Medicare ads violate federal law, GAO concludes

Posted on Wed, May. 19, 2004
Medicare ads violate federal law, GAO concludes
By Tony Pugh
Knight Ridder Newspapers

WASHINGTON - The General Accounting Office ruled Wednesday that the Centers for Medicare and Medicaid Services violated federal law by failing to identify itself as the sponsor of a recent series of ads that used people posing as journalists in "video news releases" to tout Medicare's new drug benefit.

Many local TV stations aired the videos, paid for by the Medicare agency, earlier this year as part of their news programs. The segments included images of President Bush receiving a standing ovation as he signed the drug benefit into law last December and a pharmacist who lauds the benefit.

The failure to name the ads' sponsor in the videos violated a section of the federal Anti-deficiency Act, which deals with publicity and propaganda and requires that the source of the ad be identified, said Susan Polling, the GAO lawyer who directed the investigation. The New York Times first reported on Medicare's video news initiative in March.

Willful violations of the law carry a criminal penalty of up to two years and a fine of up to $5,000, but the violations in question weren't found to be willful, Polling said.

William Pierce, spokesman for the Department of Health and Human Services, which oversees the Medicare agency, said it was the department's view that it was up to the TV stations to inform viewers about the news spots' source.

The videos are no longer being distributed.

The use of video news releases has increased over the last 10 years as broadcast news budgets have decreased and stations scramble for low-cost ways to fill airtime.

Congressional Democrats instigated the GAO investigation of the videos and other drug benefit promotional materials, arguing that they held little educational value and served only to promote Bush in an election year.

The GAO, Congress' watchdog arm, found no problems with print ads and flyers promoting the new drug benefit, but held that the videos violated the Anti-deficiency Act's ban against "materials that are self-aggrandizing, purely partisan in nature, or covert as to source," according to the report.

When it comes to the videos, the GAO found, "the materials raise concerns as to whether they constitute `covert' propaganda because they are misleading as to source.

"Because (the Medicare agency) did not identify itself as the source of the news report, the story packages, including the lead-in script, violate the publicity or propaganda prohibition."

The decision said that videos "that disclose the source of information to the target audience alleviate these ethical concerns."

Congressional Democrats lauded the GAO's finding. Reps. Pete Stark, D-Calif., and Charles Rangel, D-N.Y., said they would ask local stations that ran the videos to run a correction or retraction explaining that the materials violated federal law.

"The GAO concluded what many seniors have found out long ago - that the Bush administration's spread of unattributed information amounts to covert propaganda," Rangel, the ranking Democrat on the House Ways and Means Committee, said in a prepared statement.