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Medicare Keeps Bad Marketer Penalty Out of 2023 Rules

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What You Need to Know

  • The proposal could increase Medicare plan issuers' total average 2023 revenue by about 8%.
  • CMS wants to cut the grades of plans with many enrollees who end up with coverage canceled retroactively because of marketing complaints.
  • The agency says it may introduce the bad broker penalty proposal through the formal rulemaking process.

Medicare program managers still want to crack down on Medicare plans that use bad agents, brokers and sales reps to sell coverage — but they left an extra marketing penalty out of the new set of rules for 2023 coverage.

The Centers for Medicare and Medicaid Services said that adding the new bad marketer penalty would be a major change in program. To make such a big change, CMS will have to propose the change through a formal rulemaking process, officials said.

CMS officials talked about the bad marketer penalty proposal when they released the final version of the 2023 Medicare plan payment policy announcement.

The announcement affects issuers of ordinary Medicare Advantage plans, Medicare Part D prescription drug plans and some other types of Medicare plans.

This is the first Medicare payment policy announcement developed entirely by the administration of President Joe Biden.

Private Medicare Plans

The Medicare Advantage program gives private insurers a chance to use a combination of federal money and enrollee premiums to provide what amounts to an alternative to traditional Medicare coverage.

The Medicare drug plan gives private insurers a chance to use federal money and enrollee premiums to provide prescription drug coverage.

About 29 million of the 64 million people enrolled in Medicare have Medicare Advantage plan coverage, and 48 million have Medicare drug coverage.

CMS officials said in February, when they released a draft version of the 2023 announcement, that the base level of federal support for Medicare Advantage plans will increase 4.75% in 2023, and that the issuers’ average total revenue should increase by an average of about 8%.

Health insurers are happy with the current 2023 payment rules.

Mary Beth Donahue, president of the Better Medicare Alliance — a group that includes health insurers and other individuals and organizations with an interest in private Medicare plans — said that the group is continuing to review the payment announcement details, but that the announcement “puts beneficiaries first and ensures stability and continuity of care” for Medicare Advantage enrollees.

Matt Eyles, president of America’s Health Insurance Plans also praised the announcement.

“We appreciate that with this final rate notice, the administration continues to support innovation and flexibility in Medicare Advantage, to improve affordability, access, and value for enrollees and taxpayers,” Eyles said.

But Eyles noted that CMS is drafting regulations that could affect 2023 Medicare plan rules, such as prescription pricing rules.

“We urge CMS to swiftly re-evaluate the substance and timing of these proposals, as 2023 Medicare Advantage plan designs are being finalized now in advance of the June 6 deadline,” Eyles said.

The Bad Marketing Penalty

CMS has developed a 5-star quality rating program for Medicare plan issuers, and it ties federal payment levels to plans’ star ratings.

The agency already imposes a star-rating penalty when consumer complaints about marketing problems could lead to actions, such as coverage changes, in the future.

The agency has proposed a second penalty for marketing complaints that lead to retroactive cancellations of coverage and other retroactive actions.

In the draft notice, officials suggested that the extra bad marketing penalty could have reduced the 2021 star ratings of Medicare Advantage issuers that offered prescription drug coverage by an average of 24%.

Most commenters opposed the addition of the new bad marketing penalty, according to CMS officials’ summary of the comments.

“Some commenters raised concerns about the nature of these complaints, suggested that all of these complaints should not be attributed to the plans, and noted that low enrollment plans may be disproportionately impacted,” officials said. “Other commenters supported this update to hold sponsors accountable for complaints resulting from marketing misrepresentation.”

Officials said that they would have to go through a formal rulemaking process to add the extra bad marketing penalty. They did not say whether or not they would propose the addition of the penalty.

What It Means

Medicare plan marketing rules could still end up being relatively stable in 2023, and the supply of plans could be strong, in spite of reports that some issuers thought overly aggressive competitors might be underpricing coverage.

(Image: Adobe Stock)