Capital Blue Cross Hit With Sanctions By Federal Government

May 31--Capital Blue Cross is barred from enrolling new beneficiaries to certain plans as a result of a federal audit that found widespread and systemic violations of Medicare and Medicaid regulations.

The company is also barred from marketing those plans. The sanctions were imposed by the Centers for Medicare and Medicaid Services, which determined deficiencies by the insurance carrier had created a "serious threat to enrollee health and safety."

In a letter dated May 28, officials from the federal agency notified Capital Blue Cross of the immediate "intermediate sanctions" on certain Medicare Advantage-Prescription Drug and Prescription Drug Plan contracts.

In an e-mail to PennLive Capital Blue Cross spokesman Joe Butera said the membership of current enrollees in the company's Medicare products is not affected by this action.

"We take these matters very seriously and a focused team is working on this important matter," Butera wrote. "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."

A spokesman for the federal agency wrote: "The sanctions mean that the Capital Blue Cross cannot enroll new Medicare beneficiaries into its plans and cannot market its plans to Medicare beneficiaries."

A branch of the U.S. Department of Health & Human Services, the Centers for Medicare and Medicaid Services determined that Capital Blue Cross had failed to provide enrollees with services and benefits in accordance with federal requirements.

The letter, which was addressed to Capital Blue Cross president and CEO Gary D. St. Hilaire, noted that violations had resulted in enrollees experiencing delays or denials in receiving prescription drugs, and increased out of pocket costs for medical services and prescription drugs.

"Enrollee access to services and prescribed medications is the most fundamental aspect of the Part C and Part D programs because it most directly affects clinical care," wrote Gerard J. Mulcahy, director of Medicare Parts C and D Oversight and Enforcement Group. "(Capital Blue Cross) is denying enrollees access to drugs at the point of sale and within their appeals and coverage determinations process. The ineffective oversight... coupled with serious deficiencies with CBC's administration of its Part D coverage determinations, appeals, and grievances and Part D formulary, resulted in enrollees being denied access to the drugs that they are entitled to receive."

The sanctions apply to contracts H3923 and H3962 (Medicare Advantage-Prescription Drug Plans), and S8067 (a Part D Prescription Drug Plan). The service areas for the contracts are national, but the majority of enrollment is in Pennsylvania -- with more than 36,600 enrollees out of about 37,000 enrollees total in those contracts.

The sanctions consist of the suspension of enrollment of Medicare beneficiaries into the specific Capital Blue Cross plans cited and the suspension of all marketing activities to Medicare beneficiaries.

According to the letter, which is posted on the center's website, the sanctions were effective May 28, "because (Center for Medicare & Medicaid) has determined that (Capital Blue Cross)'s conduct poses a serious threat to the health and safety of Medicare beneficiaries."

Sanctions will remain in effect until the insurance carrier can demonstrate that the deficiencies have been corrected and are not likely to recur.

Capital Blue Cross Sanction 05-28-14 by PennLive

According to the letter, the federal agency conducted an audit of the Medicare operations at Capital Blue Cross from April 7 through April 18. Among violations, the federal auditors concluded that Capital Blue Cross had "substantially failed" to comply with requirements regarding Part C and Part D appeals and grievances, and organization/coverage determinations. Auditors concluded "failures in these areas were widespread and systemic."

Violations resulted in enrollees experiencing inappropriate denials or delays of medications at the point of sale and within enrollees' coverage determinations or appeals, the report said.

Enrollees also experienced inappropriate out-of-pocket cost for covered Medicare services and medications.

"These failures pose a serious threat to the health and safety of enrollees. Many of these issues stem from a complete ineffective monitoring and oversight of CBC's Pharmacy Benefit Manager, which is responsible for CBC's coverage determinations," the letter reads. "Additionally, CBC's lack of internal controls and of consistent procedures resulted in a breakdown in other processes with Part D redeterminations, Part C organization determinations, Part C reconsiderations and grievances."

Among the violations were: Failure to process redetermination requests; failure to conduct sufficient outreach to the prescriber or beneficiary to obtain additional information necessary to make appropriate clinical decisions.

Violations related to Part D coverage determination, appeal and grievance requirements included failure to perform timely retroactive claims adjustments. Auditors determined that as a result, more than 3,000 enrollees were overcharged a total of $27,667 for their medications

Capital Blue Cross was instructed to submit a corrective action plan within seven days from the date of receipt of the letter, or by June 5.

Medicare program is the nation's largest health insurer, handling more than 1 billion claims per year. Medicare and Medicaid together provide health care insurance for over 100 million Americans.

This report was updated to include comments from Capital Blue Cross.

___

(c)2014 The Patriot-News (Harrisburg, Pa.)

Visit The Patriot-News (Harrisburg, Pa.) at www.pennlive.com

Distributed by MCT Information Services