States May Get Tougher on Health Insurance Marketers

States may expand the Unfair Trade Practices Act to include health insurance lead generators — entities that locate prospects without actually selling health insurance.

The Improper Marketing Health Insurance Working Group — an arm of the National Association of Insurance Commissioners — is debating act amendments.

What It Means

Regulators may change how Medicare plan sellers court your clients.

One question is whether any new requirements could apply to you.

The Background

Marketing organizations attracted regulators’ attention with Medicare plan TV ads featuring celebrities like Joe Namath and what critics said were misleading descriptions of Medicare plan options.

The Centers for Medicare and Medicaid Services, the federal agency that oversees Medicare, now requires marketers to add disclaimers about their product menus and record telephone calls with consumers. The new “third-party marketing organization” rules, or TPMO rules, apply to traditional agents as well as to the marketers that run the TV ads.

The NAIC working group cannot directly change states’ Unfair Trade Practices Act rules, but states could use any model update the NAIC adopts to update their laws and regulations.

The Debate

The current NAIC working group draft would apply to an entity that “publicizes the availability of what is, or what purports to be, a health insurance product or service that the entity is not licensed to sell directly to consumers.”

Rhode Island regulators and people appointed to represent consumer interests at the NAIC want to add a reference to “independent agents and brokers, who are compensated to perform lead-generation, marketing, sales and enrollment-related functions as a part of the chain of enrollment.”

America’s Health Insurance Plans, the American Council of Life Insurers and the National Association of Health Underwriters hope to narrow the scope of the update.

AHIP says the provision should exclude newspapers and television stations.

NAHU wants to exclude insurance companies and insurance producers.