Federal authorities have banned Capital BlueCross from enrolling new customers into its Medicare plans, saying the health insurance company denied some seniors coverage for emergency services and access to prescription drugs, and overcharged about 3,000 enrollees for medications.
In a letter sent last week to company President and CEO Gary D. St. Hilaire, officials from the U.S. Centers for Medicare and Medicaid Services said an April audit found "widespread and systemic failures" that presented a "serious threat to enrollees' health and safety."
In some cases, for example, CMS said Capital BlueCross failed to collect enough information from enrollees or their doctors to make informed clinical decisions. In other cases, the company — the sixth-largest health insurer in Pennsylvania — failed to explain why it denied coverage to enrollees.
In addition, it said Capital BlueCross failed to perform timely retroactive claims adjustments, resulting in more than 3,000 enrollees being overcharged $27,667 for their medications.
CMS also is prohibiting Capital BlueCross from marketing its Medicare plans, says the letter, issued May 28. The sanctions are immediate and apply only to Capital BlueCross' Medicare operations.
They will remain in place until CMS is satisfied that the problems are addressed and not likely to recur, said the letter's author, Gerard J. Mulcahy, director of the Medicare Parts C and D Oversight and Enforcement Group at CMS.
Capital BlueCross spokesman Joe Butera said the company will not appeal CMS' decision. The company, he said, "is working closely with CMS to remediate the issues as quickly as possible to best serve our members and to have the sanctions lifted.
"We take these matters very seriously and a focused team is working on this important matter. Much work has already been done to remediate some of the audit findings we had expected. We will continue to work to make improvements as expeditiously as possible, putting all the necessary resources of our company behind this effort to help ensure we can meet the needs of our Medicare members and deliver quality and effective coverage."
The sanctions to prohibit new enrollments are infrequently imposed. According to CMS records, the agency has ordered a suspension of enrollment only 18 times in the past five years.
Lorraine Ryan, a spokeswoman for the U.S. Department of Health and Human Services, which oversees CMS, said the penalties do not affect current Capital BlueCross customers. She said more than 37,000 people are enrolled in Capital BlueCross' Medicare plans, almost all of whom live in Pennsylvania.
The violations involved appeals and grievances of denials to provide coverage or prescriptions using Medicare Parts C and D. Medicare Part C is usually referred to as Medicare Advantage, which is private coverage separate from traditional Medicare. Part D is Medicare's prescription drug benefit.
According to the letter:
Capital BlueCross inappropriately delayed or denied coverage to seniors at the "point of sale," and when those customers appealed the denial. Those problems forced seniors to pay an undetermined and inappropriate amount of out-of-pocket costs.
Delaying appeals and making improper decisions could keep customers from getting "medically necessary or life-sustaining services or drugs.These failures pose a serious threat to the health and safety of enrollees."
Many of the problems, the letter goes on, "stem from a complete ineffective monitoring and oversight of CBC's Pharmacy Benefit Manager … which is responsible for CBC's coverage determinations."
CVS Caremark is the Pharmacy Benefit Manager for Capital BlueCross.
"We are assisting Capital BlueCross as it works with CMS officials to address the areas of concern," said CVS spokeswoman Christine K. Cramer, noting that the pharmacy supports select components of the Capital BlueCross Medicare Part D drug plan.
As the pharmaceutical benefit manager, CVS Caremark processes prescriptions for Capital BlueCross and negotiates with drug makers and pharmacies on drug prices.
CMS ordered Capital BlueCross to submit a corrective action plan this week. After it submits the plan, the company will have to attest to CMS that the deficiencies have been corrected. Once that happens, Capital BlueCross will have to hire an independent auditor to review its operations, which then has to report to CMS. Only then will CMS consider lifting the sanctions, the letter says.
In the meantime, CMS said it will closely monitor the company and impose additional sanctions — which could include monetary fines or even terminating its contract to provide Medicare coverage — if problems remain.
According to the Pennsylvania Health Law Project, current members of a Capital Blue Medicare plan wishing to change to a different plan can contact Medicare at 800-633-4227 or APPRISE, a free Medicare counseling agency, at 800-783-7067 to see if they qualify for a special enrollment period or other exception that allows them to change their Medicare coverage.
Capital BlueCross merged in 1985 with Blue Cross of the Lehigh Valley and now serves 21 counties in central and eastern Pennsylvania.
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