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.