Remember Henry Waxman’s letter?
…members heard testimony from an expert on drug pricing who revealed that the January 1 transfer of drug coverage for dual-eligible beneficiaries from Medicaid to Medicare, which the Republican Congress mandated, will likely result in a multi-billion dollar windfall for drug manufacturers. I am requesting that GAO investigate this issue.
The drug company windfall involves the 6.4 million seniors and people with disabilities who were switched automatically from the Medicaid drug benefit to the new Medicare drug benefit on January 1. This transfer is enriching the pharmaceutical industry because drug prices under the new Medicare drug benefit appear to be significantly higher than the prices previously paid by Medicaid. The policy change is likely to provide tens of billions of dollars in new profits for the drug companies, virtually all of which will come out of the pockets of U.S. taxpayers…
continued below
As written earlier, under Medicare D(isaster), the rx industry is relying on the free market/competition to keep prices low. As a result of the emphasis on competition, instead of negotiations for the best price, the rx companies are the only ones able to decide what a particular rx is worth/to be sold for.
This practice, coupled with the prohibition against negotiations, can have a result of a very high increase in an rx companies profits. Also, the high profits and the sales tactics of insurance carriers, such as Humana, have raised enough concern for Pete Stark to call for an investigation, which is being done by the Office of the Inspector General at the US Department of Health and Human Services.
According to Stark’s office, the most aggressive of the sales tactics come in the form of telephone calls. And, many senior citizens may have been inappropriately steered into enrolling into the wrong plan, and have been finding that their rx’s are not covered.
Stark also wrote,
“Beneficiaries are already overwhelmed trying to navigate the new law. They should not be subject to bait-and-switch tactics or other misleading marketing ploys once they have made a decision to enroll in the plan.”
The amounts that the insurers receive appear to be a factor in this. For example,
selling a senior a Medicare Advantage plan can mean several times the revenue per senior than a typical drug plan. In the Chicago area, for example, the Medicare program pays HMO-style plans between $700 and $800 per senior per month. By comparison, the government pays $110 monthly to standard drug-only plans for each senior enrolled in the plan, according to government statistics.
However, the profits of the rx and industries are not the only cause for concern. In addition Elder Affairs has,
received calls from caregivers of elder parents reporting that their family members have received telephone calls from people asking for their bank information. Usually the caller states that they can “sign you up for a Medicare plan for a one time charge.” Please Note: There is No One Time Fee to Enroll In A Medicare Part D Plan. Thus far, the reported charges from these scams have varied from $249 to $398. Citizen’s Bank has verified in one instance that an amount of $398 was automatically removed for an elder’s account.
Another scam being perpetrated on the elderly involves people posing as Social Security Administration (SSA) personnel in an effort to get personal information. An SSA Employee may contact an applicant if information is incomplete or there is a question about information contained in the application. SSA employees, however, will not ask for social security information, mother’s maiden name, date of birth, or any other personal, identifying information. In addition, elders should be aware that state and federal mailings are branded by official state or federal logos and are written on official stationary.
It is also necessary to point out that the telephone calls “attempting to solicit insurance” are also being received by people with disabilities who are dual-eligible. I would also like to point out that I am in no way suggesting or implying that the call may have come from any insurance company that offers coverage to those who are dual-eligible.
