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CMS Asserts Medicare Advantage Is Fed's Turf

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The Bush administration–supported by insurance underwriters–on Sept. 11 signaled a hard line against allowing state insurance regulators a greater role in overseeing the Medicare Advantage program.

” … the collaborative work between the Centers for Medicare and Medicaid Services and the states is critical to the management of an effective program and to protect the beneficiaries,” said Abby Block, director of the Center for Beneficiary Choices at CMS, which oversees the MA program.

“At the same time, I must underscore the importance of maintaining oversight of Medicare managed care programs by the federal government,” she said. “State regulation of these plans is neither appropriate nor feasible.”

The administration’s policy is based on the fact that unlike Medigap and Medicare, programs in which states play a large role, MA “is managed and almost entirely subsidized by the federal government.

“Some have likened MA to Medigap plans when suggesting that states assume enforcement authority,” she testified.

But, she said, “These are inappropriate comparisons. Medigap plans are paid for entirely by the individual purchaser and supplement Medicare.

“Medicare Advantage plans instead provide all original Medicare benefits, and in some cases additional benefits, and paid for substantially or totally by the federal government,” she explained.

Her comments were made at a public hearing in Washington that represented the first meeting of a new National Association of Insurance Commissioners’ subgroup on Medicare Private Plans.

But her comments also made clear that the Bush administration and the healthcare industry would also oppose inclusion in final legislation of language now contained in the House version of legislation reauthorizing and expanding the State Children’s Health Insurance Plan that mandates a greater role in overseeing MA programs by the states.

One provision of the bill, the Children’s Health & Medicare Protection Act, H.R. 3162, (the CHAMP Act) calls for joint federal/state oversight of plan marketing and advertising practices for MA programs.

It also “specifically repeals the federal pre-emption of state law with respect to the marketing and enrollment standards” of MA programs adopted in the so-called CHAMP Act.

In its comments at the hearing, officials of America’s Health Insurance Plans, Washington, voiced support for continued federal oversight.

“We have serious concerns about provisions of [the CHAMP Act] which address regulatory and administrative issues in the Medicare Advantage program in a manner inconsistent” with federal oversight, Altheia Jackson, executive director of federal affairs for AHIP, testified.

“We oppose this approach because, based upon past experience, we believe that the practical consequences of these changes would be highly problematic, hindering rather than improving program administration and making the program less, rather than more, responsive to beneficiary interests,” Ms. Jackson said.

The NAIC subgroup that convened the hearing was formed by NAIC in response to calls by health advocates, insurance commissioners and members of Congress for a closer look at language in the Medicare Modernization Act of 2003 that pre-empted state regulation of Medicare Advantage, or Medicare Private Plans, as they are termed by the NAIC.

At hearings in both the Senate and the House earlier this year, insurance commissioners, healthcare advocates and Medicare beneficiaries all told of abuses in marketing the program by health underwriters participating in the program, as well as difficulty in understanding its costs, co-pays and benefits.

Guenther Ruch, administrator for the division of regulation and enforcement at the Wisconsin Department of Insurance, chaired the meeting.

Speakers, including representatives for a California Healthcare Advocates, Sacramento, Calif., and the insurance commissioners of Louisiana and Ohio, testified about problems with agents marketing MA program and beneficiary complaints about how the programs worked.

After each speaker testified, Ruch asked them whether state licensing of agents and compliance requirements based on the NAIC model act dealing with Medigap would lessen complaints, improve service and accelerate enforcement activities against abusive agents and underwriters. He called the approach regulation by “50 little monkeys rather than one large gorilla.”

They all said it would help the situation.

But Ms. Block voiced vehement opposition. “Take a deep breath and see how things work out,” she cautioned while being questioned by members of the sub-group. “Improvements are in place.”

She said she understood the regulators’ and consumer advocates’ concerns. But she attributed the problems in the program “to exceedingly rapid growth in the MA program in a short time frame.

“Rapidly accelerated growth was not anticipated and not prepared for” by underwriters and agents, she said. “And, CMS was also not prepared.”

But, she said, “We have become far more sophisticated in evaluating plans and people. Let’s wait and look at 2008.”


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