Medicare Sanctions CVS/Caremark SilverScript Part D Plan
On January 15th, Medicare imposed an immediate sanction on SilverScripts Part D Prescription drug plans, available through CVS/Caremark, from marketing or selling any new drug plans because of massive failures to properly handle prescription drug claims of new members.
CMS is imposing these intermediate sanctions immediately, effective January 15, 2013 at 11:59 p.m. EST, pursuant to 42 C.F.R. § 423.756(c)(2), because it has determined that SSIC’s conduct poses a serious threat to the health and safety of Medicare beneficiaries. (emphasis added)
SilverScript Insurance Company is owned by CVS/Caremark. CVS/Caremark bought Health Net’s California Part D membership in 2012 and now has approximately 4 million members across the U.S.
Medicare states that right after the first of the year they began getting calls from SilverScript members complaining about prescription copayments not being honored at CVS/Caremark.
A significant number of the SSIC enrollee complaints describe instances where the member had to pay more out of pocket than was required under the terms of the benefit plan because SSIC systems could not correctly adjudicate the member’s claims in real time. For some beneficiaries, this meant paying a higher copay amount while others were charged the full cost of the drug. In many instances, beneficiaries could not afford the higher charge and left the pharmacy without their medication.
After almost daily contact between Medicare and SilverScript, the issues could not be resolved. Medicare reports that,
SSIC management explained that an update of SSIC’s Part D data systems performed during late 2012 had led to significant disruptions in its enrollment, LIS tracking, and claims processing operations. SSIC has confirmed that tens of thousands of SSIC enrollees were affected by these system errors.
Through January 14th, Medicare had received over 2,340 complaints about SilverScript Insurance Company which was four times the rate for all Part D sponsors combined. This led to Medicare to pull the plug on SilverScript from marketing their prescription drug insurance plans.
These intermediate sanctions will consist of the suspension of the enrollment of Medicare beneficiaries (42 C.F.R. § 423.750(a)(1)) and the suspension of all marketing activities to Medicare beneficiaries (42 C.F.R. § 423.750(a)(3)).
The net effect is that there can be no marketing or signage of the SilverScript Part D Plan and they may not enroll any new members. This is essentially like locking the front door to a business. While SilverScript members can continue to have their prescriptions filled at CVS/Caremark, no new enrollments can take place until Medicare is satisfied that the problems have been resolved.
Similar sanctions by Medicare have lasted the better part of a year for some insurance companies that ran afoul of Medicare guidelines. It takes a tremendous amount of work and preparation to become certified to sell Part D Prescription drug plans. When a company is prohibited from selling new plans it puts a serious kink in their business model to enroll new members throughout the year.
Medicare takes these violations seriously because they pay the plan upwards of $80 per month for each enrolled member and they have vetted the companies as being able handle the claims and customer service in a timely manner. It will be interesting to see how long SilverScript is on sanction and what it will do to their star rating once they are able to sell again.
Download the Medicare sanction letter here [download id="44"]
See also CMS sanctions SmartD Rx PDP