Monthly Archives: May 2018

How to Appeal a Medicare Prescription Drug Denial

May 31, 2018

If your Medicare drug plan denies coverage for a drug you need, you don’t have to simply accept it. There are several steps you can take to fight the decision.

The insurers offering Medicare drug plans choose the medicines — both brand-name and generic — that they will include in a plan’s “formulary,” the roster of drugs the plan covers and will pay for that changes year-to-year. If a drug you need is not in the plan’s formulary or has been dropped from the formulary, the plan can deny coverage. Plans may also charge more for a drug than you think you should have to pay or deny you coverage for a drug in the formulary because it doesn’t believe you need the drug. If any of these things happens, you can appeal the decision.

Before you can start the formal appeals process, you need to file an exception request with your plan. The plan should provide instructions on how to request an exception. The plan must respond within 72 hours or 24 hours if your doctor explains that waiting 72 hours would be detrimental to your health. If your exception is denied, the plan should send you a written denial-of-coverage notice and a five-step appeals process can begin.

  1. The first step in appealing a coverage determination is to go back to the insurer and ask for a redetermination, following the instructions provided by your plan. You should submit a statement from your doctor or prescriber that explains why you need the drug you are requesting, along with any medical records to support your argument. If your doctor informs the plan that you need an expedited decision due to your health, the plan must notify you within 72 hours. For a standard redetermination, the plan must notify you within seven days.
  2. If you disagree with the drug plan’s decision, you have the right to reconsideration by an independent board. To request reconsideration, follow the instructions in the written redetermination notice you receive from the insurer. You have 60 days from the redetermination notice to request reconsideration. An independent review entity (IRE) will review the case and issue a decision either within 72 hours or seven days. If you receive a negative decision, you can keep appealing.
  3. The third level of appeal is to request a hearing with an administrative law judge (ALJ), which allows you to present your case either over the phone or in person. To request a hearing, the amount in controversy must be at least $160 (in 2018). The amount in controversy is calculated by subtracting any allowed amount under Part D, and any deductible, co-payments, and coinsurance amounts applicable to the Part D drug at issue, from the projected value of the drug benefits in dispute. Your request for a hearing must be sent in writing to the Office of Medicare Hearings and Appeals (OMHA). The ALJ is supposed to issue an expedited decision within 10 days or a standard decision within 90 days.
  4. If the ALJ does not rule in your favor, the next step is a review by the Medicare Appeals Council. The appeal form must be filed within 60 days after the ALJ’s decision. You will need a statement explaining why you disagree with the ALJ’s decision. The appeals council will issue an expedited decision in 10 days or a standard decision within 90 days.
  5. The final step is review by a federal district court. To be able to request review, the amount in controversy must be $1,600 (in 2018). Follow the directions in the letter from the appeals council and file the request in writing within 60 calendar days.

Long-Term Care Insurance Policyholder Wins Suit Against Company for Hiking Premiums

May 31, 2018

A long-term care policyholder has successfully sued her insurance company for breach of contract after the company raised her premiums.

At age 56, Margery Newman bought a long-term care insurance policy from Metropolitan Life Insurance Company. She chose an option called “Reduced-Pay at 65” in which she paid higher premiums until she reached age 65, when the premium would drop to half the original amount. The long-term care insurance contract set out the terms of the reduced-pay option. It also stated that the company could increase premiums on policyholders in the same “class.” When Ms. Newman was 67 years old, the company notified her that it was doubling her premium.

Ms. Newman sued MetLife for breach of contract and fraudulent and deceptive business practices, among other things. In its defense, the company argued that the increase was imposed on a class-wide basis and applied to all long-term care policyholders over the age of 65, including reduced-pay policyholders. A federal district court dismissed Ms. Newman’s suit, ruling that the contract permitted MetLife to raise her premium. Ms. Newman appealed.

