Tag Archives: Medicare

US Prosecutors Charge Major Insurance Firms with Paying Kickbacks for Private Medicare Plans

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The Justice Department has charged three major health insurance companies with engaging in illegal kickback schemes totaling hundreds of millions of dollars over several years, involving payments to insurance brokers who guided individuals to private Medicare plans.

Federal prosecutors also alleged that two of these insurers colluded with brokers to discriminate against individuals with disabilities by hindering their enrollment in private Medicare plans, based on the belief that these plans would be costlier.

Around 12% of Medicare beneficiaries, who are disabled and under the age of 65, qualify for the federal insurance program. Their intricate health requirements often lead to high care costs.

According to a complaint initially filed by whistleblowers, the Department of Justice has joined the case against the nation’s largest health insurance company, previously known as Anthem. Humana is also implicated for allegedly funneling kickbacks to three large brokers—Ehealth, GoHealth, and SelectQuote—to boost enrollment in Medicare Advantage plans, which have also been tied to fraudulent activities.

A complaint filed in federal court in Boston claims that the kickback scheme spanned from at least 2016 to 2021, accusing Aetna and Humana of discrimination against individuals with disabilities.

Aetna, Elevance, GoHealth, and Humana have denied the allegations, although others have not responded to requests for comments.

This lawsuit is one of the first indications of the Trump administration’s scrutiny of certain Medicare Advantage plans, which face ongoing federal oversight. Critics, including lawmakers, have condemned these popular plans for potential overcharging the federal government through aggressive marketing strategies. Over half of all individuals enrolled in the federal program are covered by Medicare Advantage plans.

During the Senate confirmation hearing for Dr. Mehmet Oz, he assured concerned senators about the oversight of Medicare plans, promising a “new sheriff” to address excesses.

Brokers play a crucial role in assisting senior Americans in selecting private Medicare plans. However, the allegations suggest brokers have directed individuals to plans that offer the highest commissions instead of the best fit for their needs.

In recent years, small local brokerage firms have been overshadowed by large national organizations that employ numerous agents and utilize call centers and websites like those mentioned in the lawsuit. These companies increasingly depend on technology to help brokers identify the optimal plans for callers, facilitating the kind of steering described in the allegations.

The Biden administration implemented regulations last year aimed at reducing the commissions insurance companies can pay to brokers for patient enrollments. Recent Congressional testimonies and consumer complaints have indicated that insurers are offering bonuses to brokers for enrolling more individuals in specific plans, regardless of their actual needs. However, the lawsuit is still pending.

Regarding cases involving disabled individuals, federal prosecutors have stated: “The efforts to specifically exclude beneficiaries are even more ruthless given that their disabilities may render them less profitable for health insurance companies,” said attorney Leah B. Foy. “We will continue to investigate and prosecute the greed targeting these beneficiaries.”

Source: www.nytimes.com

Trump’s plan to reduce drug costs by leveraging Medicare and importing pharmaceuticals

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President Trump signed an executive order on Tuesday outlining a series of actions aimed at lowering drug prices, including helping to import drugs from Canada.

The policy was more modest than the drug price reduction proposal Trump offered in his first term.

One of his new directives could potentially raise drug prices, as it calls for changes to the Medicare negotiation programs that could increase government costs.

Such changes may lead to delays in drug qualification for Medicare price cuts, ultimately impacting the cost.

Depending on its structure, the directive could potentially increase Medicare drug spending by billions of dollars compared to current spending under the law. The negotiation program was approved by a Democratic-controlled Congress and supported by former President Joseph R. Biden.

The executive order emphasizes that changes to the Medicare price negotiation program should be accompanied by other reforms to prevent an increase in overall costs for Medicare beneficiaries.

While some directives in the executive order may save money for patients and government programs, the proposals for Medicare negotiations are likely to increase costs without significant savings.

The order also includes provisions to lower co-payments for certain medical treatments and provide discounted insulin and epinephrine injections to low-income individuals.

