Featured Health Business Daily Story, April 29, 2015

CMS Fines Aetna $1 Million in Latest of Many Drug-Access CMPs

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. Sign up for an $87 two-month trial subscription today.

By James Gutman, Managing Editor
April 23, 2015Volume 21Issue 8

This month’s $1 million fine levied by CMS against Aetna Inc. for erroneously listing nearly 6,000 retail pharmacies as in network for its Part D plans when they weren’t (MAN 1/22/15, p. 4) is the agency’s biggest financial penalty so far this year for violations related to drug benefits under Medicare. But it is far from the only one, as CMS in the first 100 days of the year has unveiled 12 civil money penalties (CMPs) in some way relating to Part D pharmaceutical access, notes consultant John Gorman, executive chairman of Gorman Health Group, LLC. By contrast, there was only a single $50,000 fine in the first three months of 2014, Modern Healthcare reports.

Health First Health Plans, Inc., based in Rockledge, Fla., on April 8 became the latest plan to receive notice of a Part D-related CMP, with its fine slated to be $420,600. The 12 fines so far in 2015 put CMPs related to Medicare drug access on pace for a “record year,” Gorman says.

The reasons for this are numerous, several consultants tell MAN. They include that CMS has put out a best-practices memo on the subject and told plans it is tired of seeing the same problems turn up in audits, it is easier these days to achieve change in Medicare plan practices via these kinds of regulatory thrusts than by legislation, and the agency has developed algorithms that help it measure the impact on beneficiaries and thus make the case for penalties.

The Aetna situation, however, has been somewhat different in that the violations involved errors in listings of in-network pharmacies — and that the volume of beneficiary complaints was huge. Specifically, said Gerard Mulcahy, director of CMS’s Medicare Parts C and D Oversight and Enforcement Group in the April 2 CMP letter to Aetna, the 3,767 complaints CMS got on Aetna’s erroneous pharmacy network listings “accounted for 33% of all complaints received by CMS” about Part D issues. Of these complaints about Aetna, 73% “were marketing complaints that beneficiaries were misled about in-network pharmacy coverage,” Mulcahy wrote.

The insurer, according to the letter, itself reported that “6,887 non-network retail pharmacies were erroneously identified by Aetna as ‘retail in-network’ for 2015 on its website” and via its call-center representatives during the 2015 Annual Election Period last fall. This led “many Aetna enrollees” who sent prescriptions to their usual pharmacies after Jan. 1 to find out that those pharmacies were not in network for their plans and to either have to pay themselves for the entire prescription or leave the pharmacy without it.

The situation grew out of significant changes Aetna made to its pharmacy networks for 2015, including creation of what the insurer called “high-value pharmacy networks” that it said enabled premium reductions for nearly all of its stand-alone Prescription Drug Plan (PDP) members compared with 2014. Some of the pharmacies inaccurately listed were in network for other Aetna products but not for Part D.

The company says that “these issues were swiftly resolved” and that most members and pharmacies weren’t affected. Nevertheless, CMS even before the CMP granted Aetna members an informal special enrollment period to disenroll from their plan and enroll in another Part D plan if they felt misled. The new development in the letter, aside from the data on the number of complaints and pharmacies affected, is the $1 million fine, and Aetna spokesperson Kendall Marcocci tells MAN the insurer is “still evaluating” whether to appeal that and the noncompliance determination by CMS.

Problems with provider directories being out of date, however, are certainly not unique to Aetna. “They could just about play ‘Pin the Tail on the Donkey’ and nail any plan they want” for this, says Gorman about CMS. The agency went after Aetna, he says, because it got nearly 4,000 complaints about the company’s pharmacy situation and because pharmacy access clearly can lead to beneficiary harm.

Potential for Harm Triggers CMS Focus

It is the latter point that may account for the recent surge in CMPs growing out of such alleged violations as “applying unapproved utilization management practices,” deviating from a plan’s CMS-approved drug formulary by applying unapproved quantity limits, rejecting formulary medications as non-formulary, improperly administering CMS’s “transition policy” on pharmaceuticals for beneficiaries switching plans, improperly handling coverage-determination requests on drugs, not making coverage decisions within the specified time frames, and furnishing improper denial letters, including ones not informing beneficiaries of their appeal rights.

The Part D plans getting CMP letters on such drug-access issues this year, aside from Health First, and the size of their CMPs are as follows: Citizens Choice Health Plan, $689,600; New West Health Services, $349,800; Inland Empire Health Plan, $256,950; Soundpath Health, Inc., $250,100; Senior Whole Health Holdings, Inc., $229,350; Southwest Catholic Health Network, $202,200; Health Plan of the Upper Ohio Valley, $194,950; Providence Health Plan, $164,600; Pacific Source Community Health Plans, Inc., $90,000; and AlohaCare, $32,700.

Many of the fines are large, says Steve Arbaugh, CEO of ATTAC Consulting, because CMS now can measure the impact of pharmacy-access issues on beneficiaries as well as require plans to furnish information on this. Moreover, Arbaugh tells MAN, CMS has been “telegraphing” that it wants Part D plans to pay attention to these “known issues.”

Problems Come After Formulary Submissions

Some of the problems, he adds, stem from specific situations such as what happens when a new pharmaceutical comes on the market or a drug shifts from brand to generic status after Part D plans file their formularies with CMS in April. Plans need to work with their pharmacy benefit managers (PBMs) to accommodate these changes, just as they need to monitor drug-claim rejections on a daily basis to avoid such problems as transition supplies, which are “always a challenge,” he asserts.

Arbaugh also advises plans in their denial letters on coverage determinations to avoid using just boilerplate “not on our formulary” language and to assist enrollees by furnishing specific reasons for denials and possible alternatives for the drug denied.

Part of the solution, says Gorman, is to work closer with PBMs, which often “have all kinds of system edits embedded that violate CMS rules.” Common problems his consulting firm sees on Part D issues, he notes, include lack of current member data, poor documentation, improper classification — such as mixing up grievances versus appeals, resulting in depriving beneficiaries of due process — and failing to follow required timetables on determinations.

There may be one other reason for the surge in drug-access-related CMPs this year, Gorman suggests. He says the Part D industry has “so much political muscle” that it may make more sense for the Obama administration, in its second term, to make desired drug-access changes via regulatory action rather than the legislative process.

View the CMS letter imposing the CMP on Aetna by visiting the April 23 From the Editor entry at MAN's subscriber-only Web page: www.aishealth.com/newslettters/medicareadvantagenews.

© 2015 by Atlantic Information Services, Inc. All Rights Reserved.


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