Medicare Advantage Sales Practices Assailed

Rep. Pete Stark, D-Calif., chairman of the Ways and Means Health Subcommittee, introduced the Medicare Advantage Truth in Advertising Act to prevent Medicare Advantage (MA) plans from charging seniors and people with disabilities more than traditional fee-for-service Medicare for any service.

The introduction on June 28, follows hearings earlier this month. Inappropriate marketing of Medicare Advantage plans to the poor and elderly, marketing that one Alabama official called “predatory,” came under heavy fire at a congressional hearing with several members of Congress calling for legislation that would classify the conduct as Medicare fraud.

The latest criticism was lodged today at an oversight hearing on “Predatory Sales Practices in Medicare Advantage” convened by Rep. Bart Stupak, D-Mich., chairman of the Oversight Subcommittee of the House Energy and Commerce Committee.

The comments at today’s hearing appeared to address the same issues touched on by Stark at a recent hearing.

After hearing testimony, Stark said later this summer he might propose legislation to increase oversight of Medicare prescription drug programs.

What Stark suggested, and members of the Oversight Subcommittee of the House Energy and Commerce Committee, as well as state insurance regulators and health advocates talked about, are measures that could include giving state insurance regulators the authority to oversee insurers that market the plans and require public disclosure of enforcement action taken against drug plans that violate Medicare regulations.

Stark’s suggestions, as well as those who testified at the oversight hearing, included rules that would require the same open enrollment periods for stand-alone Medicare prescription drug plans and plans sold under the Medicare Advantage program.

At the latest hearing, insurers, agents and even the Centers for Medicare and Medicaid Services were all criticized.

Among those who testified, Kathleen Healey, associate counsel and director of the State Health Insurance Assistance Program for the Alabama Department of Senior Services, said that despite a prohibition on door-to-door marketing, “agents arrive on residents’ doorstep stating that the ‘President’ sent them or that they represent Medicare.

“These agents bear business cards touting themselves as ‘Medicare specialists’ or ‘senior service specialists’, not insurance agents,” she testified.

Those testifying on abusive practices included representatives from Legal Aid groups, three insurance commissioners, Ms. Healey, a staff attorney for California Health Advocates, Sacramento, Calif., and residents of an apartment complex catering to the poor and elderly in Washington, D.C.

After hearing the testimony, Rep. Michael Burgess, R-Texas, said, “This sounds like Medicare fraud to me.”

But, Stupak then cautioned him that, under a loophole in the Medicare Modernization Act, that created the Medicare Advantage Program and the prescription drug program under Medicare, states have enforcement authority over the program through their licensing power.

But states aren’t so sure of their oversight authority.

Lee Harrell, deputy insurance commissioner for Mississippi, testified before the Oversight Committee that states have “very limited” enforcement authority over companies selling Medicare Advantage plans. “Except for licensing and solvency issues, states are preempted from regulation MA plan sponsors,” he argued.

He also said that inadequate training of agents is a “major problem” and noted that one reason for this is agents are often hired on a part-time and/or time-limited basis, garnering no loyalty to the company or the product.”

He said some state regulators “question whether states have jurisdiction over an agent selling a product over which the state has no regulatory authority.”