The federal Centers for Medicare and Medicaid Services said in a letter… (David Paul Morris, Bloomberg )
Deborah Shapiro decided a few months ago to switch her prescription drug coverage from her former employer's plan to Medicare. The Medicare literature made clear that she could save hundreds of dollars on the various drugs she and her husband required.
Shapiro, 76, of Woodland Hills, studied her options carefully and decided to enroll in SilverScript, the Medicare-approved drug program run by CVS Caremark.
That turned out to be not such a good decision after all.
Shapiro was one of many seniors who found themselves facing inexplicably large bills that CVS refused to negotiate. As a result of cases like hers, CVS was sanctioned last month by Medicare, which means the company can't enroll new people in SilverScript until it cleans up its act.
The federal Centers for Medicare and Medicaid Services said in a letter to CVS' SilverScript subsidiary that its inability to process prescriptions correctly "poses a serious threat to the health and safety of Medicare beneficiaries."
The federal agency blamed the problems on "widespread data system failures" that have "created disruptions in tens of thousands of Medicare beneficiaries' access to prescription medications."
SilverScript handles the drug requirements of about 4 million Medicare beneficiaries.
In Shapiro's case, she told me that she'd ordered a 90-day supply of an estrogen pill that was supposed to cost $85. Instead, SilverScript sent her a 30-day supply running $70.61.
Shapiro said she got the runaround from three separate CVS supervisors until a company representative finally insisted that she had to take what she was given and pay the amount CVS was demanding.
She said the company deemed the $70.61 bill a "transition fee" from her former drug insurer, which, as it happens, was also run by CVS.
"They need to charge me a transition fee from CVS to CVS?" Shapiro said. "That makes no sense."
CVS blamed its SilverScript troubles on "an enrollment system conversion" that "brought about an increase in call volume and issues related to claims processing."
"We take these issues very seriously and are committed to working swiftly with [Medicare] officials to address their areas of concern," said Jon Roberts, president of CVS' pharmacy benefit management business.
He also said the company will work to resolve any issues for patients that have come up as a result of the problem. Presumably that means Shapiro and others can expect their sky-high drug bills to be revisited in a more accommodating manner by CVS service reps.
Medicare says it received 2,340 complaints about SilverScript in just the first two weeks of January — a rate four times greater than for all other Medicare-approved drug programs combined.
The agency said in its letter to CVS that the sanction will remain in place until officials are "satisfied that the deficiencies upon which the determination was based have been corrected and are not likely to recur."
This isn't CVS' first brush with regulatory scrutiny. As I've reported, the company is now being investigated by federal and state authorities for having refilled prescriptions and billed insurers without patients' approval.
CVS has blamed such incidents on overzealous pharmacy managers and said the practice doesn't represent company policy. But internal emails and documents I've obtained suggest the unauthorized refills were more widespread than CVS would have customers believe.
The U.S. Justice Department also is looking into whether CVS violated a $17.5-million settlement reached with federal authorities in 2011 over allegedly falsified claims to Medicaid programs in California and nine other states.
The Justice Department is working with the U.S. Department of Health and Human Services. California and New Jersey regulators also are probing CVS' refill practices.
Federal and state officials declined to comment on the current status of their investigations.
While we're on the subject of healthcare, here's a little artifact worth sharing.
George Zekan, 74, of La Cañada Flintridge was scrounging around his home the other day and came up with an old insurance claim. It was for his brother, Robert, who dropped a loaded pistol in 1958 and, according to the claim, required treatment for a "hole in left buttocks."
But that's not the story. The story here is how much he was billed 55 years ago for a gunshot wound and seven days in the hospital.
According to the claim, a trip to the emergency room cost $3. Drugs cost $29.20. X-rays, $20. Lab work ran $11.
And the week of hospitalization? That cost $13 a day, bringing the grand total to $154.20.
Accounting for inflation, that equates to $1,225.03 in 2012 dollars, which is still a darned impressive figure for a substantial dollop of medical attention. Three months ago, I spent six nights in the hospital for a cat bite and my bills topped $55,000.
Times change, sure. But the cost of healthcare these days can sting like a bullet in the buttocks.
David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to firstname.lastname@example.org.