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Regulation and Compliance > State Regulation

Regulators Brace For Medicare Drug Program

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NU Online News Service, March 15, 2004, 3:49 p.m. EST, New York – Scam artists are gearing up to misuse the new Medicare prescription program.[@@]

Consumer advocates and a state regulator delivered that warning here during the spring meeting of the National Association of Insurance Commissioners, Kansas City, Mo.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 will start by creating a prescription discount card program. Meeting participants say scam artists are gearing up to mislead consumers who think that they are buying medical insurance discount cards when, in fact, they are buying prescription discount cards.

One prosecutor says there is already abuse in his state, according to Mila Kofman, an NAIC-funded consumer representative and a professor at Georgetown University’s Institute for Health Care Research and Policy. “The people who were shut down for phony insurance companies are getting in to make a quick buck,” she says.

In Florida, according to Kevin McCarty, Florida’s director of insurance regulation, misleading advertising is leading consumers to believe that they are buying insurance when what they are really purchasing is a discount card. “It is already a huge problem and it will only get much, much worse with the advent of [Medicare] discount cards,” McCarthy says.

Seniors are losing credible coverage when they go to these plans, McCarty adds.

A bill in the Florida Legislature, H.B. 1629, could help curb the problem, and Tom Gallagher, the state chief financial officer, intends to take action to stop such fraud, McCarty says.

In Kansas, regulators could attack MPDIMA discount card program fraud with the state’s unauthorized entities law, according to Sandy Praeger, Kansas commissioner. The problem, she says, is that “since there are no bricks and mortar, by the time the problem reaches our office, [the crooks have] moved on.”

Simply answering consumer questions will be a major job for regulators, says Bonnie Burns, an NAIC-funded consumer representative and representative for California Health Advocates, Scotts Valley, Calif.

Marketing for prescription drug card programs will start by April, and enrollment in the programs that take effect Jan. 1, 2006, will start in May or June, Burns says.

But each card will cover different medicines, and consumers will be able to use only one card when buying a prescription. A consumer could hold 2 different prescription drug cards but end up using one to buy just one kind of medicine, Burns says.

Regulators also will have to help make low-income consumers aware of a special $600 benefit aimed at low-income card holders, Burns says.

State regulators can help consumers directly, or they can direct consumers to outside resources, such as the Web site for the Center for Medicare & Medicaid Services, Burns says.

The NAIC will have to respond to MPDIMA by overhauling the Medicare supplement insurance model regulation by September, so that the regulation will be compliant with MPDIMA when MPDIMA takes effect in January 2006.

The updated regulation will have to cut prescription drug benefits from Medigap plans H, I and J for consumers who opt for the new Medicare D prescription drug benefit. Insurers will end up with a block of H, I and J Medigap policies with prescription drug benefits and a block of H, I and J Medigap policies without prescription benefits, regulators and insurers are saying.

Insurers are noting that they will face penalties if they let consumers who choose the Medicare D benefit keep H,I or J prescription drug benefits.

Some beneficiaries may try to keep their old policies in force while they test drive the new system, Burns says.

Insurers say federal regulators should give them a list of Medicare D enrollees to help them prevent prescription drug benefit overlap.


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