Medicare Advantage

Members of Congress Seize New CMS Audit Findings That Detail Deficiencies in Medicare Advantage Plans

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs.

Just days after CMS for the first time released information on deficiencies found in Medicare Advantage (MA) and Prescription Drug Plans (PDP) audits, some members of Congress seized upon the findings as another reason for more accountability and oversight of the MA program.

The House Ways and Means health and oversight subcommittees scheduled a joint hearing Oct. 16 to hear testimony from government officials, Medicare plans and consumer representatives on a July report by the Government Accountability Office (GAO) concluding that mandated audits of MA plans' bids were of limited value. The hearing also was to focus on the 91 corrective action plans for MA and PDP plans — based on federal audits conducted from January 2006 through Sept. 30, 2007 — that were released Oct. 1 by CMS and posted on its Web site.

Some of the detailed information released by CMS on individual company audits describes serious alleged deficiencies. For example:

• Sierra Health and Life Insurance Co., Inc. is cited by CMS for the involuntary disenrollment of 2,300-plus members with HIV/AIDS from the SierraRx Plus plan on March 1, 2007,without benefit of a three-month grace period. AIDS Drug Assistance Programs, which pay Part D premiums on behalf of their clients, brought the matter to CMS's attention. CMS says that when it directed Sierra to reinstate these members, Sierra refused. CMS asked Sierra to submit a corrective action plan by Sept. 22 explaining both how deficiencies occurred and the policies and procedures it is putting in place to ensure that it remains in compliance with its PDP sponsor contract. CMS said it will consider Sierra to be meeting Part D requirements only after it demonstrates full compliance for three consecutive months. Its audit status is listed as "open."

Sierra Vice President Peter O'Neill says that CMS, after initial "inaccurate" information, notified the company in June that there was no evidence that Sierra had "disproportionately terminated patients with this diagnosis from its drug plan." The sole criterion CMS used was nonpayment of premium, and only a "very small" number of the 2,300 members "temporarily" losing drug benefits had HIV/AIDS, he says.

• Sterling Life Insurance Co. is cited by CMS for having inadequate systems for receiving auto-enrollees (i.e., low-income subsidy eligible beneficiaries who are automatically assigned to Part D plans). CMS says it will terminate Sterling's Part D sponsor contract effective Dec. 13 unless outstanding issues are resolved. Similar to Sierra, Sterling was asked to submit a corrective action plan to CMS by Sept. 22.

Yoni Cohen, a spokesman for Rep. Pete Stark (D-Calif.), who chairs the House Ways and Means health subcommittee, tells MAN the hearing demonstrates Stark's continuing interest in keeping watch over the MA program. Stark introduced legislation this summer to pay for expansion of the State Children's Health Insurance Program (SCHIP) by reducing MA plan payments to 100% of Medicare fee-for-service payments. The Senate passed a bill that instead would have used a cigarette tax for SCHIP expansion, and the legislation was vetoed by President Bush. The House Democratic leadership is trying to muster enough votes on Oct. 18 to override the veto.

United Says CMS Audit Info Is Outdated

Noting that his company was scheduled to testify at the Stark hearing, UnitedHealth Group spokesman Peter Ashkenaz told MAN Oct. 15 that over the past two years CMS has required plans to create corrective action plans focusing on areas where plans can improve operational processes. United has "worked diligently" to improve its performance on the issues raised by CMS, and got its corrective action plans approved by CMS in March, Ashkenaz says. "We've completed the actions required," he asserts. He says it appears that CMS's recently released corrective action plan report — which lists United's audit status as "open" — is not up to date.

CMS's posted information lists nearly four dozen United contracts under audit, citing broad areas as allegedly deficient. These include marketing, provider relations, appeals and grievances, provider communication and pharmacy access.

In a separate action on Capitol Hill, Rep. Henry Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee, released a report Oct. 15 entitled, "Private Medicare Drug Plans: High Expenses and Low Rebates Increase the Costs of Medicare Drug Coverage." Waxman asserts that the Part D program's "inflated administrative costs and meager drug rebates will cost taxpayers and seniors $15 billion this year alone." The panel describes its report as the first independent analysis of Medicare Part D with access to proprietary data on drug plan costs and drug prices.

Public disclosure of corrective action plans "helps both to let the public know and the [plan] contractors know the cop is on the beat. I think it increases compliance on the plans' part," says Bob Atlas, senior vice president of consulting firm Avalere Health.

Atlas says he does not think the report put out by Waxman "necessarily reveals anything new," noting that proponents and critics of private Medicare plans continue to release evidence supporting their views. Waxman's report "comes to broad conclusions.[but] unfortunately only they got to look at the numbers they're using," he says.

Listing Problems Big and Small

CMS routinely has published deficiency information on hospitals, nursing facilities and other providers participating in Medicare, but has kept plans from the public eye. On Oct. 1, CMS posted audit findings on 51 MA plans covering 107 separate MA contracts, and findings on 25 MA prescription drug plans (MA-PDs) and 15 PDPs, according to a review by Gorman Health Group, LLC. The firm considers it likely that CMS at some point will publish such findings on its www.medicare.gov Web site for consumers; it is now just on www.cms.gov.

According to the Gorman consulting firm's analysis of CMS's corrective action plan report, MA plans have the greatest difficulty in meeting appeals and grievance requirements, with findings in this category for fully 94% of listed plans. In addition, 62% of plans were cited for marketing issues, which included engaging in activities that "mislead, confuse or misrepresent" beneficiaries.

After reviewing the CMS report, Steve Balcerzak, executive vice president of Gorman Health Group, says: "For the most part, what you can tell is, except for America's Health Choice [a Florida MA plan whose contract was recently terminated by CMS], plans are continuing to function and trying to correct their problems."

But Balcerzak notes that broadly listed deficiencies may spell out a serious problem for one plan and a minor problem for another plan, even though items are displayed in a similar manner. "The bottom line here is all of these things can be terribly egregious or minimally problematic," he says. "There's no way of knowing unless you read an exact description of problems," and even then some interpretation of reviewers' language in a detailed site report may be needed, he says.

Balcerzak, who previously worked as director of performance review in HCFA's managed care division, describes CMS's published corrective action plans as "a good first step." Noting that information on fines levied against Medicare plans or intermediate sanctions imposed on them still remains unavailable, he says that perhaps CMS could follow up with a more comprehensive list of Medicare plan monitoring, oversight and sanctioning activity, "so it is all in one place."

"I think [publishing corrective action plans] creates in the health plan an additional amount of concern about how they're viewed in the marketplace," he says. "This is providing more information and, over time, I think CMS will figure out how to put it into better context."

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