The U.S. Court of Appeals for the Seventh Circuit reversed the lower court’s decision and held that MetLife breached its contract when it raised Ms. Newman’s premium (Newman v. Metropolitan Life Insurance Company, U.S. Ct. App., 7th Cir., No. 17-1844, Feb. 6, 2018). According to the court, reasonable people would believe that signing up for the reduced-pay option meant that they were not at risk of having their premiums increased. The court also allowed Ms. Newman’s fraudulent and deceptive business practices claim to proceed, ruling that she showed evidence that the company’s marketing of the policy was deceptive and unfair.

To read the court’s decision, click here.

Are Medicare Advantage Plans Steering Enrollees to Lower-Quality Nursing Homes?

May 31, 2018

A new study has found that people enrolled in a Medicare Advantage plan were more likely to enter a lower-quality nursing home than were people in traditional Medicare. The study raises questions about whether Medicare Advantage plans are influencing beneficiaries’ decisionmaking when it comes to choosing a nursing home.

Medicare Advantage plans, an alternative to traditional Medicare, are provided by private insurers rather than the federal government. The government pays Medicare Advantage plans a fixed monthly fee to provide services to each Medicare beneficiary under their care, and the services must at least be equal to regular Medicare’s. While the plans sometimes offer benefits that original Medicare does not, the plans usually only cover care provided by doctors in their network or charge higher rates for out-of-network care.

The study, conducted by researchers at Brown University School of Public Health, examined Medicare beneficiaries entering nursing homes between 2012 and 2014. Using Medicare’s Nursing Home Compare website as the measure of quality, the study found that beneficiaries in Medicare Advantage plans tended to enter lower quality nursing homes than beneficiaries in original Medicare. This was true even when the researchers took into account the beneficiaries’ distance from the nursing home and other decision factors. Even beneficiaries enrolled in highly rated Medicare Advantage plans were more likely to enter a low-quality nursing home compared to original Medicare beneficiaries.

The study does not draw any conclusions about whether the Medicare Advantage beneficiaries fared worse than original Medicare beneficiaries, only that they tended to enter facilities that had higher re-hospitalization rates and worse outcomes. The study concluded that Medicare Advantage plans may be influencing beneficiary decisionmaking around nursing home selection. According to Skilled Nursing News, one of the study’s authors speculated that a Medicare Advantage plan “might be incentivized to send patients to a given nursing home regardless of what the quality ratings are, because of a relationship with that nursing home or because they have a lot of patients in that nursing home and can better manage their care.”

Information on exactly why this is happening is “of vital policy importance,” according to the study’s authors. They recommend gathering more information about Medicare Advantage nursing home claims and re-hospitalization rates and requiring Medicare Advantage plans to be more transparent about the quality of nursing homes in their networks.

To read the study, which was also published in the January issue of the journal Health Affairs, click here.

NAELA: Medicare’s stealth price hike: Seniors are paying more for generics even though the drug prices haven’t increased

May 23, 2018

Michael Hiltzik Medicare's stealth price hike: Seniors are paying more for generics even though the drug prices haven't increased Health and Human Services Secretary Alex Azar tails President Trump to a Rose Garden ceremony announcing a drug price policy May 11. (Olivier Douliery / TNS)

Here’s a riddle about drug pricing to ask our healthcare administrators, including Health and Human Services Secretary Alex Azar: Since the prices of generic drugs haven’t risen since 2011—in fact, in many cases have fallen—why have out-of-pocket costs for seniors on Medicare nearly doubled?

That’s the finding in a new analysis by the healthcare consulting firm Avalere Health, which studied the trends in co-pay charges for enrollees in Medicare Part D, the prescription drug benefit. The benefit is administered by private insurance companies. The insurers have great latitude to establish out-of-pocket co-pays and structure their formularies—the roster of drugs they cover—as long as they meet broad rules set down by the Centers for Medicare and Medicaid Services, an agency under HHS.

What the insurers have been up to, according to Avalere, is moving many generic drugs into co-pay tiers that require patients to pay larger portions of the drugs’ cost. By shifting more costs onto patients this way, the insurers can keep Part D premiums stable. That’s important to them, since they know that patients generally choose their Part D plans based on premiums. It’s a classic bait-and-switch, because only once they start filling prescriptions do the patients realize what their real costs are.

