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Medicare Advantage Sales Practices Assailed

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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.”

Kim Holland, Oklahoma state insurance commissioner, said the MMA’s preemption of states’ authority to oversee the licensure, market conduct and financial solvency of Medicare Part D agents and carriers, and the marketing practices of MA insurers “has allowed them to exploit this exemption from regulatory oversight.

“Our seniors are plagued by aggressive and frequently misleading advertising, agent high pressure sales tactics and a lack of responsiveness if not outright neglect from their insurance company.”

Jim Poolman, North Dakota insurance commissioner, said that as early as January 2006, he called for changes to simplify the Medicare Part D program.

“I sit before you today to urge you to restore state regulatory authority over these programs and consider using the current Medigap insurance as a regulatory model,” Poolman said.

He argued that CMS is “ill-equipped to adequately address the conflicts that arose for this vulnerable population.

“For example, our contact with customer service staff at Medicare is totally unproductive,” he said. “Not only do they lack the answers or information we need, but they also are inadequately trained. On occasion, CMS staff members have simply hung up the phone.”

Representing the industry, Peggy Olson, a licensed insurance agent with Healthwise Insurance Planning, LLC, Portland, Ore., called the abuses brought out at several recent hearings on the issue “inexcusable.”

However, she added, “the outrageous behavior of a dishonest few is in no way reflective of my entire industry.”

She told the panel that most licensed producers who sell Medicare Advantage plans “spend countless hours advising their clients, answering questions and helping to select the best possible plan options based on their clients’ budgets and personal preferences.”

She said that while Medicare Advantage may not be the right choice for every senior, “there are many Medicare beneficiaries who are very happily insured under these plans.”

She said that 80 percent of her clients have chosen to use the Medicare Advantage plans “because they are easy to understand, offer excellent benefits and, at least in Oregon and Southwest Washington, are relatively inexpensive.”

She said “It is critical that all Americans, including Medicare beneficiaries, have a wide range of health plan choices available to them.”

She also said that the way “we can make sure that all producers selling Medicare-related products are able to advise their clients in the most ethical manner is through education.”

In a statement released after the hearing, the Association of Health Insurance Advisors (AHIA) and the health insurance division of the National Association of Insurance and Financial Advisors (NAIFA), both in Falls Church, Va., said they applaud calls for strict Private-Fee-For-Service (PFFS) marketing guidelines.

AHIA said it was pleased that Acting Administrator of CMS Leslie Norwalk acknowledged at the Stark hearing that “most health insurance agents are helpful and responsible in describing and explaining choices to beneficiaries…” when discussing the voluntary marketing suspension of fee-for-service plans by 7 health care sponsors.

“However, ‘most’ is not good enough.” AHIA President Lawrence E. Lounds said in the statement that AHIA members are “outraged.”

“These professional agents have witnessed unethical individuals, possibly some of the worst examples in our industry, selected to market the products,” he said. “AHIA supports the primary provisions that the plans must meet to have the suspension lifted and welcomes the ongoing education and verification processes outlined by CMS,” the group added.


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