WellPoint Inc., the second-largest U.S. health insurer by revenue, has been barred from adding customers to Medicare plans after it denied prescription drugs to the elderly, endangering their lives, the government said, Bloomberg reported.
The sanctions, outlined in a letter to WellPoint today from the Centers for Medicare & Medicaid Services, followed a "sharp" increase in consumer complaints, the agency said. Elderly customers were stopped from receiving essential prescription drugs, and some were overcharged because of computer mistakes, the government said.
"WellPoint's conduct poses a serious threat to the health and safety of both its prospective and current Medicare beneficiaries," the agency said in the letter. "The recent failures in WellPoint's information systems have resulted in beneficiaries not receiving necessary medications at their pharmacies."
The complaints jumped in the past 12 days, Medicare said. The agency also disclosed the Indianapolis-based insurer's plans were so flawed that the government in September ordered WellPoint to stop enrolling low-income people. WellPoint told Medicare that computer failures were to blame. Six months earlier, the company lowered its 2008 earnings forecast, attributing the change to problems with its computer systems.
The Medicare sanctions are "definitely not a good thing," said Carl McDonald, an analyst with Oppenheimer & Co., in New York, in a telephone interview today. "It isn't as significant now as it would have been a couple of months ago."