Medicare Advantage Growth Faces New Hurdles

The Centers for Medicare & Medicaid Services recently proposed a series of new marketing and sales rules for Medicare Advantage and Prescription Drug plans. The intent of the new standards is to provide added protections to seniors from abusive or misleading Medicare sales practices. The result would mean significant changes in the way Medicare Advantage plans could approach prospective customers,

New rules

The proposed rules, if enacted, would severely limit company and agent interaction with seniors. They will impact everything from marketing plans and sales projections to advertising and distribution channel management.

CMS is mainly targeting 5 areas of marketing and sales with the proposed rules. (See chart.)

It is widely believed that complaints about unscrupulous and over-aggressive sales agents are the main impetus behind these new rules. CMS has heard complaints about “bait and switch,” inappropriate cross-selling and other hard-sell tactics.

It is reported that CMS has a strong desire to activate these new rules for the upcoming open enrollment period. While this timeframe is tight given the required comment and waiting periods, MA and PDP plans must prepare for the possibility that these new rules could be implemented in October 2008. Nobody is saying it will happen … and nobody is saying it won’t.

Don’t wait

Health plans cannot afford to just wait and hope the implementation gets stalled. The enrollment results of an entire MA and PDP selling season could be at risk. Smart Medicare executives will not want to be caught unprepared in October. Now is the time to formulate a revised marketing and sales strategy.

But what strategy will work under the new rules? That’s a good question, especially since the exact rules and precise wording are not yet decided. The only thing certain is that unsolicited contact, whether in person or over the phone, would be severely limited under the new rules.

For MA and PDP sponsors, one thing becomes more important than ever in this time of uncertainty–lead generation. One of the most practical and predictable methods to generate leads is direct response. Whether through mail, TV commercials, infomercials, radio or Internet, direct response “done right” can generate immediate consumer interaction … leads, leads, leads!

Effective direct response can take up the slack if new rules shut down other sales practices. Execution must be balanced and laser-focused, grounded in several key DR principles:

–Customer data must be segmented for maximum targeting.

–Creative messaging must contain a strong qualifier, persuasive product detail and a compelling call to action.