Scam Alert: How to Outwit Medicare Drug Benefit Scams

Amy Vansguard

Betty Lockwood, 83, of Kalamazoo, Mich., got a phone call in September from a man asking for her by name. He said he was collecting information about Medicare recipients and insisted that after Oct. 1 she would not be able to pay for her prescription drugs with cash—only with checks or credit cards.

Then he wanted the first two digits of the routing number of her checks. That's when Lockwood, a past president of the local AARP chapter, caught on. This man was not from Medicare—he was a scam artist. She did the right thing and hung up. Then she reported the incident to a local AARP chapter, which in turn notified authorities.

With the enrollment period for Medicare's new Part D prescription drug coverage coming up in November, con artists, sometimes purporting to be from insurance companies, are trying to take advantage of potential enrollees and cash in. They try to steal Social Security numbers, credit card information and bank account numbers. Some offer to help people enroll for a fee—even though there's no charge to sign up.

But Medicare officials and consumer advocates say that being well-informed about the enrollment process and about the tactics swindlers use vastly reduces the chances of being deceived. Medicare has also developed practices to safeguard against fraud.

Already, authorities have encountered a variety of scams that people need to be aware of. In Michigan, Lockwood says, the tipoff was the caller asking for bank account information and refusing to give his name. Then she checked with her pharmacist, who said that of course she could pay for her drugs with cash. Even though she stymied the caller, she says she's going to watch her bank account closely.

In another incident in Michigan, Attorney General Mike Cox issued a statewide consumer alert after telemarketers made calls claiming that consumers' Medicare services were about to expire, offered to help people sign up for the callers' prescription drug plan and asked for a bank account, credit card or Social Security number.

In West Virginia, the Charleston Gazette reported, at least six people gave a telemarketer bank account numbers after he insisted they pay $300 to qualify for Medicare prescription drug coverage. One woman's account was debited $398 before she closed it.

In Pennsylvania, a man approached a woman—the mother of an AARP staff member—outside her church and asked for her bank account number to enroll her in a drug plan. She refused.

In addition to outright scams, some insurers are jumping the gun, trying to get beneficiaries to switch into their medical plan so they will then sign up for the Medicare Part D coverage without comparing it to other plans.

That may be what happened to George and Esther Hernandez of Madison, Wis. A phone caller said he had something important to tell them about their Medicare coverage and insisted on coming to their house for a meeting. The two alerted social worker Joyce McComish, who came to the meeting with them.

It turns out the salesman tried to sell Hernandez, 90, and his wife, who is 86 and takes several medicines, another kind of insurance. He said he would "automatically roll them over" into the new Medicare drug coverage. McComish cautioned the Hernandezes not to do anything until they studied plans of other carriers that would be available. The Hernandezes decided to wait.

The best advice for avoiding scams, consumer advocates say, is to move slowly, deal only with representatives of Medicare-approved plans and be alert. [See Do's and Don'ts at right.] Insurers officially begin marketing their prescription drug plans Oct. 1, and beneficiaries will be able to compare plans on Medicare's website beginning Oct. 13. No one may enroll in a plan before Nov. 15.

Medicare is allowing insurers to mail printed information and to market their plans by phone (but not before 8 a.m. or after 9 p.m.). The agency is touting the slogan "You Make the Call!" as a way to remind people that they need to initiate the phone call to enroll. Households on the Do Not Call registry cannot be called except by their own insurance providers. Even then, providers can call only to explain their drug plans but not to enroll people.

Salespeople are not permitted to go door to door or call on nursing homes or senior centers. Rona McNally, project manager for the Missouri SORT (Seniors Organized to Restore Trust) Program in Warrensburg recalls that an insurance salesman came to a senior center in her state wanting to set a time to sign beneficiaries up for the drug benefit with his company. He was turned away.

"We're not allowing them in," McNally says. "That implies endorsement, and we don't do that." She says some insurers are so aggressive that they are "offering to buy lunches for everyone that day and tell about their plans."

Medicare is working to nip drug benefit scams in the bud. Mark McClellan, administrator of the Centers for Medicare & Medicaid Services, has been touring the country to get the word out about the new program, how it works and how to enroll.

Legitimate plans are those approved by Medicare. Barbara Parrott McGinity, program director for the Better Business Bureau Education Foundation in Houston, says her group is trying to caution people to steer clear of phony organizations.

"We are warning people about how [sales] people use terms when they call you," McGinity says. " 'Medicare Resource Center' is nothing more than a telemarketing room with an approved script."

Washington-based writer Elaine S. Povich covers politics and economic issues.