National Antifraud Task Force takes on new charges to protect consumers

Delaware Insurance Commissioner Trinidad Navarro, Chair of the National Association of Insurance Commissioners’ (NAIC) Antifraud Task Force, announced today the successful creation of the Improper Marketing of Health Plans Working Group, which aims to tackle some of the nation’s most serious consumer-centered health scam efforts and end the siloed approach to addressing the issue.

“Robocalls, search engine advertisements, mailers, and endless telemarketing efforts aim to steal from those seeking comprehensive health insurance. All across the country we have seen scam artists build out networks of communication that center around selling insurance plans that do not offer residents adequate protection. They are merciless in their efforts, and they trick consumers into thinking they will have the coverage they need for their medical care” said Insurance Commissioner Trinidad Navarro. “There’s no need to sugarcoat it – there is deception occurring, and its being directed towards some of the most vulnerable residents. COVID-19 rightfully increased consumer concerns and led more people to seek out affordable insurance – but this concern has been manipulated by scammers. This Working Group will make headway towards ending these efforts to exploit residents.”

The Working Group is a new approach to address concerning increases in consumers being marketed away from ACA-compliant plans to other products that do not offer comprehensive coverage for things like preexisting conditions or hospital visits. Many improperly marketed health plans claim to be compliant, or advertise under look-a-like naming that deliberately creates confusion, such as “Bidencare,” or “Healthcare.com.”

These products may be inadvertently found by consumers searching for legitimate coverage, or on websites where a fraudulent entity has purchased advertising. Often, a consumers’ inquiry can be turned into a request for a quote without consent, and contact information is sold to third parties. The plans use of lead generators and telemarketing is so pervasive that department investigators must purchase dedicated phones for their investigations due to the intrusive, rapid-fire robocalls and text messages that can mount to more than 40 per day from a single webform completion.

The Working Group has meet informally since March 2020 to create a comprehensive conversation on the issue, combining discussions that previously took place in separate health, market conduct, and fraud committees. State and federal level regulators have attended, discussing the latest bad actors and efforts in their jurisdictions, often finding that those efforts are echoed elsewhere. Movement of scams from state to state after regulators shut them down is one of the key reasons that regulators sought approval of the subcommittee and its charges by NAIC’s Executive and Plenary Committees.

“The formation of this Working Group can help stop scams before they start,” shared Delaware Special Deputy Frank Pyle, who has served decades in law enforcement, fraud investigation, and market conduct, and lends his expertise to the new subgroup as Co-Chair. “With greater communication between regulators, those who aim to exploit consumers should be scared. Running from state to state will not be an option.”

The Working Group’s official charges include:

• Coordinate with regulators, both on a state and federal level, to provide assistance to and guidance on monitoring the improper marketing of health plans, and coordinate appropriate enforcement actions, as needed, with other NAIC Committees, task forces, and working groups.
• Review existing NAIC Models and Guidelines, including laws and regulations, that address the use of lead generators for sales of health insurance products and identify models and guidelines that need to be updated or developed to address current marketplace activities.

“The Nebraska Department of Insurance is pleased with the official recognition of this group by the NAIC. When we started this group, our goal was to create open communication between all states and the federal government in order to identify and investigate these bad actors in the improper marketing of health plans. Today, that goal is achieved, but the work is just beginning. We will utilize this group to further investigations and prosecutions of those entities and strengthen our laws so we can protect the insurance buying public from these activities,” shared Martin Swanson, Deputy Director of the Nebraska Department of Insurance and Chair of the Working Group.

Following approval of the Working Group, regulators can now formally join the committee. Ad hoc virtual meetings have consisted of contributors from nearly every state, with meetings regularly engaging 100 to 300 participants. The Working Group’s members have already taken multiple administrative actions against entities and schemes identified by the group to protect consumers. Meetings are regulator-only.

The Working Group is part of the National Antifraud Task Force, which works with insurance regulators across the country, as well as local, state, federal and international law enforcement and antifraud organizations. The Task Force provides guidance and resources for insurance departments across the country and in the U.S. Territories, including tracking and analyzing trends in fraud. Numerous subgroups inform the Task Force’s work, including the Antifraud Education Enhancement Working Group and the Antifraud Technology Working Group.

More information about non-compliant health plans

Participating in National Insurer Climate Risk Disclosure Survey

Insurance Commissioner Trinidad Navarro has announced Delaware’s participation in the National Association of Insurance Commissioners’ Insurer Climate Risk Disclosure Survey, an effort to assess how the impacts of climate change will reverberate across the insurance industry. From investment practices, to increased claim occurrences impacting companies’ financial sturdiness, to insurance product accessibility for consumers, the changing environment means that insurance must be a changing industry.

Insurance departments throughout the United States are working to evaluate both risks to the industry, and its resiliency in responding to those challenges to ensure continued market stability through several mechanisms, including National Association of Insurance Commissioners’ (NAIC) Climate and Resiliency Task Force and the eight-section survey.

