Advocates for giving states increased oversight of agents selling Medicare Advantage plans sought to make their case at a Senate Finance Committee Hearing last week.
Illinois Insurance Division Director Michael McRaith said states have received numerous complaints from seniors about aggressive and deceptive sales practices used by agents pushing private Medicare Advantage plans. The authority to act on those complaints lies with the Centers for Medicare and Medicaid Services, he noted, but argued that state regulators would be better able to address these concerns.
“The status quo is not working,” McRaith said, adding that “ad hoc responses after media reports” from CMS fail to resolve the problems or prevent them from occurring again in the future. To help solve the problem, he said the National Association of Insurance Commissioners is supporting legislation introduced in the Senate and known as S.1883, or the Accountability and Transparency in Medicare Marketing Act. This bill, he said, would allow states to better control the sales practices being used to sell Medicare Advantage plans.
“We do believe that more authority at the state level is absolutely essential,” he said, adding, however, that NAIC is not seeking to change the overall national standards for marketing established by CMS.
The chairman of the committee, Sen. Max Baucus, D-Mont., opened the hearing by quoting a passage from the Book of Leviticus about ensuring fairness in sales. “The centuries have passed,” he said. “But the challenge of maintaining honesty in sales continues.”
He said that in many instances seniors cannot get a salesperson to leave their house until they have signed a form, which usually turns out to be an enrollment form, and pointed to an instance in New York where a company parked a sales van outside a senior center and “herded” them to the van to discuss “new” Medicare Benefits.
“Of course, there are some good companies and good agents that want to give seniors an honest deal,” he said. “But far too many insurance salespeople are misleading seniors when they sell them private Medicare plans.”
Peter Hebertson, director of outreach for Salt Lake County Aging Services, said Harper’s situation is not uncommon, and he pointed to the commission structure of many plans for agents as a driving force in the process.
“The commission structure for agents is part of the problem,” he said. “Because the incentive is to the commission we have agents, but not all agents, out there looking at the benefit to the commission” rather than the consumer.
McRaith echoed that sentiment, noting that because some plans offer bonuses based on the number of applications, “there’s a real incentive to generate volume regardless of the quality of the application.”
Sen. Ron Wyden, D-Ore., who is among the sponsors of S.1883, argued in favor of giving the states more oversight, comparing the situation for Medicare Advantage plans to that prior to legislation aimed at the Medigap market.
“Once again you’ve got vulnerable seniors, once again you’ve got big money, and once again you’ve got these rip-off sales practices,” he said, adding that the landscape for Medicare Advantage plans looks to him like “Dodge City before the marshals showed up.”
Wyden said he was pressing for S.1883 “because we would like to clean house and get this situation corrected.” An essential part of that, he added, is to give the states more authority.
“The heart of it is to cut the shackles off the states,” he explained, so they can “go out there and make sure we’re actually doing good oversight at the state level.” Introduced last summer, S.1883 is awaiting action by the Finance Committee.
Humana vice president Patrick O’Toole testified before the committee about his company’s efforts to ensure that its agents are acting appropriately, and he offered several recommendations to the committee to address the problems being experienced in the market, among them establishing an database of agents and the complaint made against them by the department of Health and Human Services and the setting of a fixed and level commission on Medicare Advantage plans.
Humana is working with CMS, he said, adding “there should be no tolerance for sales tactics that do not meet the highest standards of ethical conduct.”
However, O’Toole declined to answer a direct question from Wyden about whether he would support S.1883, saying he would provide a written answer later, and that he believes CMS and the states, through a memorandum of understanding, “can achieve the same outcome.”
Wyden said he “looks forward” to seeing the written response and questioned the proposals put forth by O’Toole.
“There are recommendations about keeping the states out of the serious enforcement business,” he said. “That’s not going to cut it.”
Demonstrating the problems facing the Medicare Advantage market was George Harper, a senior from Arkansas who told the committee he had been subjected to an aggressive agent, signed up for a Medicare Advantage plan without giving his authority for the change to be made, and was not even aware he had been put into the plan until he sought care form a medical provider.
“All it is are false statements, misrepresentations” he said, noting that the salesman who came to his home said he was “from Medicare.”