Monday, May 17, 2010 - Today, the Centers for Medicare & Medicaid Services (CMS) issued two notices to Quality Health Plan (QHP) with intent to impose intermediate sanctions and a civil monetary penalty (CMP) on the Tampa, Fla.-based insurer for failure to comply with a number of administrative and contract management requirements.

The plan shortfalls included deficiencies in billing procedures and practices, denying and/or delaying Part D medications to beneficiaries, developing and implementing an adequate compliance plan for both its operations and pharmacy benefit manager, and non-compliance in beneficiary appeals and grievance procedures.

The first notice of intent would suspend QHP's marketing and enrollment of new members in its two Medicare Advantage health plans and a stand-alone prescription drug plan. A second notice of intent would impose a CMP of $586,800 against QHP based on the adverse impact or substantial likelihood of adverse impact that QHP's premium billing violations had on their enrollees. About 17,400 Medicare beneficiaries - many of whom are entitled to low income subsidy (LIS) benefits - in New York and Florida are currently enrolled in QHP's Medicare contracts.

"While most QHP enrollees should experience no problems, current members with premium payment concerns or those who are having difficulty paying past due balances should call 1-800-MEDICARE or contact their local state health insurance assistance program for help," said Jon Blum, CMS' deputy administrator and director of the Center for Medicare.

CMS discovered that QHP had not been billing beneficiaries for their premiums since January 2008. The plan recently sent enrollees a lump sum bill for the entire amount of back premium, in some cases up to $1,000, with no payment options. QHP's current stand alone prescription drug plan enrollees are largely comprised of low income subsidy (LIS) beneficiaries (75 percent) and the average lumped premium bill was approximately $332.

"Many of these enrollees are already financially disadvantaged, the imposition of such a large bill places this vulnerable population in a tough position," Blum said. "Based on the serious nature of the deficiencies and Quality Health Plan's failure to correct these issues in a timely manner, CMS has determined that intermediate sanctions in enrollment and marketing are necessary."

Following an extensive review of denied claims documents and an on-site audit at QHP's Tampa headquarters, CMS found that the plan had failed to fully meet obligations to Medicare beneficiaries by not providing them with timely monthly premium invoices, denying their coverage of approved Part D prescription drugs and the plan's contradictory and inappropriate payments for medications that are specifically excluded on CMS's drug formulary. Other areas of non-compliance were identified in CMS' May 17, 2010, letter to the health plan.

QHP's problems were raised to CMS by complaints from plan members, many of whom were concerned that the health plan failed to provide payment arrangements for past due premiums. Under the sanction, CMS will closely monitor the plan to determine that corrective actions have been taken and, if new issues arise, may impose additional penalties and may consider the possibility of termination of the QHP contract with Medicare.

CMS is encouraging plan members who may be having issues with their plan coverage to contact 1-800-MEDICARE (1-800-633-4227) or the SHIP Web site to help get them resolved.