Universal American, Health Net and Arcadian Health must stop marketing to and enrolling new members in their Medicare Advantage plans after violating Medicare regulations, according to the Centers for Medicare and Medicaid Services.
The Universal American and Arcadian issues were identified by CMS monitoring and were raised to CMS by both plan members and CMS partners, the agency said. Their sanctions are effective Dec. 5 and will remain in place until the companies can prove they have corrected the violations and they are unlikely to recur, the Plattsburgh Press-Republican reports.
CMS alleged that Universal has a "longstanding pattern of prohibited marketing practices targeted to highly vulnerable populations in violation" of federal law and guidelines as well as contractual terms with CMS, notes the Wall Street Journal. It is sanctioned because it didn't provide proper oversight of sales agents, who misled beneficiaries about network providers who were not actually part of the network or drugs that were not part of the plan's formulary, according to the Press-Republican. CMS added that the violations resulted in delays in treatment and may have caused in risks to patient health.
Likewise, Arcadian's sales agents were misleading beneficiaries about network providers and/or drug plan formularies, CMS said.
CMS identified Health Net's violations during an audit and imposed immediate sanctions upon the insurer because CMS found its conduct poses a "serious threat" to enrollees as a result of the company's "intractable failure to provide its enrollees with prescription drug benefits in conformance with laws, guidelines and contract terms." CMS also said Health Net has a "history of non-compliance," according to the Wall Street Journal.
The CMS sanctions are the latest sign that the Obama administration is taking an aggressive approach to overseeing Medicare managed care plans, Deutsche Bank analyst Scott Fidel told the WSJ. "The timing of the suspensions could not be worse given than the annual enrollment period just started Nov. 15," he said, adding that the sanctions will impair the companies' ability to generate new sales and increase the risk of member defections to competitors.
CMS will closely monitor the plans until the determination is made that corrective actions have been taken and to ensure that these deficiencies are not likely to recur. If the sponsors do not come into compliance with Medicare requirements, penalties that could be imposed range from fines to the possibility of termination of the sponsors' contracts with Medicare, according to the agency.
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