Proposed Federal Rule Would Ban Certain Marketing Techniques for Private Medicare Plans

The Bush administration on Thursday proposed new marketing rules for Medicare Advantage comprehensive coverage and drug plans that aim to curb aggressive sales tactics, the Wall Street Journal reports. According to the Journal, health insurers have been criticized for their "overly aggressive marketing tactics, such as enrolling seniors without explaining what they are getting into." In some cases, beneficiaries lost supplemental coverage or access to their physicians, the Journal reports (Zhang/Fuhrmans, Wall Street Journal, 5/9). Since the Medicare drug benefit was launched in 2006, some beneficiaries and state insurance commissioners have said that some insurance agents use incorrect information to enroll people in certain plans, "particularly those offering comprehensive health insurance," the AP/Google.com reports (Freking, AP/Google.com, 5/8).

The proposal would:

• Prohibit cold-calling, door-to-door marketing and unsolicited marketing in places such as waiting rooms and senior centers (Wall Street Journal, 5/9). According to the AP, the proposal "essentially restricts face-to-face solicitations to those initiated by the customer" (AP/Google.com, 5/8);
  
  
• Ban cross-selling of non-health care products (Wall Street Journal, 5/9). Sales agents could sell non-health care products, such as life or disability insurance, if they were cleared with the beneficiary prior to the meeting (AP/Google.com, 5/8);
  
  
• Increase the government's ability to fine insurers that do not comply with the rules. The government currently can impose a civil fine of up to $25,000 for each violation, but the new rules would allow a fine of up to $25,000 for each beneficiary affected by a violation;
  
  
• Limit to $15 gifts and promotional items for potential customers. In addition, it would bar no-cost meals, regardless of value, which would "end a common practice" of holding sales presentations at family restaurants where meals are provided, according to the New York Times;
  
  
• Bar insurers from paying agents higher bonuses or commissions for the first-year enrollment of a beneficiary compared to a renewal, which creates a "financial incentive for agents to encourage beneficiaries to change plans each year," administration officials said. It also would prohibit insurers from paying more money to agents for enrolling beneficiaries in different plans of the same category; however, agents could receive a higher commission for enrolling a beneficiary in a comprehensive plan over a drug-only plan (Pear, New York Times, 5/9); and
  
  
• Add new restrictions on special needs plans, including requiring providers to "more clearly establish and clarify" that they are providing additional benefits to beneficiaries of the plans, CQ HealthBeat reports. Special needs plans serve so-called "dual eligibles," beneficiaries who qualify for both Medicare and Medicaid; beneficiaries with disabling or severe chronic conditions; and beneficiaries living in nursing homes or long-term care facilities (Carey, CQ HealthBeat, 5/8).

State Authority
The proposal does not address concerns by some consumers, lawmakers and state officials that states do not have enough authority to regulate marketing of the plans, according to the New York Times (New York Times, 5/9). The Los Angeles Times reports that the 2003 Medicare law, which created the drug benefit, "tightly limited the ability of state insurance regulators to police the plans" (Alonso-Zaldivar, Los Angeles Times, 5/9). According to the Journal, the "health insurance industry has tried to head off more state regulation ... by pushing for stronger federal oversight" (Wall Street Journal, 5/9). In addition, the lack of strengthened state regulation in the proposal "affirms the Bush administration's view that 'states do not have the authority to regulate the marketing' of private Medicare plans," the New York Times reports (New York Times, 5/9). According to Ap/Google.com, "The rule is unlikely to stop lawmakers' efforts to give states more authority to hold insurers accountable."

Comments
Acting CMS Administrator Kerry Weems said, "We want to make sure that beneficiaries aren't pressured into sales. In parking lots, waiting rooms and those kinds of places, a salesman can create a pressure environment or a threatening environment where a beneficiary will agree to anything just to get away."

Paul Precht, policy director for the Medicare Rights Center, said, "CMS doesn't have the boots on the ground to enforce even good rules like this," adding that states need more authority (AP/Google.com, 5/8). Robert Hayes, president of MRC, in an e-mail wrote, "The final regulation will need to be much tougher if it is to have the desired effect," adding, "Even the Bush administration, which has so zealously promoted the privatization of Medicare, recognizes that it must repeatedly reaffirm its instructions to these private, for-profit insurance companies to get them to play by the rules" (Bloomberg/Boston Globe, 5/9).

Karen Ignagni, president of America's Health Insurance Plans, said, "Moving away from federal regulation toward 50 states approaching this in 50 different ways doesn't set a uniform standard for beneficiaries" (AP/Google.com, 5/8). Ignagni added that under the proposal, "The rules will be clear, they will be specific and there will be no questions about how they should be interpreted" (CQ HealthBeat, 5/8).

Senate Finance Committee Chair Max Baucus (D-Mont.) said, "America's seniors have been pressured, prodded, preyed on and ripped off by shady marketing too often," adding, "I intend to get these bans into the law to insure aggressive marketing tactics are quashed once and for all" (Wall Street Journal, 5/9).