This executive order marks a significant move by the Trump administration regarding drug pricing.

Following Trump’s decision to consider imposing tariffs on imported drugs, which manufacturers might pass on to consumers, there is concern that this could lead to increased costs and potentially worsen drug shortages.

Some directives in the executive order, such as changes to the Medicare negotiation program, require Congressional approval and have faced opposition from the pharmaceutical industry.

Trump has long expressed dissatisfaction with the high drug prices in the US compared to other countries. While the executive order includes measures to address some pricing issues, it lacks a report on the pricing policies of preferred countries, which could have helped align US drug prices with those of other nations.

These are some of the key aspects of Trump’s executive order concerning drug pricing.

The order instructs Health Secretary Robert F. Kennedy Jr. to collaborate with Congress on addressing disparities in how certain drugs are treated in Medicare negotiation programs.

It highlights that under current law, different types of drugs have varying eligibility periods for price reductions, with some drugs having longer wait times before price cuts can be applied.

Drugmakers have criticized the existing “pill penalty” in the Medicare program, which they claim hinders innovation and access to new treatments. Legislative efforts are being made to address these differences in treatment of various drug types.

The executive order does not specify the exact timeline for exempting different drug types from Medicare price reductions.

Pharmaceutical industry representatives have expressed willingness to work with the administration and Congress to develop solutions that reduce costs and enhance access to medications for the public.

The negotiations on drug prices overseen by Biden officials are set to result in price reductions taking effect in 2026, while the Trump administration will oversee negotiations for certain drugs in upcoming years.

The White House released a fact sheet on Tuesday stating that the Biden administration aims to generate more savings through its Medicare negotiation program compared to previous years. However, this could be challenging if Congress limits the duration during which Medicare can access lower prices.

The executive order directs the FDA to streamline the process for importing low-cost drugs from Canada, building on previous efforts initiated during Trump’s first term.

While importing drugs from Canada may offer cost savings, the potential imposition of tariffs by Trump on imported drugs could offset these benefits.

The order calls for regulations to ensure consistency in the fees charged by medical practices for administering drugs to patients across different healthcare settings.

Currently, many hospital-owned medical practices bill Medicare higher fees than independent practices for the same services, impacting Medicare beneficiaries who are responsible for a portion of the costs.

Efforts to standardize these payments have faced opposition from hospitals seeking higher payments. Legislation during the Obama administration addressed some of these discrepancies in payment rates.

Trump has instructed the FDA to expedite the approval process for generic and biosimilar drugs, aiming to increase access to lower-cost alternatives to brand-name drugs.

While there is hope for cost savings through the approval of biosimilars, patient adoption has been slower than anticipated, impacting the overall savings potential.

Trump has reinstated a previous order to provide discounted insulin and epinephrine injections to certain low-income individuals through Community Health Clinics.

While initially proposed in 2020, the implementation of this initiative was halted by the Biden administration citing administrative burdens.

Source: www.nytimes.com

Medicare spends billions on costly bandages while doctors face cuts

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According to industry experts, companies can set high prices for their products due to the intricacies of Medicare pricing rules. During the first six months of a new bandage product’s lifespan, Medicare sets a refund rate based on the company’s chosen price. The agent will then adjust the refund to reflect the actual price that your doctor will pay after any discounts.

To avoid decreases in refunds, some companies opt to introduce new products regularly.

For example, in April 2023, Medicare started reimbursing $6,497 per square inch for bandages called Zenith sold by Legacy Medical Consultants, a company based in Fort Worth, Texas. However, six months later, the refunds for Zenith dropped to $2,746.

In October 2023, Medicare began reimbursing $6,490 for a “double layer” bandage for a new product called Impax from Legacy.

Both products use the same images and similar descriptions in their marketing materials, touting them as offering optimal wound care and protection.

Analysis by Earty Read shows that spending on Zenith and Impax has surpassed $2.6 billion since 2022.

