Critics Eye Companies in Medicare Drug Plan

W A S H I N G T O N, June 19, 2004 -- Medicare's new drug discount card may save seniors some money, but the cards also mean billions in profits for health care companies and, critics say, huge potential for fraud by some of those companies.

"They've either ripped off the government in the application of these programs or they've ripped off their consumers," said John Podesta, the former chief of staff for the Clinton White House who now serves as president and CEO of the Center for American Progress, of some of the companies affiliated with the program.

The government reports about 3 million senior citizens are enrolled in Medicare's new discount drug program, most of them automatically through their health plans. The cards allow recipients approximately $600 a year to spend on prescription drugs.

Critics Raise Concerns

But critics have concerns about the providers.

A study by the Center for American Progress — a nonpartisan think tank that lists one of its objectives as "responding effectively and rapidly to conservative proposals and rhetoric" — claims the Bush administration and the Department of Health and Human Services did not sufficiently investigate the backgrounds of the companies allowed to offer the cards, and 20 of them have recently been involved in serious fraud charges.

"If my mother was asking me what company she should select, I'd tell her to look elsewhere from these 20 companies," Podesta said.

The companies cited by the group include:

Medco Health Solutions, which just paid a $29 million settlement over charges it pressured doctors to switch to medicines more profitable for itself;

Aetna, which agreed to a $470 million settlement with doctors for allegedly interfering with their recommended treatments;