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Fox Insurance Ejected from Medicare Prescription Drug Program

By Jane Norman, CQ HealthBeat Associate Editor

March 10, 2010 -- A New York health insurance company has been kicked out of the Medicare Part D prescription drug program after the government determined the insurer wasn't meeting Medicare requirements for beneficiaries. CMS officials said it is the first time a company has been terminated from the Part D program since its inception.

Fox Insurance Co., which was suspended from enrolling new members on Feb. 26, now has had its contract terminated, the Centers for Medicare and Medicaid Services announced on Tuesday. A CMS statement said that an onsite review of the company by federal officials found violations including imposition of unapproved prior authorization of prescriptions, a failure to meet the plan's appeals deadlines and a failure to comply with regulations requiring that enrollees be transitioned to new drugs at the beginning of the new plan year.

Brenda J. Tranchida, director of the Program Compliance and Oversight Group at CMS, said in a letter to Fox that "CMS is imposing these intermediate sanctions immediately because it has determined that Fox's conduct poses a serious threat to the health and safety of Medicare beneficiaries." The letter was sent to Kary Shankar, CEO and senior official for contracting at Fox.

More than 123,000 beneficiaries were enrolled in Fox plans in Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Louisiana, Maryland, Missouri, North Carolina, New Jersey, New York, Nevada, Ohio, Pennsylvania, South Carolina, Texas and West Virginia.

Jonathan Blum, acting director of the Center for Drug and Health Plan Choices at CMS, said those enrolled in Fox will be sent letters explaining how they can continue to receive their prescriptions. Beginning Wednesday, beneficiaries will receive their prescriptions through LI-NET, which is run by Medicare and administered by Humana. Those enrolled in Fox plans will be able to choose a new plan through May 1 and those who don't choose a new plan will be enrolled by Medicare.

A Fox spokesman, Jules Abraham, said that Fox is working closely with attorneys and with CMS to "resolve the situation as soon as possible." Abraham said Fox anticipates mounting an appeal of the contract termination.

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