The head of the Centers for Medicare and Medicaid Services on Feb. 13 promised swift action on the problems of abusive and aggressive sales practices in private Medicare Advantage plans.

Acting CMS administrator Kerry Weems told the Senate Finance Committee that new administrative guidance will be unveiled “in the coming weeks” and would address areas such as contact between agents and beneficiaries and information-sharing between CMS and state regulators regarding agents.

The problem of sales practice was highlighted during a prior Finance Committee hearing, and the committee’s chairman, Max Baucus, D-Mont., opened the hearing by noting that three witnesses had testified to the abusive sales practices being used in the market, and questioning if simple guidance would be enough.

“All three witnesses shared the same story,” he said. “Private plans and their agents are pushing private Medicare plans using methods that are aggressive, and too often, abusive or fraudulent. CMS guidelines are just not enough to stop the abuses.”

Weems said CMS has already undertaken other measures to ensure fair sales practices are being used, including a “secret shopper” program that he has personally taken part in. CMS auditors, he said, were present at 240 marketing events sponsored by 30 different plans across 39 jurisdictions, and identified 696 violations.

“CMS took swift action to address high risk issues and help prevent further deficiencies,” Weems said, adding that one plan was placed under a marketing and enrollment freeze throughout the 2007 open enrollment period while two others were subjected to Corrective Action Plans. To illustrate the effectiveness of the program, Weems said he attended a marketing event in Virginia where an attendee questioned why the plan would call them to confirm their decision to join it, and that the agent responded that “we know CMS is watching.”

However, Baucus countered that the actions taken by CMS to date have not been enough. He noted that a representative for Humana, one of the largest plan sponsors, offered recommendations for additional action by CMS at an earlier hearing which he told Weems was “a signal that you’re not doing enough” to combat the problem.

“We’re not getting complaints from plans saying ‘Hey get CMS off our backs,” Baucus said. “In fact it’s just the opposite.”

Weems countered that CMS is still formulating the guidance it plans to release in the near future, adding that plans seeking more oversight “will likely get their wish.”

Another issue raised during the hearing was the idea of allowing state regulators to oversee the marketing practices of agents selling private Medicare Advantage plans, and the legislation that would enact the change, S. 1883.

In response to a question from Sen. Ron Wyden, D-Ore., Weems said CMS and the Bush Administration might not agree with every aspect of the bill, “but we support the spirit of S. 1883.”

However, he added that giving the states some enforcement power will come with a degree of costs, and that CMS has already been given short shrift in the budgeting process and received a 2008 appropriation that was $170 million below the president’s budget request. “This kind of help isn’t going to come for free, and we might consider giving CMS what it is asking for first before taking these other measures,” he said.

The most common regulatory comparison at the hearing was with Medi-Gap plans, the marketing of which operate under a system similar to what S. 1883 would create for Medicare Advantage. Weems pointed to a key difference between the two. “Medi-Gap plans are uniform plans, and therefore much easier for states to regulate,” he said. In contrast, he said, states would have to deal with numerous different Medicare Advantage plans that have different benefits and different cost sharing structures. Additionally, Weems expressed concern that plans would find it too difficult to operate under a “variety” of regulatory schemes from state to state.

The most contentious moments of the hearing, though, did not even deal with Medicare Advantage, but instead with the Children’s Health Insurance Program, or CHIP, and a directive issued by CMS making it more difficult for states to insure children in families with annual income beyond 250% of the federal poverty level.

Sen. John Rockefeller, D-W.Va., took Weems to task, saying that issuing guidance in that manner “went well beyond the intent of Congress, and the law.”

“You know it, [Health and Human Service Secretary Michael] Leavitt knows it, and I’m sure that the President doesn’t know it and wouldn’t be interested if he was told,” Rockefeller added.

Weems responded that CMS “took this action because we believe we had the authority to do so,” and added that it is not uncommon for CMS to issue guidance through letters rather than a formal process.

Later in the hearing, Rockefeller asked Weems if he had ever “seen poverty” and if he’d been to West Virginia. Weems said he had seen poverty, and had been to West Virginia, explaining that he had recently driven through the state. Rockefeller wondered aloud if Weems did so on his way to the Greenbrier, a luxury resort in White Sulpher Springs, where many conferences take place.

“I’ve never been to the Greenbrier, sir,” Weems responded.