Reports raise $2 billion worth of questions about Medicare health insurance
Providing medical coverage to millions of senior and disabled Americans, Medicare health insurance represents a significant market for many health insurance companies. While original Medicare is provided directly by the federal government, Medicare Advantage and Prescription Drug Plans offer private companies an opportunity to share a piece of the Medicare pie. However, a pair of reports from the U.S. Department of Health & Human Services' (HHS) Office of Inspector General indicates the program still has plenty of room for improvement.
$2 billion in Medicare premium overpayments
Titled "Concerns with Rebates in the Medicare Part D Program," one report indicates the government and Medicare beneficiaries may be overpaying an eye-popping $2 billion a year in Part D premium payments. Part D is the prescription drug component of Medicare. Unlike hospital and medical insurance that can be obtained directly from the government, prescription drug coverage is only offered through private companies.
Part of the reason the government opted out of the prescription drug business is because it believed private health insurance companies are better equipped to negotiate price cuts with manufacturers. When companies set premium rates, they are required to estimate the amount of rebates they expect to receive from manufacturers and pharmacy benefit managers in return for funneling customers their way.
The problem is that most health insurance companies appear to be underestimating their rebates. In 2008, some 69 percent of insurers underestimated their rebates, leading to $1.9 billion in premium overpayments by Medicare beneficiaries and the government, the report said. While these may be honest mistakes for some companies, there is always the question of whether insurers are purposely underestimating in order to inflate profits.
The report made suggestions in hopes of eliminating future overpayments. In the meantime, the reality is that though the government may be able to recoup some of its costs, Medicare beneficiaries are out extra premium dollars with no possibility of reimbursement.
Medicare coverage of little blue pills
At the same time Medicare prescription drug plans were charging too much for premiums, they were apparently providing benefits above and beyond what was authorized by the government, according to a second report from the HSS Office of the Inspector General. The government apparently paid $3.1 million for Viagra and other erectile dysfunction medications, the second report said. However, health insurance companies don't share any of the blame for this mistake.
The drugs, although considered essential by some, are not a covered benefit under Medicare. So why did the government pay $3.1 million for these prescriptions? Not because of fraud. No, $3.1 million in taxpayer dollars were paid for Viagra and similar drugs because someone forgot to edit Medicare computer software to include a complete list of excluded medications.
We trust that the Centers for Medicare & Medicaid Services (CMS) will work to remedy the situation but collecting refunds for the mistaken payments may be a more difficult task.
For the cynics among us, the two inspector general reports likely offer little surprise. After all, this is the government we're talking about, right? Still, despite the bad rap, we like to think that federal agencies really want to be good stewards of taxpayer dollars. The CMS knows there are problems, and knowing problems exist can be half the battle.Tags : medicare, prescription drug plans, medicare part d