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Marketing Complaints May Hurt Medicare Plan Grades More in 2023

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What You Need to Know

  • Star ratings affect how much cash Medicare plans get from CMS.
  • CMS already has one measure for consumer complaints about plan marketing in the plan star ratings, and it wants to add a second measure, for complaints that could lead to retrospective disenrollments.
  • Many traditional, brick-and-mortar agents have expressed concerns about some of the big, national Medicare plan marketing campaigns.

Managers of the Medicare Advantage and Medicare Part D prescription programs want to hit the plan issuers’ “star rating” grades harder when consumers say plan marketers lied to them.

The Centers for Medicare and Medicaid Services has proposed adding a second measure for Medicare Advantage marketing problems to the plans’ star ratings.

CMS officials say they tried applying the proposed measure to a batch of plan star ratings for 2021 coverage and found that the measure would have cut 24% of the star ratings for Medicare Advantage plans that offer prescription drug coverage.

In theory, the proposal could hit insurers with a large number of consumer complaints about marketing hard, because CMS pays plans with high star ratings more, and consumers may be more likely to choose plans with high star ratings.

CMS included the Medicare plan grade marketing penalty proposal in a short section in an advance notice that describes how Medicare plan programs might work in 2023.

The Centers for Medicare & Medicaid Services is predicting in the new 2023 Advance Notice packet for the programs that issuers’ 2023 base level of federal support will increase by 4.75%, and that their average total revenue will increase by an average of 7.98%.

Mary Beth Donahue, president of the Better Medicare Alliance, a group that represents insurers and other groups and individuals that support the Medicare Advantage program, said in a comment on the advance notice that the alliance sees the document as a “thoughtful proposal.”

The proposal “will help ensure stability for the millions of diverse seniors and individuals with disabilities who count on Medicare Advantage,” Donahue said.

Medicare Plan Background

The Medicare Advantage program gives insurers a chance to sell health plans that look to the insured like an alternative to traditional Medicare coverage.

The Part D prescription drug plan program lets insurers sell subsidized drug coverage to Medicare program enrollees.

About 29.5 million U.S. residents with Medicare coverage have Medicare Advantage plan coverage, and 48 million have Part D drug coverage.

Marketing Penalty Proposal Details

CMS already includes a measure for complaints in the category of “plan lead marketing misrepresentation: allegation of inappropriate marketing by plan, plan representative, or agent/broker” in Medicare plans’ star ratings.

The new measure would have the title “CMS lead marketing misrepresentation: allegation of inappropriate marketing by plan, plan representative, or agent/broker.”

CMS officials say the current measure marketing problem involves complaints by consumers who want to be able to change their coverage or make other changes in the future.

The new measure would involve complaints from consumers who want CMS to cancel their coverage retroactively as well as consumers who want to make changes in the future.

CMS would develop separate regulations for the new marketing penalty, and it would likely keep both the old measure and the new measure in place during a transition period, officials say.

The proposal could divide Medicare plan sellers.

Several organizations now generate market Medicare plan leads through high-profile advertising campaigns, and some traditional retail agents and brokers buy leads from those organizations.

Some of those producers, and many producers that use other marketing channels, have suggested that some of the advertising campaigns give consumers an unrealistic idea of the kinds of benefits that typical Medicare Advantage plans offer.

(Image: Adobe Stock)