussion and, consequently, should recognize that his actions were simply inappropriate," Grassley added in an Aug. 4 letter to HHS Secretary Tommy Thompson.