More insurers face Medicare fines for coverage violations
Last month, the CMS fined Phoenix Health Plans, a small Medicare Advantage insurer in Arizona owned by Tenet Healthcare Corp., $146,600 for what it called “systemic” violations of Medicare rules.
Small and large insurers in the Medicare Advantage and Part D prescription drug programs increasingly are facing similar civil monetary penalties imposed by the CMS. This year, nearly three dozen insurers received either fines or temporary suspension from enrolling or marketing to new members. Critics of Medicare Advantage view the increased CMS oversight as acknowledgment of serious flaws in the program, as well as in Medicare’s Part D prescription drug program. Others say most of the identified problems are either overstated or easily fixed.
With Phoenix Health Plans, the CMS said the plan inappropriately denied or delayed medical services and prescription drugs that should have been covered. The agency further alleged the plan didn’t provide proper mechanisms for beneficiaries to appeal Phoenix’s decisions. Those failures, the CMS said, led to higher out-ofpocket costs for plan members.
Phoenix said in a written statement that it has responded to the enforcement action with increased operational oversight and more robust internal audits and staff training.
The recent spate of CMS sanctions typically involve questionable prior-authorization techniques for services or drugs, or disputes over denied coverage and noncompliant formularies. In the first 11 months of 2014, the CMS took 35 enforcement actions against insurers that provide Advantage or Part D coverage. That’s more than any other year since the CMS beefed up its auditing strategy in 2010. Of the 35 actions this year, 30 were fines, totaling $4.9 million, with penalties ranging from $20,700 to more than $447,000.
“That’s just embarrassing for this industry,” said John Gorman, a prominent Medicare Advantage consultant. “The plans just keep screwing it up.”
Most CMS actions originate from auditors combing through an insurer’s business, said Larry Kocot, a healthcare attorney at Epstein Becker Green who works with Advantage insurers. “Auditors can be subjective and sometimes just plain wrong,” he said. “Even the best-run plans will pay the price from a bad audit.”
Lew Borman, a spokesman with Blue Cross and Blue Shield of North Carolina, which was penalized $290,250 in July, said, “We take these audits very seriously … we have resolved all of the issues raised in the audit.”
Moda Health in Oregon was fined $312,300 in July. It also created a correction plan and now is in full compliance, a spokesman said.
Aetna received two civil money penalties in April totaling $509,300. The larger fine involved Coventry Health Care, which Aetna acquired in 2013. A spokeswoman said Aetna “had already found and corrected some of the issues before the CMS audit.”
The largest civil monetary penalty the CMS has imposed to date was against UnitedHealth Group, which has 3 million Advantage members. The big insurer had to pay $2.2 million in 2012 for Medicare coverage infractions.
Even though the penalties are relatively small, Dan Mendelson, CEO of consulting firm Avalere Health, said they are a “badge of shame” and significantly affect many plans. The CMS’ goal is to root out bad practices, not necessarily eject the players. “What they want is for their business partners to come into compliance with their policies,” Mendelson said.
The remaining five CMS actions this year were suspensions of enrollment and marketing, which Gorman said could be a “kiss of death” because they could lead to lower bonus payments tied to the plan’s star ratings for quality, or even termination from the Medicare program. Such intermediate suspensions can last from seven months to two years. The CMS said they last “as long as it takes for the sponsor to demonstrate to CMS that the deficiencies have been corrected and are not likely to recur.”
SummaCare, a managed-care plan owned by Akron, Ohio-based Summa Health System, had its Advantage plan suspended in August. In a written statement, outgoing SummaCare CEO Martin Hauser said: “We pledge to our valued members that we will resolve any and all deficiencies cited by CMS.”
Gorman said many of the cited problems have simple fixes—such as improved employee training in a health plan’s member services department—and the CMS is determined to get plans to make them. “As long as CMS starts carrying a bigger stick, they are going to get the results they want,” Gorman said. “And there’s going to be a lot of roadkill along the way.”