By Jeffrey Young
The Hill
March 8, 2007
Federal officials are investigating whether one health-insurance company that sells prescription-drug coverage to Medicare beneficiaries inappropriately diverted its most expensive customers to a competitor.
Sierra Health Services, which offers Medicare Part D prescription-drug plans under the brand name SierraRx, alleges that Humana Inc. telephoned its highest-cost customers and recommended they purchase coverage from Sierra instead.
Sierra President and Chief Executive Anthony Marlon delivered the bad news: “As we looked at the first month’s results, it became apparent that the pharmacy costs on this product were much higher than we and our independent actuaries had projected.”
Sierra will discontinue the money-losing plan next year, Marlon assured the analysts.
According to Marlon, “We believed our level of adverse selection was in part due to certain high-utilizing members being referred to us by another PDP provider. We did not agree to these referrals.”
Humana counters that it merely passed along information to its customers about a competing product that might better suit their needs, and said federal regulators approved its actions.
Humana redesigned its Complete product (Part D drug benefit) for 2007 by eliminating brand-name doughnut hole coverage and raising the premium to about $80.
All Part D plans are required to send letters by Oct. 31 to beneficiaries explaining any changes in their drug coverage for the coming year, which Humana did.
Humana went one step further. In December 2006, Humana customer-service representatives contacted an undisclosed number of Complete customers by telephone.
During the call, Humana employees again explained that the brand-name doughnut hole coverage was being cut out. They also told beneficiaries that other insurance companies were offering that benefit in 2007, including Sierra Health Services.
“Our goal was to make sure these people continued to have access to prescription coverage,” Humana’s director of media and public relations, Dick Brown, said. Humana also asserts that CMS (Centers for Medicare and Medicaid Services) approved the script the company used for these calls.
Brown would not explain, however, whether the company contacted each of the more than 400,000 Complete customers with the same information or if Humana targeted the calls to a subset of these beneficiaries such as those with the highest drug costs, as Sierra implied.
http://thehill.com/leading-the-news/feds-probe-humana-over-rx-drug-patients-2007-03-07.html
Comment:
By Don McCanne, MD
Getting rid of high-cost patients is a very wise business move for an investor-owned insurer. But what about the interests of the patients?
In the business world, premium increases due to adverse selection are known as the death spiral, which results in withdrawal of those insurance products from the market. Humana escaped from its death spiral by forcing a new death spiral on a competitor. As a result, comprehensive Part D coverage will no longer be available for those with very high drug costs. The business model works for the investors, but not for the patients.
A drug program in the traditional Medicare program would never have been designed to deprive those with the greatest needs of their drug benefits. To the contrary, it would have been designed to be certain that patients would have affordable access to the drugs that they need.
The complicity of our public stewards is consistent with the current administration’s goal to shift public insurance to the private sector. Maybe we need new public stewards. After all, patients deserve more than to be pawns for passive investors.