When asked about the marketing and pricing strategies for these products, Legacy Medical Consultants did not provide a response. Company spokesman Dan Childs stated, “Legacy abides by laws that govern the system.”

In the field of wound care, doctors and nurses visit patients’ homes for treatment. Some companies that specialize in skin alternatives target doctors to help mitigate the rise in bandage prices.

Dr. Caroline Fife, a Texas-based wound care physician, highlighted the industry’s excesses in her blog last year. She shared an email she received from an undisclosed skin replacement company, which claimed that doctors could generate significant revenue from their bandages.

Some companies offer doctors bulk discounts of up to 45%, as reported by interviews with doctors and contracts reviewed by The Times. However, doctors could still receive Medicare rebates for the full price of the product.

The anti-kickback law prohibits physicians from receiving financial incentives from pharmaceutical or medical supply companies. While Medicare allows for discounts, experts suggest that rebates on bandages may have violated federal law by not requiring actual bulk purchases. In some cases, doctors only needed to buy three products to qualify for a 40 or 45% discount.

Lawyer Reuben Guttman from Washington, D.C., who represents Medicare whistleblowers, commented, “That’s not a volume discount,” indicating that such practices could be a way to disguise kickbacks.

In 2024, at least nine healthcare practices claimed over $50 million in Medicare reimbursements for skin replacements, according to an analysis conducted by The Times and the National Association of Associations representing healthcare organizations incentivized to reduce Medicare spending.

Source: www.nytimes.com

Trump refuses Medicare proposals to include Wegovy and other medications for obesity

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The Trump administration rejected the Biden plan on Friday, which proposed Medicare and Medicaid covering obesity drugs and increasing access to millions of people.

The Biden administration’s proposal aimed to circumvent the ban on Medicare paying for weight loss drugs by claiming they would treat diseases related to obesity.

Expanding drug coverage would cost the federal government billions of dollars, with an estimated cost of around $35 billion over a decade according to the Congressional Budget Office Estimates.

The decision was part of a larger set of regulations contained in a 438-page document aimed at updating Medicare benefits and private insurance plans used by about half of Medicare beneficiaries.

Catherine Howden, a spokesperson for the Centers for Medicare and Medicaid Services, stated that the agency did not believe it was appropriate at the time to approve the Biden plan.

Medicare currently covers a limited set of weight loss medications for individuals with specific health conditions, such as diabetes and heart problems.

The Biden plan aimed to extend coverage to obese patients without these specific diseases, with an estimated 3.4 million people potentially benefiting from the policy.

Popular weight loss pills like Wegovy by Eli Lilly and other related products are now available at reduced prices to patients paying out of pocket.

Eli Lilly and Novo Nordisk offer discounts for their products to patients paying out of pocket instead of through insurance, significantly reducing the cost for individuals.

Health Secretary Robert F. Kennedy Jr. criticized weight loss pills, advocating for a diet of healthy foods instead.

Clinical trials have shown benefits of weight loss drugs beyond just weight loss, including preventing heart attacks and strokes.

Supporters of expanded drug coverage argue that the long-term health benefits will outweigh the costs, potentially reducing overall medical expenses. However, the realization of such savings remains uncertain.

States’ Medicaid programs now have the option to decide whether to cover obesity drugs or not, with some already opting to provide coverage. If the Biden policy had been implemented, all states would have been required to provide coverage.

The exact cost of obesity drugs for Medicare and Medicaid patients is undisclosed, but it is estimated to be several hundred dollars per patient per month.

Many employers and private health insurance plans do not cover weight loss drugs, leading some to discontinue coverage due to high costs.

Patients without insurance often rely on cheaper generic versions of drugs created through compounding, costing less than $200 a month. However, regulators are phasing out this option due to improved supply of branded products.

Congressional Republicans have shown some interest in urging Medicare to cover weight loss drugs, although this is not a current priority. Negotiations with Novo Nordisk for lower drug prices under a 2022 law have been initiated, with reduced prices scheduled to start in 2027 for eligible individuals.

Source: www.nytimes.com