Seven Health Insurers Agree To Suspend Marketing for Private Medicare Fee-for-Service Plans After CMS Questions Sales Tactics

Seven of the largest health insurers offering private fee-for-service Medicare Advantage plans have entered into a voluntary agreement to suspend marketing of the plans amid allegations of illegal and aggressive sales practices, CMS officials announced on Friday, the AP/Wall Street Journal reports (AP/Wall Street Journal, 6/18). Such practices have included the enrollment of dead or mentally incompetent Medicare beneficiaries, the impersonation of Medicare representatives and the use of personal information stolen from federal records, according to a Senate investigation released prior to a committee hearing in May examining marketing abuses (Kaiser Daily Health Policy Report, 5/16).

The government spends 19% more on private fee-for-service Medicare Advantage plans than traditional Medicare and spends 12% more on all Medicare Advantage plans, according to the Medicare Payment Advisory Commission (Kaiser Daily Health Policy Report, 5/8). The insurers, which collectively provide insurance for about 90% of all MA private fee-for-service plan beneficiaries, will resume marketing after meeting six basic conditions:

• Informing beneficiaries that the plans do not guarantee a physician will accept them as a patient;
  
  
• Requiring sales agents to pass written examinations testing knowledge of MA plan details;
  
  
• Calling prospective beneficiaries to ensure they understand fully how their MA plan will work;
  
  
• Working with physicians and other providers to increase understanding of how the plans function (Lee, Washington Post, 6/16);
  
  
• Providing CMS with a list of all sales agents and authorizing CMS to share the list with state insurance departments if necessary; and
  
  
• Including "delegated" brokers and agents, as well as those sponsored by the plan, on lists of planned sales events provided to CMS.
  

Comments
Block said, "This voluntary agreement demonstrates the plans are stepping up to assure deceptive marketing practices end and beneficiaries fully understand what they are purchasing" (Colliver, San Francisco Chronicle, 6/16). Block added that the alleged unethical sales tactics were committed by a relatively small number of "rogue sales agents" rather than the companies themselves.

Karen Ignagni, president of America's Health Insurance Plans, said the insurance industry is "moving immediately" to put additional safeguards in place against unethical marketing, including the development of a uniform reporting mechanism to identify agents selling on behalf of MA plans and "clear guidelines for health plans to report serious broker-agent misconduct to CMS and the states."

Senate Finance Committee Chair Max Baucus (D-Mont.) said, "I applaud plans for volunteering a suspension," adding, "I'd like to see CMS spend less time promoting private coverage and more time figuring out how to regulate the actions of insurers who sell directly to seniors."

House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) said, "The administration's response is to allow private companies to determine which crimes they'll plead to and which sentences they'll serve. This will do virtually nothing to protect Medicare beneficiaries and is a pathetic attempt to pre-empt congressional action" (CQ HealthBeat, 6/15).