Monday, October 08, 2007

Managed Care Promises Vs Medicare Audits

Many health care insurance and managed care companies have lofty mission statements. For example, UnitedHealth Group promises to:

- Improve access to health and well-being services;
- Simplify the health care experience;
- Promote quality; and,
- Make health care more affordable.

Similarly, Wellpoint promises to:

- Bring affordable quality health care and coverage to medically underserved communities
- Educate people to take an active role in their own health
- Work with our health care partners to improve quality of care
- Help shape public policy that makes health care more affordable and more accessible

And Humana promises that it

makes health benefits affordable, easy to administer and use, and instills confidence in both employees and employers.

In contrast, Robert Pear, writing in the New York Times, found multiple problems when these companies privately ran Medicare-financed health plans,

Tens of thousands of Medicare recipients have been victims of deceptive sales tactics and had claims improperly denied by private insurers that run the system’s huge new drug benefit program and offer other private insurance options encouraged by the Bush administration, a review of scores of federal audits has found.

The problems, described in 91 audit reports reviewed by The New York Times, include the improper termination of coverage for people with H.I.V. and AIDS, huge backlogs of claims and complaints, and a failure to answer telephone calls from consumers, doctors and drugstores.

Medicare officials have required insurance companies of all sizes to fix the violations by adopting “corrective action plans.” Since March, Medicare has imposed fines of more than $770,000 on 11 companies for marketing violations and failure to provide timely notice to beneficiaries about changes in costs and benefits.

The companies include three of the largest participants in the Medicare market, UnitedHealth, Humana and WellPoint.

The audits document widespread violations of patients’ rights and consumer protection standards. Some violations could directly affect the health of patients — for example, by delaying access to urgently needed medications.

There were a variety of problems.

Medicare officials said that compliance problems occurred most often in two areas: marketing, and the handling of appeals and grievances related to the quality of care.

Many of the marketing abuses occurred in sales of the fastest-growing type of Medicare Advantage product, known as private fee-for-service plans. In June, the government announced that seven of the leading companies in this market, including UnitedHealth, Humana and Coventry, had agreed to suspend marketing of these plans. Medicare recently allowed them to resume marketing after they took steps to monitor their sales agents more closely.

Each Medicare plan has a list of preferred drugs, known as a formulary. Under federal law, patients can request coverage of other drugs that may be medically necessary. But many insurers do not have procedures to handle such requests, auditors said.

Specific problems occurred that seemed to contradict the commercial managed care companies' lofty statements of purpose.

UnitedHealth, which serves more than six million Medicare beneficiaries, did not have an 'effective program' to supervise its marketing representatives, agents and brokers. In some cases, United improperly denied claims without giving any explanation to beneficiaries. Peter L. Ashkenaz, a company spokesman, said, 'We terminated a few agents and brokers for misrepresenting our products.'

WellPoint, one of the nation’s largest insurers, had 'a backlog of approximately 354,000 claims' at certain Medicare plans offered through its UniCare subsidiary. The company’s call center took an average of 27 minutes to answer phone calls from its members and 16 minutes to answer calls from health care providers. More than half the callers hung up before speaking to a company representative. Karen Brown, a spokeswoman for WellPoint, had no immediate comment.

Humana, which covers more than 4.5 million people on Medicare, promised to investigate every complaint about its marketing practices, but it received so many complaints that it could not keep up. Many beneficiaries said they had received incorrect information from Humana agents. Medicare officials said some agents had not been adequately trained or supervised. Thomas T. Noland Jr., a senior vice president of Humana, said the company had taken 'corrective action to improve the situation.'

Humana did not always tell beneficiaries about changes in its list of covered drugs. In some cases, Humana did not explain its reasons for denying claims and did not inform beneficiaries of their appeal rights.


So what did the government do to remedy these problems?

Medicare has taken “vigorous action” to halt marketing violations, said Abby L. Block, a Medicare official.

As noted above, that amounted to less than a million dollars worth of fines, apparently spread over 11 companies.

Once again, this nice example of investigative reporting shows that all too often in health care, large organizations make lofty promises, but their actions seem to contradict these claims.

Furthermore, negative incentives for bad behavior by giant health care corporations, in this case, health insurance and managed care companies, are very minimal. $770,000 is not even petty cash for such corporations. Minimal fines are just a minimal cost of doing business. It is doubtful that behavior will change until the people who actually determine that behavior suffer negative consequences.

Wouldn't it be nice of large health care corporations really did try to make health care better, more transparent, and more affordable?

ADDENDUM (8 October, 2007) - See Joe Paduda's take on this in his post on Managed Care Matters.

1 comment:

Anonymous said...

Unfortunately, many of the those who are recipients of the programs are among those easiest to abuse from everyone from telemarketers to the actual insurance carriers. There's a new web-based show called The Raymond Report where viewers are invited to write in with their problems for his team of investigators to help. You can search it on YouTube or go to

I'd be curious as to what you think.