Barack Obama

Obama Calls for Investigation into Violations by Private Medicare Insurers

Wednesday, October 10, 2007

FOR IMMEDIATE RELEASE
Contact: Amy Brundage, 202-228-5511

Requests additional oversight, answers from GAO

WASHINGTON, DC – Today, U.S. Senator Barack Obama called on the Government Accountability Office (GAO) to open an investigation into Medicare Advantage programs. Recent reports have exposed cases of private insurers exploiting America's seniors by denying access to needed health care services and medications, improperly denying claims, engaging in deceptive sales practices, and providing poor customer service.

Below is the text of Senator Obama's letter:

October 8, 2007

The Honorable David M. Walker
Comptroller General
U.S. Government Accountability Office
441 G Street, NW
Washington, DC 20548

Dear Mr. Walker:

I am writing to request that the Government Accountability Office (GAO) immediately open an investigation into the exploitation of senior citizens by private insurers participating in the Medicare Advantage program.

According to an analysis by the New York Times, tens of thousands of Medicare recipients have been the victims of deceptive sales practices by these private insurance companies, had claims improperly denied or denied without explanation, and received poor customer service in trying to get their questions answered. In some cases, the practices of these companies were found to have affected the health of patients by delaying access to urgently needed health care services and medications.

Medicare has been a successful program for four decades, in part because it has been free of such practices. And if this is the price of introducing private insurers into the system, the cost for America and our senior citizens is too high.

Among the examples of problems identified by these audits were:

• UnitedHealth and Humana denied claims without giving any explanation to beneficiaries;
• WellPoint had a backlog of 354,000 claims, its call center required an average of 27 minutes to answer phone calls from beneficiaries and 16 minutes to answer calls from providers, and more than half of the callers hung up without speaking to a customer service representative;
• Sierra Health Services stopped drug coverage for 2,300 beneficiaries with HIV/AIDS when the company mistakenly thought that the beneficiaries had not paid their premiums; and
• Humana had so many complaints about its marketing practices that it could not investigate all of them.

Other news stories in recent months have detailed how insurance companies aggressively market private Medicare plans to seniors - in some cases even forging their signatures and providing false information. What is particularly egregious is that these private plans receive higher subsidies for services than under traditional Medicare. The Medicare Payment Admission Commission recently reported that on average the government pays 12 percent more to private Medicare plans than it costs to treat comparable beneficiaries through traditional Medicare. These excessive subsidies cost the government billions of dollars every year.
Given the popularity of Medicare Advantage plans – enrollment has increased to 8.7 million from 5.3 million in 2003 – it is important to ensure these companies are providing the services for which they are reimbursed. This year, the federal government will pay private insurers $76.3 billion for participating in the Medicare Advantage program. I am pleased that GAO has already started this oversight process as evidenced by a July 2007 report finding that the Centers for Medicare and Medicaid Services was not complying with a requirement that it audit the financial records of one-third of participating companies.

However, I believe that GAO needs to conduct additional oversight into how America 's senior citizens are treated by these private companies. Specifically, I believe that GAO should open an investigation into the following:

• The extent of deceptive practices in the marketing of Medicare Advantage programs;
• Whether beneficiaries are wrongly being denied needed health care services and medications;
• Whether the claims of beneficiaries are being improperly denied or denied without sufficient explanation;
• The speed with which appeals of claims denials are considered;
• Whether customer service representatives are responsive to the questions and concerns of beneficiaries; and
• Whether additional safeguards are necessary to protect beneficiaries.

Given the seriousness of this issue and its effect on America 's senior citizens, I appreciate your prompt attention to this request. Thank you.

Sincerely,

Barack Obama
United States Senator