If CMS decided they didn’t like this practice, they could prevent it. It’s entirely within CMS’ control.
Dan Mendelson, Avalere Health

The trend can deliver a real jolt to patients. Avalere says that total out-of-pocket costs for the same basket of generic drugs increased by $6.2 billion, or 93%, from 2011 through 2015. In that period, average generics prices increased only 1%, and the volume of generics purchased rose by only 22%. The difference was almost entirely the result of higher co-pays charged per prescription by the insurers.

If left unchecked, this practice will thwart any government initiative to hold drug prices down. One would hope regulators would be on top of this situation, because limiting the growth of generics prices is a linchpin of the Trump administration’s initiative on drug prices. The administration also says it’s determined to hold down prices for Medicare beneficiaries. Yet in announcing the White House’s drug pricing blueprint last week, HHS Secretary Azar soft-pedaled proposals for Medicare to take a firmer stand in negotiating with drug companies, and made no mention of co-pay policies in Part D.

“If CMS decided they didn’t like this practice, they could prevent it,” Dan Mendelson, Avalere’s president and a co-author of the study, told me. “This is entirely within CMS’ control.”

What’s especially worrisome is that among the drugs subject to the up-charges are some of the most widely prescribed and cheapest for seniors, including medications for such chronic conditions as cholesterol, hypertension, and diabetes.

“These are the drugs you want consumers to take,” Mendelson says, because they’re effective in forestalling more serious medical conditions down the road. “You don’t want to set up barriers for patients taking these drugs.” Some are so cost-effective, he adds, that insurers have given them away for free.

Avalere’s analysis was funded by the Assn. for Accessible Medicines, a generics manufacturers trade group. The consultancy says it retained “full editorial control” of the study. Medicare Part D insurers have been shifting generic drugs to tiers with higher out-of-pocket charges to save money: In 2011, 71% of generics were in the lowest-cost tier, but by 2015 only 19% were. Their share of generics in the next two tiers rose. Medicare Part D insurers have been shifting generic drugs to tiers with higher out-of-pocket charges to save money: In 2011, 71% of generics were in the lowest-cost tier, but by 2015 only 19% were. Their share of generics in the next two tiers rose. (Avalere)

Avalere says that insurers have been gradually increasing the number of tiers into which they slot drugs. When Part D was launched in 2006, most offered four tiers—a single generic tier with the lowest co-pays, two tiers for brand name drugs, “preferred” and “non-preferred,” and a top tier for specialty drugs such as high-priced biologics. Non-preferred drugs are those that aren’t part of the insurers’ standard formularies and therefore are available to patients only for higher out-of-pocket fees.

Drugs in higher tiers also tend to be subject to tighter restrictions on prescriptions—an insurer may disapprove them for any but a limited segment of the patient population, such as those with the most severe conditions. Since 2006, some 95% of Part D insurers have moved to a five-tier structure by adding a second tier for “non-preferred” generics. Some have established a hybrid tier with some generics and some brand name drugs.

In 2011, the study found, 71% of covered generic drugs were placed in tier 1, the lowest, carrying the smallest co-pays. By 2015, only 19% of covered generics were still in tier 1; about 46% were in tier 2 and 35% in tier 3 or higher. Avalere detected the shift into higher-priced tiers across the entire generics spectrum, even among the cheapest drugs.

Insurers have been looking for new ways to hold down prescription plan premiums in the face of “innovative, expensive new drugs coming down the pike,” Mendelson says. “If you shift costs to the patient who has a chronic illness, you can keep costs lower for everyone else.” Keep up to date with Michael Hiltzik. Follow @hiltzikm on Twitter, see his Facebook page, or email

Michael Hiltzik

Pulitzer Prize-winning journalist Michael Hiltzik writes a daily blog appearing on His business column appears in print every Sunday, and occasionally on other days. As a member of the Los Angeles Times staff, he has been a financial and technology writer and a foreign correspondent. He is the author of six books, including “Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age” and “The New Deal: A Modern History.” Hiltzik and colleague Chuck Philips shared the 1999 Pulitzer Prize for articles exposing corruption in the entertainment industry.