Some States, Seniors Bristle at Lack
of Authority Over Medicare Advantage Plans
Medicare pays private health plans - an alternative to
traditional Medicare - set monthly rate per patient: about 16 million
have signed up, almost one third of elderly, disabled eligible for
By Fred Schulte, The Center for Public Integrity
hit him with a bill for $6,461.66, claiming the surgery was not
covered because the hospital was “out of network.”
Aug. 19, 2014 - When Minnesota
retiree Doug Morphew needed surgery last year, he expected his Humana
Medicare Advantage plan to step up and pay the lion’s share of the bill.
Morphew said the health plan had
told him over the phone he would owe just $450 for the two days he spent
in a St. Paul hospital recovering from the operation to repair an
Less than a month later, however,
Humana hit him with a bill for $6,461.66, claiming the surgery was not
covered because the hospital was “out of network,” according to an
affidavit he filed with the Minnesota Attorney General’s Office last
“Considering that I was expecting a
bill of $450, I was incredibly upset,” said Morphew, 68, who lives in
Lonsdale, Minn., and works part time as a transportation industry
Morphew said that Humana paid the
bill, but only after “several months of fighting” with him, and after he
complained to state regulators.
In October 2013, Minnesota Attorney
General Lori Swanson sent Morphew’s formal complaint, and about two
dozen others, to Centers for Medicare and Medicaid Services (CMS)
administrator Marilyn B. Tavenner. Swanson asked the federal official to
“undertake an investigation of Humana’s practices and take appropriate
remedial and punitive action.”
The letter sparked media
coverage in the state. But nearly a year later, Swanson is
not satisfied with the response.
“As far as I’m aware, there has
been no formal enforcement action taken,” said Minnesota attorney
general’s office spokesman Benjamin Wogsland. “We have very serious
concerns that continue.”
Citing patient confidentiality
laws, Humana spokesman Tom Noland declined to comment on specific cases.
But he said that Humana “has worked actively with CMS to resolve the
matters outlined in the letter.” CMS said it is satisfied that Humana
has largely fixed any problems.
Medicare pays the privately run
health plans -- an alternative to traditional Medicare -- a set monthly
rate for each patient. About 16 million Americans have signed up, about
one third of the elderly and disabled people eligible for Medicare, at
an annual cost to taxpayers of more than $160 billion. A Center for
Public Integrity investigation published in June found as much as $70
billion of improper payments to Medicare Advantage plans from
2008 through last year.
Many health plans also collect
monthly fees directly from patients and may charge co-payments for
medical services, such as $10 for a doctor’s office visit. The plans
also can limit care to doctors and hospitals in their networks, so long
as patients are advised of these restrictions.
Humana has pitched its plans in
Minnesota through radio and television ads, telemarketing and the mail,
typically telling seniors it offers more benefits than standard Medicare
and will cost them less out of pocket.
But Humana “sometimes denies claims
for services that are covered under original Medicare,” overcharges for
copayments, “misrepresents” which doctors and hospitals patients can go
to and hides behind “red tape and delay” to avoid paying claims,
according to Swanson’s letter.
Swanson turned to CMS because state
regulators lack the legal authority to impose sanctions on Medicare
Advantage carriers. When Congress created the Medicare Advantage option
in 2003, it gave CMS that power, thus preempting state laws and
Minnesota officials don’t believe
CMS should have a “monopoly” on oversight. “We think states should have
authority over improper determinations by Medicare Advantage plans,”
Wogsland said. “If they (CMS officials) don’t take action, there’s no
Other state officials also have
been frustrated by the limits on their authority. In October,
Connecticut Attorney General George Jepsen called for federal officials
to “aggressively scrutinize” UnitedHealthcare’s decision to drop a large
number of doctors from its Medicare Advantage plans, a move that had
caused an uproar from patients and medical groups.
Medicare has also reported its own
difficulties keeping tabs on the fast-growing program.
In a little noticed proposal in
March, CMS officials said they were “constrained in the number of
program audits we can conduct each year, due to limited resources.” The
agency is only able to audit about 30 Medicare Advantage companies a
year -- about one in ten -- of the 300 operating.
CMS proposed that health plans
conduct and pay for self-audits with the goal that each organization
would be looked over at least every three years. But in May CMS backed
off in the face of industry protests.
“Ensuring that Medicare
beneficiaries receive high quality care and timely services while
enrolled in a Medicare Advantage plan is a top priority for CMS, an
agency spokesman wrote in an email. He said the agency “may finalize
this proposal at a future date.”
“We were disappointed to see it
rolled back,” said David Lipschutz, a senior policy attorney with the
Center for Medicare Advocacy. He said the proposal “begged the question”
of how often plans are audited.
“We have concerns across the
board,” Lipschutz said. “It’s unfortunate that we have public dollars
going toward a privatized program with relatively little oversight.”
CMS officials point out that they
have taken enforcement action against health plans that fail to pay
bills or provide necessary care for their patients.
The agency posts these actions on
its website, though patients aren’t likely to spot them without
considerable hunting around. Even if they do, the sanctions often are
written in language that gives little clue to the actual infractions
other than they pose a “serious threat to the health and safety” of
From November of 2009 to this
August, the agency levied 68 fines against Medicare Advantage plans for
a total of about $9.8 million, a review of the CMS website shows.
In that time, CMS terminated four
health plans, two of them because they had become insolvent. On 21
occasions, CMS suspended enrollment in health plans, usually after
discovering that sales agents misrepresented the benefits to potential
In the case of Humana’s performance
in Minnesota, CMS officials said they had “not seen increases in
complaints or other concerns” since receiving Swanson’s letter.
They said Humana “appears to have
made significant progress addressing these issues, and we have been
satisfied with Humana’s responses to date.”
But Minnesota official Wogsland
called it “disappointing” that CMS had taken no formal action. His
office continues to get complaints from patients, hospitals and other
health care providers about unpaid bills. “That’s a problem,” he said.
Darlene Tucker, 75, of Bloomington,
who said she got by on monthly Social security income of $1,271, is one.
In an affidavit, she said the
Humana agent sold her a plan that was supposed pay the full cost of
radiation therapy for breast cancer. But she said she was stuck with
co-payments of $994.22, which she couldn’t afford.
The health plan never did pay,
according to her affidavit. The center that performed the radiation
treatments eventually wrote off the bill.
“My fight with cancer was enough
for me to deal with at the time. I do not think I should have had to
fight Humana for insurance coverage it promised to provide,” she said.
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