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Who Is Minding the Store?
October 11, 2007 • Volume 7, Issue 40Private Medicare health plans—so-called Medicare Advantage plans—will cost taxpayers about $75 billion in 2007. People with Medicare will pay an additional $74 million in Part B premiums this year just to fund the excess subsidies these plans receive above the cost of care under Original Medicare.
For that kind of money, you might think the Bush administration would try to ensure we got our money’s worth from these plans. You might hope the administration made sure that the plans delivered on what they promised.
Wrong, and wrong again.
As the Government Accountability Office (GAO) reported in July, the Centers for Medicare & Medicaid Services (CMS) failed to conduct the audits of Medicare Advantage plans that were required by law. When it did conduct audits, CMS found that, in 2004 alone, taxpayers had overpaid the plans some $34 million—money that was supposed to go to plan enrollees in the form of additional benefits. Incredibly, even after CMS discovered that the Medicare program had been shortchanged, it declined to recoup the overpayments from the insurance companies offering these plans.
The GAO report sheds a revealing light on lack of scrutiny given to the benefit packages provided by private Medicare health plans. How is it, when the law bars benefit designs that are discriminatory, that plans can discriminate against cancer sufferers by charging more for chemotherapy than Original Medicare or by carving chemotherapy from annual caps on out-of-pocket spending? The answer is: no one is really checking.
CMS’ failure to conduct effective oversight and enforcement has allowed widespread marketing abuses by Medicare Advantage plans. Although CMS has been monitoring the marketing conduct of Humana, the Louisville, Kentucky-based insurer that has been at the center of many marketing complaints, it was not until June 15, 2007, that CMS reached an agreement with Humana and six other insurers to temporarily suspend marketing of one of their private fee-for-service plans, just one of their many Medicare Advantage products.
A July compliance audit by CMS shows that Humana was unable to keep up with complaints about marketing misconduct—350 allegations in a two-week period in June alone. The company had inadequate training of its agents and failed to conduct the verification calls to new enrollees to ensure they understood their new coverage. CMS imposed a corrective action plan on Humana that requires the company to correct these deficiencies. This corrective action plan is still open—there is no record that Humana has fully implemented the plan. Nevertheless, CMS has lifted the marketing moratorium on Humana and the company has been allowed to resume marketing.
It is time for Congress to step in and force the administration to hold these plans to account. Billions of dollars, and, more importantly, the health and well-being of 43 million people with Medicare, are at stake.
Medical Record
“CMS audited contract year 2006 bids for 80 organizations, and 18 had a material finding that affected amounts in approved bids. CMS officials said that they will use the audit results to help improve bids in subsequent years but took limited action to follow-up on contract year 2006 findings. CMS will not pursue financial recoveries based on audit results because it maintains that it does not have the legal authority to do so. However, according to our assessment of the statutes, CMS has the authority to include terms in bid contracts that would allow it to pursue financial recoveries. CMS also has the authority to sanction organizations but has not identified instances where sanctions are warranted” (Required Audits of Limited Value, Government Accountability Office, July 2007).
“Both Humana and CMS continue to receive complaints from enrolled beneficiaries which demonstrate that they did not understand their election. Humana's present verification process is only used on agent assisted enrollments, and Humana reports in their present Corrective Action Plan that many times the verification process is not completed. The verification process is done while the agent in still in the home or with the enrollee. CMS believes this process should be completed after the representative leaves the enrollee. Many complaints received by CMS are from beneficiaries who believe that they were enrolling in a prescription drug plan, but then find themselves in an MA-PD plan. This demonstrates that enrollees are not fully educated on understanding their enrollment choice. Humana should implement a better process to educate the beneficiary on the choices they made” (“CMS Medicare Managed Care Auditing Report, Report 8657” Centers for Medicare & Medicaid Services, Generated September 28, 2007).
“With the subsidies Medicare private health plans receive for providing standard Medicare benefits, they have begun marketing themselves as low-premium, or no premium, alternatives to Medigap policies. But Medicare private health plans are subject to much less stringent regulation of the benefit packages they provide than Medigap supplemental policies. As a result, people with Medicare have a much more difficult time comparing the benefits offered by these plans to competing Medicare private health plans, to Original Medicare or to the benefits provided by a Medigap supplemental policy. More seriously, enrollees in these Medicare private health plans who fall ill can find themselves hit with high bills for medical expenses and with no protection against catastrophic expenses for medical care” (Informed Choice: The Case for Standardizing and Simplifying Medicare Private Health Plans, Medicare Rights Center and California Health Advocates, September 2007).
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Medicare Part D Monitoring Project
The Medicare Rights Center (MRC) would like to hear about your experience, or that of someone you know, enrolled in a Medicare private drug plan. With information about what the issues are with Medicare Part D, we will be able to demand that those problems be fixed.
Submit your story at http://www.medicarerights.org/partdstories.html.
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The Louder Our Voice, the Stronger Our Message
Asclepios—named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.
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