Medicare Fines Health Net, Tenet for Problems With Drug Benefit

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By Mindy Yochelson

March 7 — Medicare has fined two health plans for problems with administration of their drug and other benefits, stating that their actions resulted in enrollees “experiencing inappropriate delays or denials.”

The Centers for Medicare & Medicaid Services imposed $458,250 in civil money penalties on Health Net Inc. of Woodland Hills, Calif., for using utilization management techniques that weren't approved by the agency.

The CMS also fined Tenet Healthcare Corp. of Phoenix $127,200 for similar actions, including using unapproved prior authorization techniques that resulted in enrollees not receiving their medicines or experiencing unnecessary delays.

Both letters from the CMS were dated Feb. 29.

Plans Penalized

The two companies were among a dozen issued penalties between November 2015 and February 2016 based on findings from 2015 CMS audits, according to a March 3 agency memo.

Health Net's nearly half-million dollar penalty involved utilization management techniques that hadn't been approved by the CMS. “As a result, enrollees experienced inappropriate denials of coverage for drugs at the point of sale and were delayed access to their drugs, never received their drugs, or incurred increased out-of-pocket expenses in order to receive their drugs,” according to the letter from Gerard J. Mulcahy, who directs the agency's Parts C and D Oversight and Enforcement Group.

More Information for Decisions

Among other problems cited in the letter was a failure to adequately contact prescribers to obtain additional information to make appropriate clinical decisions.

“As a result, enrollees’ requests for coverage decisions had the substantial likelihood of being inappropriately denied because Sponsor failed to conduct sufficient outreach to prescribers to obtain additional information needed to process the case,” the letter said.

A company spokesman told Bloomberg BNA March 7 that HealthNet has “worked closely and collaboratively with CMS to review the issues that it brought to our attention, and we have pledged to immediately implement corrective actions to help prevent them from happening again.”

In July 2015, the Phoenix-based company was fined $349,075 for issues related in part to the dissemination of inaccurate information .

Tenet's Audit

Tenet's issues were similar, including using “unapproved prior authorization edits.” As a result, the letter said, enrollees “may have experienced delays, paid out-of-pocket, or never received the prescription drugs at all.”

The violations involved both Part D and the Part C Medicare Advantage benefit.

For one issue, the health plans didn't produce sufficient records for the CMS to evaluate services furnished to Medicare enrollees. As a result, auditors were unable to test whether Tenet was complying with certain areas, such as timely processing of pre-service independent review entity (IRE) cases.

This shows “that sponsors’ are not adequately monitoring their operations to ensure compliance with CMS requirements,” the letter said.

The audit also found that Tenet didn't conduct sufficient outreach to providers or beneficiaries to obtain additional information necessary to make appropriate clinical decisions.

‘Actively Addressed.'

A company spokeswoman said in a March 7 statement that the items raised by the review are being actively addressed “in order to continually improve oversight of operational processes, enhance the quality of services provided and ensure compliance with agency requirements.”

The CMS in its March 3 memo said audit-related civil money penalty notices will be posted to its website within the first quarter of the following program audit year. For 2016 program audit violations, for instance, notices will be posted in the first quarter of 2017. “This will allow the public and plan sponsors to more easily compare all of the CMP audit violations imposed within the same program audit year,” the memo said.

To contact the reporter on this story: Mindy Yochelson in Washington at

To contact the editor responsible for this story: Steve Teske at

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