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Medicare Orders Health Net to Stop Selling Orange Drug Plans
By Susan Jaffe, Florida Health New
February 15, 2008
Medicare officials have ordered Health Net, Inc., one of the largest publicly traded health insurers in the nation, to stop marketing its “Health Net Orange” prescription drug plans.
The U. S. Centers for Medicare and Medicaid Services also froze enrollment in the drug plans, according to an obscure notice on a government Web site. The plans have 379,000 members, including 41,000 in Florida.
The government acted against the California company because it fell behind in processing enrollment applications and sent members incorrect information about changes in their coverage for 2008, said CMS spokeswoman Allison Henry. She said she could not provide specific information about the letter or the enrollment problems.
Ironically, two Health Net Orange plans were named to a list of the five best deals among Medicare drug plans in Florida by Consumers Union last year. They won based on price, but the group that selected them did not look at satisfaction measures, such as grievances filed.
Health Net is calling members of the Orange drug plans who signed up after Jan. 16, when the enrollment and marketing freeze took effect, to give them the option of switching to another Medicare drug plan, said Health Net spokeswoman Amy Sheyer. She declined to provide further information about the violations.
However, consumer groups were willing to discuss the problems. Health Net failed to process enrollment applications on time, said David Lipschutz, a staff attorney and interim president of California Health Advocates. That may have led to some members having difficulty filling prescriptions, he said.
While he hasn’t seen the letters and doesn’t know what the errors were, Lipschutz said that if Health Net did not describe changes in coverage and costs that would take place on Jan. 1, then members may have remained in plans that stopped meeting their needs after the Dec. 31 deadline for choosing a better drug plan for 2008. Most beneficiaries cannot switch plans now, he said, so a freeze on marketing and enrollment does not help them.
Some Health Net members with low incomes have discovered they have higher prescription co-pays than last year and now must pay monthly premiums for plans that were free last year, said Tatiana Fassieux, program manager in northern California for the state Health Insurance Counseling and Advocacy Program. She said her staff knows of Health Net Orange members who have not been able to afford their prescriptions and their complaints to Health Net and Medicare have not been resolved.
The company is required to write a plan to address its problems. “We’re talking with CMS on a regular basis and working through the corrective action process,” Sheyer said.
CMS’ action against Health Net came to light this week when the agency’s acting administrator, Kerry Weems, told the U.S. Senate Committee on Finance that seniors would be protected from marketing abuses this year. He mentioned a new web site the agency created to publicize enforcement actions the government had taken against insurers over the past two years. Health Net was at the top of the list, cited for “multiple enrollment processing violations [and] incorrect annual notice of change [letter].”
It is not clear how members who were misinformed by the letters were supposed to learn about the enrollment and marketing freeze. CMS did not issue any public announcement about it, Henry said.
In the fall of 2006, when several companies delayed mailing the required information about plan changes, Medicare allowed members additional time to change plans if they wished, Lipschutz said. The companies were also fined for violating Medicare rules, he said.
The length of a freeze on marketing and enrollment can vary depending on the company’s progress in correcting problems. Last week, Medicare lifted a similar freeze on a St. Petersburg-based insurer, Universal Health Care Insurance Co., which sells the “Any, Any, Any” plan covering both drugs and medical care. The ban took effect in Florida and seven other states a year ago after the Florida Office of Insurance Regulation cited the company for lacking sufficient financial reserves for its level of enrollment. State and federal officials said members of Any, Any, Any complained in massive numbers about difficulty in finding doctors who would accept the insurance.
Health Net is not facing any enforcement action in Florida., a spokesman for the state agency said.
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