Posted on February 2, 2009

Part D insurers overcharging


Insurers overcharged Medicare for prescriptions, report finds

By David Goldstein
The Miami Herald
February 1, 2009

If you buy medicine through Medicare’s prescription drug program, you could be paying too much.

The taxpayers who finance Medicare aren’t doing too well, either.

Insurance companies involved in the Medicare prescription drug benefit have overcharged subscribers and taxpayers by several billion dollars, according to the inspector general for the Department of Health and Human Services. Eighty percent of the participating insurance companies owe the program an estimated $4.4 billion for 2006 alone.

Medicare, however, has been slow to do something about it. In fact, the agency doesn’t even know how much money the insurance companies owe taxpayers because it hasn’t begun most of the financial audits needed to determine that.

Inspector General Daniel Levinson found a number of problems. Among them:

A quarter of all bid audits done for the years 2006 and 2007 had errors that resulted in higher profits for the insurance companies, higher costs for Medicare and higher premiums or fewer benefits for the beneficiaries.

Some administrative and marketing costs also were “unreasonably high.”

Costs charged by companies in some cases were questionable because the supporting financial data was “poor” and “inadequate.”

However, none of the findings resulted in changes to the program, the inspector general found, because the bid audits are done after the contracts with the insurance companies are signed and beneficiaries are enrolled.

The insurance companies never faced penalties for their mistakes and overcharges because the bid audits don’t say whether errors are “misrepresentations” or honest mistakes.

That means problems haven’t been fixed, the inspector general said.

“Bid audits are not designed to lead to sanctions,” the report says. “However, without any consequences … their deterrent effect is limited.”


By Don McCanne, MD

The determination of the Bush administration and the Republican-controlled Congress to turn the Medicare Part D drug program over to private insurers produced no surprises. Medicare was overcharged, and the patients were overcharged.

One more consequence of electing a president and members of Congress who don’t believe in government is that appropriate oversight has been lacking. Limiting oversight to sanction-free audits long after the fact is an open invitation to abuse and wink-of-the-eye fraud.

Even if rigid oversight were introduced, these private intermediaries will always find innovative ways of shifting an excessive amount of public funds and patient funds into their own coffers. Patch one leak in the system, and they’ll punch three more into it.

Those who believe in Medicare understand that we need to fold the drug benefit into the traditional Medicare program and eliminate these wasteful, intrusive intermediaries. Now that we have elected a Congress and an administration whose members believe in government, how can we distract them from their intense conversations with the insurance and pharmaceutical lobbyists who helped elect them?