Government to insurance agents: It’s time to stop preying on the elderly

Imagine your grandmother, ambushed in her grocery store parking lot by a salesperson pressuring her to change her Medicare coverage, a system convoluted enough to confuse just about anyone.

It sounds unbelievable, right? Unfortunately, it’s exactly what insurance companies are up to.

Insurance companies have spotted an easy target - seniors living on fixed incomes struggling to make ends meet while trying to make sense of Medicare – and are taking advantage of the situation, aggressively pushing private plans called Medicare Advantage on seniors.

When the companies switch seniors to different insurance plans without first fully explaining the change, it has caused some to lose supplemental coverage and physician access.

States currently don’t have the power to regulate the companies that issue these plans. Some argue that states should have the authority to do so, but insurance companies say they would rather see regulation at the federal level than have to deal with 50 states, each with a different set of rules.

Meanwhile, state officials say the only way insurance agents will come clean, and the only way they can look out for seniors, is if they have the muscle to make it happen.

States belonging to the National Association of Insurance Commissioners have received many complaints they can’t do anything about, leaving consumers to fend for themselves. Like figuring out Medicare, navigating the labyrinth of Centers for Medicare and Medicaid Services and state regulators is a daunting task.

The NAIC wants to set standards for marketing private plans that would be enforced by the states that adopt them.

In what could be interpreted as steps toward ending this swindling or politicians caving in to lobbyist pressure, the federal government proposed to ban insurance agents’ aggressive marketing of private Medicare comprehensive and prescription drug coverage last month.

The federal proposal does not address state regulation.

Senate Finance Committee Chairman Max Baucus of Montana was quoted by The Wall Street Journal as saying, " America's seniors have been pressured, prodded, preyed on and ripped off by shady marketing too often. I intend to get these bans into the law to ensure aggressive marketing tactics are quashed once and for all.”

Insurance companies target seniors as easy prey during Medicare open enrollment

Do seniors, most of whom are on low or fixed incomes, deserve to be left with high medical bills and without coverage or access to their doctors just so insurance companies can make an easy buck?

Most of us would say no, and so did members of Congress when they passed the Medicare Improvements for Patients and Providers Act of 2008 in July - a bill that restricts insurance industry marketing tactics such as telemarketing, door-to-door solicitation, and providing meals to prospective clients.

Despite lawmakers cracking down on these unethical sales practices, during the 2008 year-end Medicare annual election period, some companies are up to their old tricks. They continue to swindle one of the country's most vulnerable populations while taking advantage of the fact that the vast array of options available through Medicare is  confusing enough to boggle just about anyone's mind.

In the past, insurance companies - including PBMs offering prescription coverage through Medicare Part D plans as well as private companies selling government-sponsored Medicare Advantage plans - have used aggressive, unsolicited marketing tactics to switch seniors to plans that are not appropriate for the individual but offer hefty financial incentives to sales agents or companies.

And as seniors lose supplemental coverage and physician access, some companies continue to rip off seniors by identifying themselves as Medicare representatives, buying seniors' trust with perks like free eyeglasses and cell phones, and lying outright about plan benefits.

If you are contacted by insurance sales agents, resist the pressure. Take your time to be certain the coverage and costs are right for you. This includes premiums, deductibles, co-pays, which types of doctor and hospital visits are eligible, and limits on medication, as well as coverage with current providers.

If you are subject to illegal sales tactics, call 1-800-Medicare.

PBMs cash in on contract loopholes

Each year, PBMs swindle governments, employers and insurance companies out of big bucks by deliberately misleading clients in their contracts.

Do you know what a “branded generic” is? It’s a clever term invented by PBMs. We all think “generic” means cheaper—right? Well, yes. But, no, not when it’s a branded generic.

Say what? Exactly. It’s an intentionally misleading term in contracts that bilk unsophisticated, trusting clients.

Manipulating the way they categorize drugs enables PBMs to line their wallets by charging higher brand prices for generics, classifying generic drugs as brand drugs in order to keep rebates/kickbacks from drug manufacturers rather than passing them on to employers or insurance companies, and essentially lying about generic drug utilization rates so they can attract more customers.

Most payers are unaware of this issue until after the fact, when they find out through an audit they’ve been bamboozled. At that point, there’s little they can do to resolve it. [We need to point out that too few employers know how to audit a PBM contract. More to come on this problem!]

The large PBMs’ response to this issue is that their manipulative behavior is the industry’s standard.  Well, no kidding, if by industry standard they mean always looking for a profit on the backs of those they are supposed to serve.

