Scores of health insurers that sell Medicare Advantage and Part D plans have been slapped with fines in the past several months, including a $3.1 million penalty that was levied on Humana for various violations.
In total, the CMS imposed more than $13 million worth of fines on private Medicare insurers and prescription drug plan companies last year, compared with $4.9 million of so-called civil money penalties in 2014, according to new letters posted on the CMS' website. In January, a CMS spokesman said the agency had not yet completed all 2015 audits.
The latest disclosures show the CMS is boosting the enforcement of Medicare's rules on insurers and pharmacy benefit managers, with some observers indicating the CMS will be “giving plans a lot of heartburn” over the coming years if they don't improve their compliance and member outreach.
Health plans can appeal the CMS' decisions, but if they don't, the fines are due within three months of when the letter was sent.
Last year's biggest fines went to Humana ($3.1 million), Envision Pharmaceutical Services ($2.6 million) and Medical Card System ($1.3 million). Envision is a pharmacy benefits manager that was acquired last year by drugstore chain Rite Aid for $2 billion. Medical Card System, a managed-care company based in Puerto Rico, has 195,000 Medicare Advantage members.
The CMS has actively attempted to fix the multiple layers of mismanagement throughout the privatized Medicare programs and found similar violations across each company. Among the most common are lousy drug formularies and policies that prevent members from getting their medications, inappropriately denied medical services, and stonewalling patient complaints.
Humana, the $37 billion takeover target of Aetna, has more than 3 million Medicare Advantage enrollees and is one of the most dominant players in the space. Gerard Mulcahy, director of CMS' Advantage and Part D oversight group, told Humana CEO Bruce Broussard in a letter that the company routinely had unapproved prescription drug limits and imposed barriers for seniors to receive care, among other infringements. A Humana spokesman said the insurer has “swiftly and thoroughly” addressed the issues.
The federal government hasn't slowed down since the new year. The CMS kicked off 2016 with a major suspension of Cigna Corp., saying the insurer's noncompliance “posed a serious threat to the health and safety of Medicare beneficiaries.”
The CMS has taken action on six organizations since Cigna's suspension. Health Net, a for-profit insurer that is merging with Centene and has been a repeat offender of Medicare's rules over the years, was fined more than $458,000 in February. A Health Net spokesman said the insurer has pledged to correct the violations.
Cigna wasn't the only Medicare plan to feel the severity of a suspension. Effective Feb. 26, the CMS halted the enrollment and marketing of Ultimate Health Plans, an insurer based in senior-heavy Florida with 5,800 members.
An office manager at Ultimate Health Plans released a statement that said the company immediately started instituting changes so that problems “do not happen again.” An independent auditor is working with Ultimate Health Plans to ensure changes are being made.
“We take the CMS' findings very seriously and are committed to proving to the CMS and to our members that the solutions we have put in place are effective and will prevent these problems from ever happening again in the future,” the company said.
A new letter (PDF) to Medicare Advantage and Part D companies said all fines from 2016 will be posted publicly in the first quarter of 2017. However, plans with more serious sanctions will have their violations posted online after the CMS notifies them.