Medicare RX plan problems in 2007

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BlankDecember 27, 2006

Drug Plan Companies Failed to Tell of Changes

By ROBERT PEAR

WASHINGTON, Dec. 26 — Some prescription drug plans did not inform Medicare

beneficiaries of impending changes in their costs and benefits, as they were

required to do, Bush administration officials and Congressional aides said

Tuesday.

This could be a serious omission in a program where beneficiaries need accurate

information to choose among dozens of competing private plans.

Administration officials have told Congress that they may give these

beneficiaries a six-week extension of the open-enrollment period, which ends

Sunday. Beneficiaries could use the extra time to compare the options that will

be available to them in 2007.

Drug benefits are administered by private insurers under contract to Medicare.

Premiums, co-payments and the list of covered drugs vary by plan. In general,

people who are enrolled in a drug plan and take no action by Sunday will remain

in that plan throughout next year.

Even when a Medicare drug plan keeps the same name, its costs and benefits may

change substantially on Jan. 1. Medicare officials repeatedly told insurers that

they must notify beneficiaries of such changes by Oct. 31 of this year. But some

insurers did not send out the “annual notice of change” documents, which can be

30 or 40 pages long.

The administration informed Congress of the problem last week. Administration

officials said they would consider imposing penalties on companies that did not

provide the necessary information to beneficiaries.

“There could be penalties for plans that did not send out the annual notice of

change on time,” said Jeff Nelligan, a spokesman for the Centers for Medicare

and Medicaid Services.

Mr. Nelligan said he understood that UnitedHealth Group, one of the largest

Medicare drug plans, did not send the required notices to some of its

beneficiaries in October. He said he did not know how many other plans failed to

meet their obligations or how many people were affected.

Tom Koutsoumpas, senior vice president of Ovations, the UnitedHealth unit that

serves the Medicare market, confirmed that the company had failed to send timely

notices to some people enrolled in its prescription drug plans. He said he

believed that Medicare would give those beneficiaries more time to choose a

plan.

L. Ashkenaz, a spokesman for UnitedHealth, said that perhaps 200,000 of

its beneficiaries had not received the required notices by the Oct. 31 deadline.

Even though people have until Dec. 31 to sign up for a plan, the Bush

administration urged them to do so by Dec. 8, to avoid problems at the pharmacy.

Mr. Ashkenaz cited two reasons for the delay. UnitedHealth held back some

notices because they included erroneous information that had to be corrected, he

said. In addition, he said, a company printing the notices “had a fire that

delayed production.”

In every state but Alaska and Hawaii, more than 50 drug plans are available.

Many have increased or reduced their premiums for 2007. Many have added coverage

of generic drugs and reduced coverage of brand-name drugs. Some insurers have

adopted new techniques to control the use of certain drugs. They can, for

example, require doctors to get prior approval for prescriptions and can limit

the number of pills given to a patient each month.

Insurers report other problems in the final days of the open-enrollment period.

They say they have not received guidance from the government on exactly how to

compute the late fees for people who did not join a Medicare drug plan when they

were first eligible. The surcharge — an extra 1 percent for each month without

drug coverage — adds up quickly.

The surcharge, known as a late enrollment penalty, depends on the number of

months that a person went without drug coverage. Many insurers have asked the

government whether they should calculate the penalty, based on the number of

“uncovered months” reported by a beneficiary, or whether the government will

compute the penalty.

In addition, Medicare and Social Security are still trying to straighten out

problems in the withholding of prescription drug premiums from Social Security

checks. Medicare mistakenly sent premium refunds to tens of thousands of people,

and it failed to make the proper deductions for others.

Many insurers said they had experienced long delays in getting Medicare to

correct the records on which their payments were based. These records show, for

example, the date of a person’s enrollment and changes in state of residence.

Most of the changes are supposed to be handled by a government contractor,

IntegriGuard Enterprises, a national Medicare fraud-detection company.

Houser, a spokeswoman for the company, said she could not immediately explain

the delays. Federal officials noted a large backlog of requests.

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