Humana in Hot Water

Insurers are fighting hard this year to protect their interests as Congress debates health reform.

But Humana Inc. got itself in hot water over letters the insurer recently sent to Medicare recipients urging them to protest proposed program cuts. At stake for Humana: potential government sanctions on a business that accounts for half of the company's sales.

Humana is a leader in providing Medicare benefits through private health plans, and it reached out to customers in its Medicare Advantage program to help fight any attempt to pare these type of offerings as part of health reform.

"Millions of seniors and disabled individuals could lose many of the important benefits and services that make Medicare Advantage health plans so valuable," the Wall Street Journal quotes Humana from a letter to customers. Louisville, Kentucky-based Humana also sponsors a website that generates letters to politicians on behalf of customers opposing cuts to the program.

President Obama and Democrats have been critical of Medicare Advantage programs and the president has gone as far as calling them a subsidy to the insurance companies.

Humana's warning that these type of plans, which offer supplemental benefits such as drug coverage to patients in the government's Medicare program, may be dismantled is a legitimate worry. Even Democrats like Senator Ben Nelson of Nebraska are expressing concern about disruption of seniors' health coverage.

But regulators who oversee Medicare are looking at another issue: Humana possibly violated rules on marketing to recipients. Senator Max Baucus of Montana called for the probe.

Jonathan Blum, an official with the Centers for Medicare and Medicaid Services, tells the Journal that the government "places strict limits and oversight on how plans communicate with beneficiaries." Possible punishment includes fines or suspending Humana's ability to add customers.

Humana has about 1.4 million Medicare Advantage customers and is second only to UnitedHealth Group Inc. in size for such plans.