CMS investigates allegations that Humana encouraged its highest-cost beneficiaries to join competing Medicare prescription drug plan

Mar 11 2007

CMS officials are investigating whether Humana inappropriately advised the highest-cost beneficiaries in its Medicare prescription drug benefit plans to switch to plans provided by Sierra Health Services, The Hill reports.

Sierra officials on Feb. 27 alleged such practices during a conference call with investment analysts.

Sierra President and CEO Anthony Marlon said that an "extraordinary amount of drugs" were being used by some beneficiaries enrolled in one of the company's new drug plans.

The plan, called SierraRx Plus, was introduced in January and provides full coverage of brand-name and generic drugs during the Medicare drug benefit coverage gap known as the "doughnut hole."

Marlon said, "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." Marlon said the plan will be discontinued next year. Sierra executives on Feb. 28 discussed the matter with CMS officials.

Humana officials said beneficiaries were informed about Sierra's new plan because the company was eliminating brand-name doughnut hole coverage and increasing premiums to about $80 for its Humana PDP Complete plan.

"Our goal was to make sure these people continued to have access to prescription coverage," Humana Director of Media and Public Relations Dick Brown said.

He added that CMS had approved the scripting that Humana representatives used in their calls to beneficiaries. Brown did not clarify whether the company contacted each of the 400,000 beneficiaries enrolled in the Complete plan or only those who had the highest drug costs.

Peter O'Neill, Sierra's vice president of public and investor relations, said CMS has given Sierra executives a "clear impression" that Humana's actions were not consistent with CMS-approved referral practices.

Abby Block, director of CMS' Center for Beneficiary Choices, said, "We are working very closely with Sierra in examining their claims experience so far."

The Hill reports that the dispute "highlights the difficulty of offering comprehensive prescription drug coverage to the oldest, sickest and costliest Medicare participants" (Young, The Hill, 3/8).