Humana’s practice of paying higher commissions for Medicare Advantage plans “is violating CMS regulations.”
He claims the agency’s marketing rules bar insurers from paying higher commissions for a more profitable product. According to a BusinessWeek report, he asked for an immediate investigation of his allegations. And, other managed-care companies may also be doing the same thing.
Humana is using high commissions to encourage its sales representatives to enroll the elderly in such HMO-type policies and paying increased commissions for managed-care enrollees as it pays for customers who sign up for one of its drug-only plans which is being offered as part of the new Medicare D.
Humana sales appears to be using Medicare D policies for marketing purposes to attract seniors. This is referred to as an
“enroll and migrate” strategy.
Seniors sign up for drug-only plans, and are encouraged them to enroll in one of the more profitable managed-care plans. It is also claimed that sales staff advise some senior to sign up for a managed-care plan as well.
“Forty-two million people were presented with a new opportunity to be enrolled in the drug program…That’s only going to happen once.”
CIBC World Market Corp. Analyst Carl McDonald:
“Humana sees a big first-mover advantage…They’re saying, ‘Let’s get them into a [drug plan] at a modest margin or even no margin in Year One, then try to convert them to a [managed-care plan].’ “
What has appears to have been overlooked by many is a marketing deal with Wal-Mart, that may possibly concentrate on aggressive pricing. Another example of aggressive pricing:
In most states, Humana’s drug premiums are below $10 a month, far less than the $32 average. According to health consultants Lewin Group, a retail drug bill of $2,000 cost just $766 under Humana’s Standard Plan, vs. an average of $1,420 through other insurers.
People with disabilities and senior citizens are a part of Humana’s marketing strategy. Both populations have been assigned to low-cost plans. It follows that the federal government and the taxpayers are financing a portion of Humana’s marketing costs.
The market will never support all the plans that are out there today — more than 1,300. Insurers also worry about what health economists call adverse selection. In other words, if the only people who sign up for drug insurance are those with big pharmaceutical bills, the insurance companies will take a financial bath.
People w/o health problems or a chronic condition are also encouraged to pick a Medicare D plan, by the 1% penalty that is imposed on those who don’t by May 1.
Democratic Senator Ron Wyden of Oregon:
“I think Congress is going to change the enrollment period for you,” Wyden told McClellan at a hearing…
Senate Finance Committee Chairman Charles Grassley:
“I’d like to say that the implementation has gone smoothly…We all know it hasn’t, especially for some of the nation’s most frail and neediest beneficiaries.”
Olympia Snowe of Maine,
“We ought to extend this so that we can get this right.”
Sixty votes are needed to change this. On Feb. 2, 52 senators voted in favor of extending the deadline. Democrat Jeff Bingaman of New Mexico, was unable to make the vote. (Wonder why?)
Missouri plans to sue the federal government over Medicare D. Jay Nixon called the Medicare Part D program
a costly and illegal drain on the state treasury…Missouri stands to lose $400 million over the next five years…
The lawsuit would be filed directly with the U.S. Supreme Court.
President Bush signed a measure Wednesday that trims Medicaid and Medicare spending over the next five years (Wasn’t the Medicare D supposed to do that?) saying that Medicare, Medicaid and Social Security are the biggest long-term challenge to the budget. He added that
the growth rates projected for the programs are unsustainable.
He and members of his administration kept insisting that an overhaul of Medicare was necessary.
“By 2030, spending for Medicare, Medicaid, and Social Security alone will be almost 60 percent of the entire federal budget…That will leave future generations with impossible choices _ staggering tax increases, immense deficits, or deep cuts in every category of spending.”
And what about the cost to the taxpayers of the invasion of Iraq? As of this writing, it was 239 billion + and steadily increasing?
Of course that was ignored, as Bush continued with the following:
“There are some that, frankly, whose policies would make us look more like Europe than we should, and that is kind of a centralization of power…The surest way to centralize power is to take more of your own money to Washington.”
Don’t like that last bit–getting more than a bit nerve-racking. But, then, it appears that this administration is into power and fear to keep the public in line.
(Who does that remind you of?)
And, of course Humana claims,
“We are following the Medicare marketing guidelines.”