Medicare Part D Out Of Control

Dear Friends and Colleagues:

Attached a NYT article reporting about the deceptive marketing practice of Medicare Part D drug plans.

Many of these plans DO NOT follow federal guidelines that regulate the marketing standards and information disclosure of the participating private health plans.

This can lead to deceptive consumer advertising and confusion about the quality of products offered.

Another example of a poorly designed government program that is running out of control.

Bernd

June 25, 2006

Troubles Linger in Regulation of Medicare Customer Service

By ROBERT PEAR

WASHINGTON, June 24 — After enthusiastically promoting Medicare drug plans for three years, the Bush administration is having difficulty regulating these same plans to ensure they comply with federal standards for marketing, customer service and consumer protection.

Medicare officials are juggling two potentially incompatible roles as they try to police the new program while defending it against a barrage of election-year criticism from Democrats.

The new benefit is administered by dozens of private insurers under contract to Medicare, which has set detailed standards for marketing and customer service. Federal officials said many insurers had evaded their duty to resolve complaints from beneficiaries and had instead simply referred callers to the government's toll-free telephone number, 1-800-MEDICARE (1-800-6-334-2273).

In a recent memorandum to insurers, Cynthia G. Tudor, a senior Medicare official, said the government "has been receiving a large number of urgent requests from beneficiaries who are enrolled" in drug plans under the new program, known as Part D of Medicare.

"These urgent requests generally mean that the beneficiary is in immediate need of a medication refill," Ms. Tudor said.

On two occasions in the last month, Ms. Tudor reminded all insurers of their "obligation to resolve complaints" from their members. She told them not to refer subscribers to 1-800-MEDICARE, saying the federal call center "is not intended to respond to complaints or questions enrollees have about their particular Part D plan."

Under federal rules, Medicare officials can impose civil fines up to $100,000 for each violation of federal standards. In a document describing its enforcement strategy, the Bush administration said it saw no need to disclose the penalties or other sanctions that might be imposed on prescription drug plans in the future. A public listing of enforcement actions "could unfairly impede business opportunities" for insurers that later correct their deficiencies, it said.

"Sanction authority is not designed to be punitive," the administration said.

Dr. Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services, said his agency was monitoring plans' compliance with federal standards and would "take action when appropriate."

In the last six months, President Bush and Medicare officials have repeatedly said that consumers need more data on the cost and quality of care provided by doctors and hospitals.

Drug plans must report large amounts of data on their performance to the federal government — for example, the number of claims approved and rejected, the number of complaints against each plan, the number of grievances and appeals, the average waiting time on telephone help lines and the proportion of prescriptions filled with low-cost generic drugs. So far none of the data has been released, even though members of Congress from both parties say it would help consumers.

"If you ask me to choose a prescription drug plan, you ought to give me the information I need to make an intelligent decision," said Representative Pete Stark, Democrat of California. Representative Phil English, Republican of Pennsylvania, said he supported the idea of giving consumers a wide range of choices, "provided they get useful information" on the options available.

Dr. McClellan said his agency would consider the performance of drug plans in deciding whether to renew their contracts next year. Moreover, he said, if Medicare officials find that an insurer is "substantially out of compliance" with federal requirements, they can terminate its contract this year.

But John K. Gorman, a former Medicare official who is now a consultant to many insurers, said: "The government has given companies an unofficial grace period in the first year, while they try to make this program work. We do not expect to see much enforcement unless there's an egregious violation."

Insurers say the government is responsible for some of the problems that have provoked the most complaints from beneficiaries. These problems include delays and errors in withholding Medicare premiums from Social Security checks.

Rarely has the government relied so heavily on private contractors to deliver public benefits. More than 29 million people receive drug benefits subsidized by Medicare. Federal officials are struggling to find the right mix of regulation and gentle persuasion, giving insurers a large degree of discretion about how to achieve objectives set by Congress and the White House.

Federal officials issued regulations for the Medicare drug program in January 2005. Since then, they have clarified, revised and expanded the requirements by issuing hundreds of guidelines, memorandums, bulletins, fact sheets, tip sheets, instructions, "frequently asked questions" and other documents providing informal guidance to Medicare drug plans and pharmacists.

Consumer advocates, insurers and health care providers said it was extremely difficult to keep track of the shifting federal policies.

"It's hard to find out the current state of the law," said Leslie B. Fried, a lawyer at the American Bar Association. Elise Smith, vice president of the American Health Care Association, a trade group for the nation's nursing homes, said, "It's almost impossible to keep track of all the changes and clarifications."

Judith A. Stein, director of the Center for Medicare Advocacy, a nonprofit group that counsels beneficiaries, said, "Most of the guidelines are phrased as recommendations or suggestions, not binding requirements, so they are difficult to enforce." Insurers have repeatedly asked the administration to clarify what is required and what is simply recommended.

Karen M. Ignagni, president of America's Health Insurance Plans, a trade group, said the administration had invented "a new regulatory model" for the drug benefit, working with insurance companies to solve problems reported by doctors, druggists or beneficiaries. "It's a very productive partnership," Ms. Ignagni said.

The White House recently cautioned agencies against using guidance documents as a form of "backdoor regulation," and it noted that several courts had refused to enforce such standards.

In one case, the United States Court of Appeals for the District of Columbia Circuit said the phenomenon was familiar: "Law is made, without notice and comment, without public participation," as agencies issue more and more guidance documents expanding the reach of their regulations.

The federal government has issued guidelines for the marketing of Medicare drug plans, but state officials say they have not been adequately enforced.

Jorge Gomez, the Wisconsin insurance commissioner, who is also a spokesman for the National Association of Insurance Commissioners, said: "State regulators are very concerned about the aggressive marketing practices of certain prescription drug plans. Some brokers and agents are using Medicare Part D as a pretext to get in the doors of Medicare-eligible consumers, then selling them a variety of unrelated and sometimes unsuitable insurance products."

In addition, Mr. Gomez said, some beneficiaries were placed in health maintenance organizations when they thought they were signing up only for drug coverage.

The administration recently told states they "may not take enforcement action" against insurers for deceptive marketing of Medicare drug coverage. In general, it said, only the federal government can regulate such marketing.