Imagine your grandmother, ambushed in her grocery store parking lot by a salesperson pressuring her to change her Medicare coverage, a system convoluted enough to confuse just about anyone.

It sounds unbelievable, right? Unfortunately, it’s exactly what insurance companies are up to.

Insurance companies have spotted an easy target - seniors living on fixed incomes struggling to make ends meet while trying to make sense of Medicare – and are taking advantage of the situation, aggressively pushing private plans called Medicare Advantage on seniors.

When the companies switch seniors to different insurance plans without first fully explaining the change, it has caused some to lose supplemental coverage and physician access.

States currently don’t have the power to regulate the companies that issue these plans. Some argue that states should have the authority to do so, but insurance companies say they would rather see regulation at the federal level than have to deal with 50 states, each with a different set of rules.

Meanwhile, state officials say the only way insurance agents will come clean, and the only way they can look out for seniors, is if they have the muscle to make it happen.

States belonging to the National Association of Insurance Commissioners have received many complaints they can’t do anything about, leaving consumers to fend for themselves. Like figuring out Medicare, navigating the labyrinth of Centers for Medicare and Medicaid Services and state regulators is a daunting task.

The NAIC wants to set standards for marketing private plans that would be enforced by the states that adopt them.

In what could be interpreted as steps toward ending this swindling or politicians caving in to lobbyist pressure, the federal government proposed to ban insurance agents’ aggressive marketing of private Medicare comprehensive and prescription drug coverage last month.

The federal proposal does not address state regulation.

Senate Finance Committee Chairman Max Baucus of Montana was quoted by The Wall Street Journal as saying, " America's seniors have been pressured, prodded, preyed on and ripped off by shady marketing too often. I intend to get these bans into the law to ensure aggressive marketing tactics are quashed once and for all.”

Do seniors, most of whom are on low or fixed incomes, deserve to be left with high medical bills and without coverage or access to their doctors just so insurance companies can make an easy buck?

Most of us would say no, and so did members of Congress when they passed the Medicare Improvements for Patients and Providers Act of 2008 in July - a bill that restricts insurance industry marketing tactics such as telemarketing, door-to-door solicitation, and providing meals to prospective clients.

Despite lawmakers cracking down on these unethical sales practices, during the 2008 year-end Medicare annual election period, some companies are up to their old tricks. They continue to swindle one of the country's most vulnerable populations while taking advantage of the fact that the vast array of options available through Medicare is  confusing enough to boggle just about anyone's mind.

In the past, insurance companies - including PBMs offering prescription coverage through Medicare Part D plans as well as private companies selling government-sponsored Medicare Advantage plans - have used aggressive, unsolicited marketing tactics to switch seniors to plans that are not appropriate for the individual but offer hefty financial incentives to sales agents or companies.

And as seniors lose supplemental coverage and physician access, some companies continue to rip off seniors by identifying themselves as Medicare representatives, buying seniors' trust with perks like free eyeglasses and cell phones, and lying outright about plan benefits.

If you are contacted by insurance sales agents, resist the pressure. Take your time to be certain the coverage and costs are right for you. This includes premiums, deductibles, co-pays, which types of doctor and hospital visits are eligible, and limits on medication, as well as coverage with current providers.

If you are subject to illegal sales tactics, call 1-800-Medicare.

Oh sure, you can appeal the PBM’s decision, but even if you prevail, it can take months. And the PBM is counting on you to cave before going through that arduous and emotionally taxing exercise.

PBMs’ preferred drug lists influence employers and beneficiaries, who try to save money by sticking to those drugs. But when doctors prescribe medicines that aren’t on the list, PBMs bully beneficiaries into returning to the physician to rewrite the prescription – regardless of which is the best drug to treat the patient’s condition.

So why do PBMs care which drugs patients take? While you might assume it’s because they want their customers to stick to the cheapest drugs, they’re actually motivated by profits.

The way preferred drug lists work reveals a lot about PBMs’ incestuous relationship with drug manufacturers. Drug manufacturers slash their wholesale prices to PBMs to entice the PBM to include the drug on the preferred lists. Each manufacturer also pays PBMs according to the volume of their drugs the PBMs push.

And all-too-often PBMs pocket the kickbacks rather than pass them on to consumers. [Only an expert PBM auditor can help employers ferret out these rebates/kickbacks.]

Nearly 30 states recently blew the whistle on PBMs, resulting in a $9.5 million settlement with Express Scripts Inc. The states that investigated the company will receive $9.3 million of the settlement, while patients who were forced to change a prescription to a preferred drug will receive the remaining $200,000.

Express Scripts settled not because the company did anything wrong, they said, but just to get the attorneys general off their back and save future legal costs.

Walgreen Co. also settled recently – for a whopping $35 million – when they were busted for switching patients' prescriptions to more expensive drugs so they could increase their Medicaid reimbursement.

“These settlements often seem to bear no resemblance to actual damages,” an industry expert said.

“I am sure the plaintiffs are modeling the damages in these cases, but I wonder sometimes about whether the vast legal resources of these big companies wears them down and they end up accepting a settlement that is significantly less than the actual harm done just to be done with it.”

Walgreens fired the employee who blew the whistle on their drug switching scheme, and Express Scripts said they settled not because the company did anything wrong, but just to get the attorneys general off their back and save future legal costs.

Do you know what a “branded generic” is? It’s a clever term invented by PBMs. We all think “generic” means cheaper—right? Well, yes. But, no, not when it’s a branded generic.

Say what? Exactly. It’s an intentionally misleading term in contracts that bilk unsophisticated, trusting clients.

