Overcharging runs rampant in Medicare

Insurers for the health program have jacked up fees for taxpayers, subscribers.

McClatchy Newspapers

WASHINGTON — If you buy medicine through Medicare’s prescription drug program, you could be paying too much.

The taxpayers who finance Medicare aren’t doing too well, either.

Insurance companies involved in the Medicare prescription drug benefit have overcharged subscribers and taxpayers by several billion dollars, according to the inspector general for the Department of Health and Human Services. Eighty percent of the participating insurance companies owe the program an estimated $4.4 billion for 2006 alone.

Medicare, however, has been slow to do something about it. In fact, the agency doesn’t even know how much money the insurance companies owe taxpayers because it hasn’t begun most of the financial audits needed to determine that.

“It shows a mindset that could care less about wasting taxpayer money, that has no problem with padding profits of drug companies with hard-earned taxpayer dollars,” said Sen. Claire McCaskill, a Missouri Democrat.

McCaskill, a former state auditor, has asked the Centers for Medicare and Medicaid Services, which administers the program, to explain why so many audits haven’t been done and how it plans to collect the $4.4 billion.

Medicare is the federal health insurance program for people 65 and older. The optional prescription drug benefit, which subsidizes the costs of medicine for subscribers, was the subject of an intense political debate before Congress enacted the program in 2003.

The program’s nearly 27 million beneficiaries generally pay for the coverage, known as Medicare Part D, through a monthly premium that’s deducted from their Social Security checks. That and Medicare subsidies paid for by taxpayers pay for the $60 billion program.

CMS contracts with private insurance companies to provide the drug coverage. Each offers a bid, which represents the company’s estimate of the average monthly revenue it would need to provide the basic prescription drug benefit to each beneficiary.

Medicare is required to complete financial audits of at least a third of all the insurance companies that offer the prescription drug benefit to determine how they set their prices.

For 2006, the first year of the program, Medicare was required to perform 165 audits. However, the inspector general found that, as of April, it had begun only seven, or 4 percent.

With 158 other audits from 2006 remaining to be done and audits for 2007 and 2008 waiting in the wings, problems found in the first year of the program aren’t likely to be fixed before 2010, according to the inspector general’s report.

The financial fallout could snowball “to the detriment” of beneficiaries and the program.

In response to the findings, the Medicare agency issued a statement indicating that as of Jan. 28, it had either begun or completed 103 of the 165 required audits for the plan in 2006.