PBMs weasel out of paying bills on time

If the companies known as pharmacy benefit managers were like the rest of us, they’d have lousy credit. But because they make so much profit by holding onto employer and patient money intended to reimburse pharmacists, the PBMs are fighting legislation to make them pay their bills on time.

PBM lobbyists claim that paying pharmacists within 30 days would be costly and hinder antifraud efforts. This argument—made by those who rake in record profits while facing lawsuits for unethical business practices—makes no sense. But when you take a look behind the scenes, it’s easy to see why they want to maintain the status quo. PBMs earn interest on the money they owe pharmacists, so as they see it, the longer they can hang on to it, the better. Meanwhile community pharmacies sometimes wait up to 90 days to be paid, and are forced to take out loans to pay their own bills.

Pharmacists electronically verify insurance coverage with a PBM at the time a doctor sends in a prescription or a patient brings in a prescription. So it stands to reason that the PBM can electronically transmit reimbursements to the pharmacy on time. But the PBMs are hanging onto every penny as long as they can.

Pharmacists are trying to cure this problem of slow pay through congressional action on legislation (HR 5182) that would require drug plans to pay all electronic clean claims within 14 days and to notify pharmacists within 10 days of problems in submitted claims.

Ultimately, patients will pay for this system of slow pay that only benefits greedy middlemen. When community pharmacies are forced out of business, patients will lose access to their local pharmacists, who offer lower-cost drugs and face-to-face care. And while patients end up in the emergency room for problems that could be avoided through commonsense prescription drug policy, PBMs will be laughing all the way to the bank.   

Pity the Poor PBMs: Their Record-Breaking Profits Are at Risk

Medco Health Solutions Inc., (MHS) the nation’s largest pharmacy benefit manager, reports a six-fold jump in first-quarter 2007 earnings. Revenue reached $11.16 billion, up 5.6 percent from $10.56 billion.

Express Scripts (ESRX) is doing so well it announced a two-for-one stock split. Adjusted gross profit for the first quarter increased 21 percent to $417.1 million from $344.6 million last year. Adjusted gross profit per adjusted claim was a record $3.26, a 28 percent increase over $2.55 for the same quarter last year.

CVS/Caremark is both a retailer and a PBM now. They’re now the alpha and omega of PBMs, so other than noting they too had record profits, it’s not exactly comparing apples and oranges.

These strong profits are in some peril, as they note in their “safe harbor” statements to investors. They are afraid of government efforts to demand transparency and auditing rights. These are the same guidelines adopted by the HR Policy Association representing more than 250 of the nation’s largest employers. Medco, CVS/Caremark and Express Scripts all have signed on to these requirements, but the weight of the “white hat” approach may throw them off their horses in the long run. As more employers, both private and government, enter into new contract negotiations, the PBMs can see their profits sinking.

PBMs also face a lawsuit that could subject them to claims under ERISA if they are found to be a fiduciary of a health benefit plan governed by ERISA.

The writing is on the wall for PBMs if they continue to operate in their current fashion. But they’re known for their adaptability and ability to siphon health care dollars. We’ve already seen the CVS/Caremark merger. What do you think their next incarnations will be?

How Do We Disclose the Secret About Pharmacy Benefit Managers?

Try this. Ask the next 10 people you encounter if the know what a pharmacy benefit manager is. Your humble Blogmaster is willing to wager no more than nine will know. Now, don’t cheat and talk to people in the industry! But even that may not be a guarantee they will know what a PBM is.

Last spring we conducted a series of focus groups to determine just this question. Well, out of three groups—one with human resource managers, one with small to medium business owners, and one comprised of seniors—not a single person had heard of a PBM!

What should be done to make people aware that their access to medications is being controlled by a third party with pockets stuffed with our healthcare dollars?

Did Your Medicare Part D Plan Increase Your Copayments?

More than 25 percent of Medicare drug plans increased beneficiaries’ copayments and prices for prescription drugs in 2006. OFTEN AFTER BENEFICIARIES WERE COMMITTED TO PLANS FOR THE YEAR according to a study by Consumers Union.

For the study, researchers examined cost information provided by insurers to CMS (the federal agency responsible for administering Medicare) listed on the Medicare Web site. The study tracked price fluctuations of five commonly used drugs among 225 insurers in five states.

According to the study, 62 INSURERS INCREASED BENEFICIARIES’ COSTS for medicine by at least 5 percent last year. Most insurers increased costs by less than 10 percent, but six increased costs by 10 percent or more. One plan increased costs by 32 percent, or by $795 for the five drugs, during 2006. In addition, 22 percent of plans between January and February raised drug costs by 5 percent or more.

Do you think that’s that fair?