Medicare Advantage Part D Fines Less in 2015

Modern Healthcare recently reported that civil monetary penalties issued to insurers offering private Medicare were down over 4% in 2015 compared with the prior year. These fines, issued for noncompliance with Medicare’s coverage rules, totaled $4.72M last year, and while the jury is still out, most experts believe that the decline is primarily due to plans getting better at interpreting the rules.

“Richard Lieberman, chief data officer at Mile High Health Analytics, said the lower penalty amount in 2015 likely means plans have taken CMS’ enforcement message to heart. He also believes the CMS will continue to monitor several Medicare issues closely… CMS gets infuriated when a member goes to a pharmacy counter and can’t get their meds. CMS is really going to come down hard on that.”

Most of the fines are related to unclear or inaccurate prescription drug information resulting in inappropriate denials. CMS is especially sensitive to drug access for seniors and is taking steps to make sure plans don’t deny legitimate claims. Aetna received the largest fine in 2015 for inaccurate pharmacy network information leading to denials.

While the level of fines is still quite small relative to overall insurer reimbursements, fines and sanctions can impact plans’ ability to retain or expand their Medicare contracts. Each year CMS reviews MA and Part D plans for compliance. For 2017, CMS will assess 11 different performance categories and plans receiving a lot of negative points will put their Medicare contracts in jeopardy.

Plans looking to avoid penalties need to pay close attention to drug formularies (list of covered drugs), network pharmacies, and coverage rules and keep up-to-date with changes as they are announced.