Widespread confusion over flu shot insurance benefits

Wendell Morris stopped recently at a Rite Aid drugstore in Santa Monica to get a flu shot.

A worker at the pharmacy said Morris’ insurer, Anthem Blue Cross, didn’t cover flu shots. So Morris paid about $30 out of pocket for the vaccination.

He later saw the column I wrote last week about how drugstores may be misleading people about flu-shot coverage. He called Anthem to ask whether his insurance covered the vaccine. It did.

Morris, 48, returned to Rite Aid and showed them my column. The drugstore manager, he said, immediately refunded the money he’d paid for the flu shot.

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“They obviously seemed to know this was an issue,� Morris told me.

“You want to trust drugstores,� he said. “Now it seems like we have to check first with our insurance company and tell the drugstores that we know we have coverage.�

I received hundreds of emails in response to that column. Almost all related experiences similar to what Morris went through, involving all leading drugstore chains and insurance companies.

The common denominator to all these emails was the consumer being told by the drugstore that his or her insurance didn’t cover flu shots and being asked to pay about $30 — in some cases, as much as $50 — for the vaccine.

Each customer’s insurer subsequently confirmed that coverage existed.

“It seems like more than just honest mistakes on the drugstores’ part,� said Joel Hay, a professor of pharmaceutical economics at USC. “It wouldn’t surprise me if something nefarious was going on.�

He cited last week’s news that Kmart will pay $2.55 million to settle complaints that it overbilled government health programs for prescription drugs. This shows that pharmacies can behave less than honorably, Hay said.

“If they know for a fact that a person has insurance coverage and they’re not applying it, that’s fraud,� he said.

Insurers may be complicating things by an inconsistent approach to offering drug benefits. In some cases, the coverage may be listed as a “pharmacy benefit.� In others, it may be classified as a “medical benefit.�

Drugstore workers thus may run a customer’s insurance card through the system seeking coverage of flu shots as a pharmacy benefit, and may overlook that the coverage is provided as a medical benefit.

Greg Schapansky, a pharmacist in Northern California, said it makes no sense that insurers seem to have such a hard time classifying flu shots.

“This season, I have seen more than one company deny pharmacy billing at retail pharmacies and call flu shots a medical benefit,� he said. “Why would this be necessary? Why would it matter as long as their insured gets immunized?�

Good question. Then there’s the question of why a drugstore might want to mislead customers about whether their insurance covers flu shots.

Turns out there’s serious money to be made by such behavior.

Three pharmacists who asked not to be identified for fear of retaliation by their employers said drugstores obtain flu shots from wholesalers for roughly $8 apiece.

Reimbursement by insurers can vary among pharmacy chains. At one prominent chain, I was told, reimbursement runs close to $14 a shot. At another chain, reimbursement is typically “a few dollars less than the retail price of the shot,� according to a senior executive.

In either case, it seems clear that charging customers the full retail price represents more profit for the drugstore than if an insurer is involved — nearly 300% over the wholesale price for shots costing about $30.

Up to 145 million flu-shot doses are expected to be produced this season, according to the Centers for Disease Control and Prevention.

Representatives of CVS, Walgreens, Rite Aid and Target declined to say how much each chain pays for flu shots or how much each is reimbursed by insurers.

But Ashley Flower, a Rite Aid spokeswoman, said company workers routinely check to see whether a flu shot is covered either as pharmacy or medical benefits. If it’s not covered, “the cash price for the standard injectable flu shot is $29.99,� she said.

Jamie Bastian, a Target spokeswoman, said that “many factors can impact pharmacy charges, including a guest’s insurance plan, if a provider has named the pharmacy a preferred location and the guest’s deductible.�

If nothing else, these mixed signals on flu shot coverage highlight a need for greater coordination among healthcare companies.

Preventive medicine is in everyone’s interest. Consumers hopefully will avoid catching the flu or will have only mild symptoms as a result of receiving a vaccination.

Insurers lower their risk of a policyholder being hospitalized or catching pneumonia. And drugstores, of course, enjoy a brisk business providing millions of shots.

It seems insane that a treatment this important and commonplace is the source of so much confusion. And that’s giving pharmacies the benefit of the doubt in claiming they’re not trying to cheat people out of insurance.

Is that trust warranted?

Considering the high number of consumers saying they’ve been misled by drugstores, this seems like a question for state Atty. Gen. Kamala D. Harris to answer. A spokesman for her office declined to comment.

In the meantime, consumers have to serve as their own flu-shot watchdogs.

Ellen Klein, 56, recently visited a CVS store in Westchester for her vaccination. She was told by a pharmacy worker that her insurance didn’t cover the shot and thus paid about $30 out of pocket.

“I was surprised,� Klein said. “They have my insurance information on file. I go to that CVS all the time.�

After seeing my earlier column, she called her insurer, Aetna, and asked about her coverage. The Aetna rep said she was covered for flu shots at CVS and most other major pharmacies.

The rep proceeded to ask Klein to fax in her CVS receipt. Aetna would reimburse her for her expense, the rep said.

“He even apologized for what happened,� Klein recalled.

And in case you were wondering, that’s a health insurer behaving in a stand-up fashion.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to [email protected].