Termination letters emphasize Medicare horror stories

Edgar Allen Poe and Mary Shelley are great sources of gothic fiction, but recent CMS termination and suspension letters sent to Medicare Advantage and Part D plans gives these masters of horror a run for their money.

The letters spoke of cancer patients goaded into switching coverage by unscrupulous brokers--and missing weeks of chemotherapy or anti-tumor medications. Or the disabled girl who had her seizure medication cut off when her father was conned into making a similar change. That led to an 18-day hospitalization--and pressure ulcers. Or the multiple patients forced to undergo unnecessary cardiac catheterizations and other invasive procedures to convince their plan, Fox Insurance Co., they needed medications federal law said they were already entitled to receive.

"I would say it's horrifying. They're preying for profit," said Judy Dugan, a one-time Los Angeles Times editorial writer who is now research director for Consumer Watchdog, an advocacy group that's been giving heartburn to the insurance industry for the past quarter century.

Dugan in particular singled out Health Net (NYSE: HNT). It was suspended from enrolling any new lives last month and marketing its plans without the standard 15-day transition period. Health Net had so systematically denied drugs to patients who needed them (including anti-seizure and AIDs prescriptions) that CMS spokesman Peter Ashkenaz told me agency officials were concerned not doing something immediately would endanger the health and even lives of its Medicare enrollees.

Health Net is still allowed to tend to its 650,000 current Medicare Advantage and Part D enrollees, likely in part because moving them to another insurer in a short period of time would demand a colossal effort.

Nevertheless, CMS's fury at Health Net is palpable: its suspension letter is a masterpiece of controlled anger and exasperation, distilling how the plan had committed egregious breaches of its Medicare contracts for years, and all but brushed off repeated warnings to shape up.

Health Net didn't respond to my inquiries either, although the plan did post a prepared statement from Chief Executive Officer Jay Gellert on its website. It read in part: "Health Net takes its obligations to Medicare members seriously ... we hope in the next months we can demonstrate to CMS that we have successfully addressed the issues they have raised. We are committed to the Medicare program and look forward to serving new Medicare beneficiaries once again."

A reasonable person might expect Gellert to publicly apologize to enrollees and camouflage his eagerness to resume growing a business his employees clearly cannot manage. But since not a penny of the $1.6 million he received in incentive pay last year (out of nearly $3 million total cash compensation) was tied to ensuring the elderly and disabled people in his charge got their medicine, you can hardly expect him to sound passionate about doing so now.

Remarkably, Gellert's canned drone was better than what I got from Arcadian Health Management, the insurer responsible for the disabled girl who developed bed sores. Their spokesperson actually described its response as "approved talking points."

Medicare celebrated its 45th anniversary last summer. Observance of this milestone was accompanied by the disheartening prospect that, like many American institutions, its best times are behind it. When businesses like Health Net and Arcadian demonstrate manifest indifference toward Medicare enrollees, they abet this dread.

Few historians or journalists reminisced this year about the Medicare signing ceremony. After President Lyndon Johnson inked the historic program into law he handed out the first Medicare card--to Harry Truman.

Truman had been the first president to champion universal healthcare coverage, so it made sense to have him present. But neither man knew the creation of Medicare more likely signaled the end of an era than a beginning.

Both came from modest rural backgrounds. Truman spent two years in an obscure law school before dropping out, and never earned a college degree. Johnson's diploma was from a teachers college in the Texas Hill Country so backward his biographers have inferred it wasn't worth the paper it was printed on. Both men entered their prime during the Great Depression and worried about money well into middle age (Truman was still selling Automobile Club memberships in his 40s to feed his family).

In other words, they were the last true underdogs to be elected president. Both clearly understood what Medicare meant for their constituents.

In the decades since, Medicare has been a source of hand-wringing rather than triumph. Economists worry about the prospect of the Medicare trust fund going bust, while physicians grumble that they'll stop treating enrollees if they don't get paid more. It's a disheartening culture of diminished expectations that provides cover to a much more malignant one of naked greed.

Meanwhile, commercial health plans keep grabbing more and more Medicare enrollees for their own. They slather administrative costs (like multimillion dollar CEO salaries) onto the care they broker that are about five times higher than what Medicare spends to run things on its own. The plans then take their profits from these ventures and contribute hand-over-fist to key PACs so Congress will keep on handing them more control over Medicare. When those plans violate Medicare regulations, they pile on even more costs by prompting easily preventable hospitalizations and unneeded procedures.

The Medicare enrollees who are either aged or infirmed are the underdogs in this new narrative, and they have no one except a few CMS officials to champion them. They're getting duped into Medicare Advantage and Part D plans that cut their benefits and disrupt their care. And in some cases when they filed complaints, the insurance agents who tricked them into changing their coverage chewed them out.

In her characteristically blunt manner, Dugan suggested an antidote for this type of behavior: prompt the Justice Department to investigate and prosecute some of these plans, their executives and their sleaze-meister sales reps.

It's not exactly the angry villagers with pitchforks and torches scenario that is the denouement of many a horror tale, but it's a far better ending then the one Medicare and its beneficiaries are now stumbling toward. - Ron

Note: By the way, I erred in last week's Editor's Corner in saying that former CMS director Mark McClellan was the person who repeatedly said "good question" at the ACO event I attended in Los Angeles. I like to think my work in this space is tough, but in the context of last week's missive, it was mean--something I like to think I am not. I apologized in a call to Dr. McClellan's office last week, and I do so now in print.