“In Delaware and across the country, residents are feeling the impacts of climate change, and relying on insurers to respond to the heightened risk of damage to our properties, businesses, homes, and lives. As natural disasters occur more frequently and with more intensity, the industry must be prepared to provide rapid response,” said Insurance Commissioner Trinidad Navarro. “The issues of affordability and access seen as a result of wildfires in the west and hurricanes in the south have served as ominous forewarnings of what may be to come in our own region, and through participating in the Climate Risk Disclosure Survey we can better understand how prepared Delaware insurers are for these events and what opportunities we have to protect residents from these effects.”

Eighty-two Delaware insurers that reported $100 million or more in 2020 premiums have been asked to respond to questions about their investment and risk management policies, processes to identify, assess, and reduce climate-related risks, actions taken to encourage policyholder mitigation efforts and engage key constituencies in climate-based discussions, as well as information about the company’s existing analysis of risk and their organization’s climate-related goals, such as reducing emissions.

Surveys are due August 31, 2021. In total, over 1,200 insurers will complete the Survey, representing more than 70% of the U.S. insurance market. The California Department of Insurance, who asked Delaware to participate in this year’s Survey, will compile the data of all participating states and issue a public report.

Responding insurers with survey-related questions can contact Special Deputy Frank Pyle.

View the Insurer Climate Risk Disclosure Survey

View Survey Results for Prior Years

Devices being used to treat chronic conditions, COVID-19

Delaware Insurance Commissioner Trinidad Navarro has released a consumer alert for users of respiratory devices manufactured by Philips. An estimated 4 million Philips Continuous Positive Airway Pressure (CPAP) and Bi-Level Positive Airway Pressure (BiPAP or BiLevel PAP) devices, as well as mechanical ventilators manufactured before April 26, 2021 are being recalled due to potential health risks associated with the sound abatement foam in the devices that may degrade and be inhaled, and could contain cancer-causing chemicals.

The Delaware Department of Insurance is issuing this notice after the company’s recall notification and lack of communication to consumers and facilities has caused concern, particularly due to the necessity of devices in the treatment of both chronic conditions as well as facility-based usage. Recalled devices include those listed as providing respiratory treatment or support for COVID-19 patients.

While the recall notice urges immediate discontinuation of device use if possible, some individuals require the use of CPAP, BiPAP, and ventilator devices and may face serious medical issues, including the possibility of death, if they do not have access to a machine. Residents using these medically necessary devices should contact their physician to discuss the best path forward for their individual needs and register in the Philips recall system online or call 1-877-907-7508 to begin a claim for replacement or financial restitution. Users should not make any changes to their equipment or treatment plan without discussing with a physician. Doctors are encouraged to proactively communicate with their patients, and facilities should check all machines.

At this time, the company has not provided a replacement or repair timeline after issuing notice in June that the sound abatement foam in these devices may degrade, be ingested, and create additional respiratory problems, and could be releasing carcinogenic or otherwise hazardous chemicals into the air pathway. The Department of Insurance encourages insurers to assist policyholders in any way possible during this situation.

Expanded oversight of Pharmacy Benefits Managers possible

Legislation to further regulate the Pharmacy Benefits Manager industry was passed by the General Assembly in late June and sent to the Governor with unanimous bipartisan support.

HB 219, sponsored by Rep. Andria Bennett, Sen. Spiros Mantzavinos, Senate President Pro Tempore Dave Sokola, and Rep. Mike Smith, would bring Delaware’s oversight of the multi-billion-dollar industry on par with other states. Insurance Commissioner Trinidad Navarro and the Delaware Department of Insurance were proud to work with the sponsors on this bill and share their goals of ensuring access to affordable pharmaceuticals and protecting local pharmacies.

A Pharmacy Benefits Manager (PBM) acts as an intermediary for prescription drug plans, influencing what pharmaceuticals will be covered, and the consumer and pharmacy costs of those drugs. These companies hold massive power and bring in billions through manufacturer rebates, limiting generic drug offerings, and retaining negotiated savings while costs for consumers continue to rise. The largest PBMs operate their own pharmacy chains, and their consolidated market power allows them to pay unaffiliated pharmacies unsustainably low reimbursement rates – rates lower than it costs the pharmacy to dispense the drug to a consumer. PBMs’ move toward monopolization has contributed to waves of pharmacy closures across the nation, especially in rural, inner city, and under-served areas – areas that already crave equity and access.

HB 219 aims to solve many of these issues through efforts such as required use of the National Average Drug Acquisition Cost for pharmacy reimbursement, prohibiting inequal payments to unaffiliated pharmacies, and providing the Department of Insurance the ability to investigate PBMs, enforce consumer protection measures, and incentivize corrections through increased regulatory authority.

“With more consumers and local pharmacies facing dire financial situations, and more PBM wrongdoing coming to light, we must act with urgency in reining in this industry. In a developed nation, it is unconscionable that a mother would have to go hundreds of miles to get her child’s medication affordably, and no pharmacy should have to fight for months on end for the right to provide their clients needed pharmaceuticals without going bankrupt,” said Insurance Commissioner Trinidad Navarro, referencing passionate resident testimony provided at the bill’s legislative committee hearings.

