More in­sur­ers face Medi­care fines for cov­er­age vi­o­la­tions

Modern Healthcare - - NEWS - By Bob Her­man

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.”

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