Medicare+Choice: Oversight Lapses in HCFA's Review of Humana's 1998 Florida Contract

Humana, Inc., a large Medicare Choice Plan, provided a prescription drug benefit with a coverage limit that was below the amount listed in its 1998 Florida Medicare Choice contract. Ernst and Young, the contractor hired by the Health Care Financing Administration (HCFA) to review Humana's contract submission, did not detect the discrepancies because it failed to follow HCFA's review procedures. HCFA has revised its processes and procedures for monitoring the accuracy of the information in Medicare Choice plans' contracts. The Humana case shows that the agency did not follow procedures that could have revealed the contract discrepancies that caused some beneficiaries to receive less coverage for brand name prescription drugs than the amount specified in their plan's basic package. Unless HCFA adheres to its revised monitoring procedures, beneficiaries will have few guarantees that they will receive the prescription drug benefits for which the government contracted and paid.