“We need the authority to enforce consumer protections, to require price transparency and cost containment, and to ensure that these big corporations can’t exclude the small businesses and local pharmacies that have served our community for decades. I’m so thankful for the sponsors of HB 219 for working so hard on this needed legislation, and I am grateful that every single member of the General Assembly supported the effort.”

“For too long, pharmacy benefit managers’ egregious predatory practices have put profits above consumers. With this legislation, we are implementing critical reforms that will improve the oversight of this murky industry and ensure everyday Delawareans are not taken advantage of in such a vulnerable way,” shared Rep. Andria Bennett, the prime sponsor of HB 219 and chair of the Pharmacy Reimbursement Task Force. “I’m grateful for the outpouring of support this legislation has received both in the General Assembly and from individuals and small businesses throughout our state. We owe it to residents to fight for their best interests by increasing affordability and access to needed medication. That’s exactly what we’re doing with HB 219.”

“I served alongside Rep. Bennett on the Pharmacy Reimbursement Task Force and have seen firsthand how the middlemen between drug makers and pharmacies can drive up costs for consumers and even threaten the financial viability of independent pharmacies throughout our state,” said Senate President Pro Tempore Dave Sokola. “HB 219 will give Delaware the tools it needs to properly regulate this industry to ensure we’re controlling the costs of life-saving medication and protect the pharmacies who serve them.”

Rep. Mike Smith stated, “I was proud to co-sponsor this measure and help shepherd it through the House. This is ultimately a consumer protection bill with the intended goal of ensuring citizens have affordable access to prescription drugs. It is my hope that the Governor will sign this legislation without further delay.”

“Reducing prescription drug prices is one of the most important things we can do to help improve the health and welfare of our neighbors,” said Sen. Spiros Mantzavinos, the Senate prime sponsor of HB 219. “I am proud to have helped champion this legislation that will provide greater oversight of pharmacy benefit managers, a little-known industry that has a huge impact on whether you can get the medication you need and at what cost. I want to thank Rep. Bennett for her hard work on this legislation and I look forward to it being signed into law soon.”

The legislative effort was supported by consumers and independent pharmacists throughout the state, and the Delaware Pharmacist Society, who spoke passionately about the need to regulate PBMs.

“Not only have PBMs failed to manage the cost of prescription medications, which is the reason they were created, but they have artificially inflated medication prices, causing patients to struggle to afford their medication, while they continue to line their pockets. And, while Independent pharmacy strives to find ways to assist patients with chronic diseases, those who are underserved and vulnerable populations, PBMs put profits over patient care and have created barriers for patients to utilize our services, while forcing them to utilize more cumbersome and costly options,” explained Kevin Musto, R.Ph., FAPhA, Independent pharmacist.

“The Delaware Pharmacist Society is elated that patients as well as pharmacists may soon be able to appeal inadequate prescription drug reimbursement, and that unregulated PBMs would have to answer to the Insurance Commissioner’s office on their business practices,” said Dr. Kim Robbins, Executive Director of the Delaware Pharmacist Society. “Pharmacists have tried to fight PBMs individually and have been unsuccessful. PBM reform will allow the Insurance Commissioner’s office to protect consumers.”

More than $1.3M in total fines assessed for coverage discrimination

Insurance Commissioner Trinidad Navarro has announced the completion of additional Mental Health Parity examinations on regulated health insurers in Delaware. These violations resulted in $735,000 in fines and significant insurer corrections to create a less discriminatory environment in the future. Combined with two examinations completed in 2020, Delaware’s largest health insurers have been fined a total of $1,332,000 for not treating mental and behavioral health care equally to other forms of needed care. A high number of violations was expected as these final reports complete the first round of assessments by the department.

“Every person should be able to seek the care they need without undue expense or difficulty, and that remains true whether the person is seeking care for a physical ailment, or a mental one,” said Commissioner Navarro. “The thorough examinations conducted by the Department of Insurance highlight many needed improvements to ensure parity, and we will continue to work to bring these corrections to fruition and to hold insurers accountable.”

Mental Health Parity laws, which exist both at the state and federal levels, aim to eliminate coverage discrimination between policyholders seeking mental illness or substance abuse care and those seeking physical care. A lack of parity can prevent a person from pursuing needed care due to cost or limited access, or otherwise make it more expensive or more time intensive than medical visits. Department examinations are critical to uncovering parity issues as consumers may not be aware if they are experiencing disparate treatment.

“We have been working toward a more just healthcare system over the past decade, and mental health parity has been a key solution to the issues of access and affordability that plague our communities,” Commissioner Navarro shared on an American Health Law Association podcast.

Throughout the examination processes, instances where parity was violated included placing greater limits on the coverage of medicines for an insured during the diagnosis and treatment of mental illness or substance dependency than for covered services provided in the diagnosis and treatment of any other illness or disease covered by the health benefit plan. Insurers imposed Non-Quantitative Treatment Limitations (NQTL) prior authorization requirements more stringently to mental and behavioral health benefits than to medical/surgical benefits and thus created barriers and delays to treatment. Companies excluded mental health-related medications in their cost-saving programs for policyholders, and placed these medications on formulary tiers that resulted in members who take those pharmaceuticals facing higher copays compared to other medications offered in lower tiers.