U.S. Medicare probes Humana over letter to patients

WASHINGTON Mon Sep 21, 2009 5:23pm EDT

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WASHINGTON (Reuters) - U.S. health officials are investigating whether Humana Inc (HUM.N) used so-called "scare tactics" when contacting its Medicare Advantage health insurance plan customers and warning them about pending health reform legislation, according to a letter released on Monday.

The Centers for Medicare & Medicaid Services (CMS), which oversees the Medicare program for the elderly and disabled as well as privately-run Medicare Advantage options, ordered Humana to halt all related outreach until the agency concluded its investigation.

CMS said Humana's letter alleges "that current health care reform legislation affecting Medicare could hurt 'millions of seniors and disabled individuals who could lose many of the important benefits and services that make Medicare advantage health plans so valuable.'"

The letter could violate federal regulations, it added.

"CMS is concerned that, among other things, this information is misleading and confusing to beneficiaries... makes several other claims about the legislation and how it will be detrimental to enrollees, ultimately urging enrollees to contact their congressional representatives to protest the actions referenced in the letter," CMS wrote Humana in a letter dated September 18.

Humana spokesman Tom Noland said the company was cooperating with CMS.

The letter was released by Senate Finance Committee Chairman Max Baucus, a Democrat whose committee has jurisdiction over Medicare. Baucus is aiming to reform the Medicare program, the insurance industry and other aspects of the nation's healthcare system through major legislation introduced last week.

Baucus, in a statement, said the letter amounted to "insurance industry scare tactics" and that he had urged CMS to take action.

"It is wholly unacceptable for insurance companies to mislead seniors regarding any subject -- particularly on a subject as important to them, and to the nation, as health care reform," Baucus said, one day before his committee takes up the legislation on Tuesday.

Humana has one of the biggest Medicare Advantage businesses among private health insurers. Such plans aim to offer enrollees more options than traditional fee-for-service Medicare benefits but can also cost more.

It reported 1.5 million enrollees in its Medicare Advantage plans as of June 30. Overall, more than 10 million of Medicare's roughly 45 million enrollees opted for such plans in 2009, according to the Kaiser Family Foundation.

Baucus posted a copy of the letter on his website here

(Reporting by Susan Heavey; editing by Carol Bishopric)

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