Manipulating the way they categorize drugs enables PBMs to line their wallets by charging higher brand prices for generics, classifying generic drugs as brand drugs in order to keep rebates/kickbacks from drug manufacturers rather than passing them on to employers or insurance companies, and essentially lying about generic drug utilization rates so they can attract more customers.

Most payers are unaware of this issue until after the fact, when they find out through an audit they’ve been bamboozled. At that point, there’s little they can do to resolve it. [We need to point out that too few employers know how to audit a PBM contract. More to come on this problem!]

The large PBMs’ response to this issue is that their manipulative behavior is the industry’s standard.  Well, no kidding, if by industry standard they mean always looking for a profit on the backs of those they are supposed to serve.

PBMs like ExpressScripts actually interviewed pediatric neurologists to determine how much they money they could get by with charging for a specialty drug for which they have exclusive distribution rights. Where’s the Federal Trade Commission? Or an even better question: What ethical compass guides the guys at ExpressScripts?

As reported by the New York Times, ExpressScripts arbitrarily raised the price of a vial of H.P. Acthar Gel, a drug used to treat a rare, severe form of epilepsy from $1,600 a vial to an astonishing $23,000!

The drug in question is part of a category called “specialty drugs,” medicines needed by relatively few people but are critical to the health of those people. So who picks up the tab for this extraordinary cost? Employers and patients, of course.

A PBM is supposed to negotiate with manufacturers to obtain drugs as discounted prices on behalf of employer-sponsored health plans. But when PBMs begin acting as exclusive drug distributors for lifesaving drugs, it’s an obvious conflict of interest. Along with rebates they get from manufacturers, this is just another way PBMs control access to medications, not because it’s actually best for patients, but because it is best for the PBM’s bottom line.

While these profit-mongers claim to keep healthcare costs down for their customers, exclusive drug distribution deals pose an obvious conflict of interest. Since specialty drugs have no generic equivalent and an ever-increasing chunk of PBM revenues comes from the monopolization of specialty drugs, it is hard for these companies to argue that they are looking out for the people they are supposed to serve.

PBM lobbyists claim that paying pharmacists within 30 days would be costly and hinder antifraud efforts. This argument—made by those who rake in record profits while facing lawsuits for unethical business practices—makes no sense. But when you take a look behind the scenes, it’s easy to see why they want to maintain the status quo. PBMs earn interest on the money they owe pharmacists, so as they see it, the longer they can hang on to it, the better. Meanwhile community pharmacies sometimes wait up to 90 days to be paid, and are forced to take out loans to pay their own bills.

Pharmacists electronically verify insurance coverage with a PBM at the time a doctor sends in a prescription or a patient brings in a prescription. So it stands to reason that the PBM can electronically transmit reimbursements to the pharmacy on time. But the PBMs are hanging onto every penny as long as they can.

Pharmacists are trying to cure this problem of slow pay through congressional action on legislation (HR 5182) that would require drug plans to pay all electronic clean claims within 14 days and to notify pharmacists within 10 days of problems in submitted claims.

Ultimately, patients will pay for this system of slow pay that only benefits greedy middlemen. When community pharmacies are forced out of business, patients will lose access to their local pharmacists, who offer lower-cost drugs and face-to-face care. And while patients end up in the emergency room for problems that could be avoided through commonsense prescription drug policy, PBMs will be laughing all the way to the bank.   

If you were watching the Super Bowl commercials, you saw the announcement of a White House task force to address the abuse of legitimate prescriptions

While applauding this initiative, the National Community Pharmacists Association points out "one problem associated with abuse of prescription drugs is the routine shipping of 90-day supplies through the mail from facilities owned by pharmacy benefit managers.

"In most parts of the world, a 30-day supply is the norm-also the maximum amount that these same pharmacy benefit managers allow community pharmacies to dispense.

"With so many pills delivered in mailboxes or on front door steps, placed in the medicine cabinet or on the kitchen counter, it is very difficult for consumers to account for every painkiller (Vicodin), sleeping aid (Ambien), or anti-anxiety medication (Valium), increasing the risk for teenagers or other family member to experiment with medications not prescribed for them."

"Medications often are discontinued well before all of the medication has been taken. Even if it is not an 'abusable' drug, the potential for accidental poisoning is always present.

"In addition, disposal of unneeded prescription drugs is a major environmental risk for our waterways and landfills."

Rather than resolving the problem head on, health plans and PBMs contacted by Drug Benefit News say they are working with states to help combat the diversion of prescription drugs, while taking steps of their own to intervene when unusual prescribing patterns are identified. One PBM is dumping the responsibility onto state Rx tracking efforts.

U.S. House Ways and Means Health Subcommittee Chairman Pete Stark ( D-Calif.) is calling for more consumer protections in Medicare Part D. He said the private insurance companies that administer Part D prescription drug benefits are taking advantage of the number of coverage options “to bamboozle seniors.”

Even when seniors settle on a plan that may not be their best choice, they stay with it out of inertia and fear of trying something new—even when the medicine their doctor prescribes is not permitted by the Part D plan.

How to protect our seniors and disabled? Congressman Stark says regulations are called for to bring some order to the tangled mess of Part D. What would you suggest to help bring order to Medicare Part D?

If you believe they deserve those incomes, do nothing. If you believe they’re taking home more than their share, talk to your human resources managers and state elected officials to demand transparency in their contracts with PBMs. Shine some sunlight on how PBMs make their money, and your employer and fellow taxpayers will save some money.

Or will you shed a tear for those CEOs?