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In response to continued complaints from Medicare beneficiaries about unscrupulous sales reps and misleading plan information, members of Congress and state insurance regulators are urging better oversight of Medicare Advantage and Part D plans. The Centers for Medicare and Medicaid Services (CMS) says it is beefing up policies and enforcing rules with more vigor.
Private plans are pushing MA sales with methods that are "aggressive and, too often, abusive or fraudulent," stated Senate Finance Committee chairman Max Baucus (D-Mont.) at hearings last month. Sales agents pretend to be Medicare representatives, and they skirt prohibitions on door-to-door sales and cold-calling.
Such marketing tactics are even more disturbing because the government pays MA plans 13% more than the cost of comparable care under the traditional Medicare program, Baucus noted. Notable misrepresentation by private fee-for-service (PFFS) plans, moreover, is fueling calls for tightening the rules governing this fast-growing but less regulated MA product.
State regulators want authority to go after violative plan sponsors and are unhappy about current rules that give CMS sole authority for regulating MA plans. This pre-emption of state regulation aims to avoid 50 different sets of marketing rules that would discourage the development of regional and national plans. But state insurance regulators claim they are better positioned than CMS to identify problems and take compliance action.
CMS Acting Administrator Kerry Weems told the Finance Committee that his office will issue more guidelines in coming weeks to address continued abuses. He expressed concern about sales commissions that encourage "churning" and described efforts to curb PFFS marketing abuses through stronger rules and an expanded a "secret shopping" program. "We're not done yet," Weems stated.
Insurers similarly seek to head off state regulation by supporting stronger federal oversight. Humana Vice President Patrick O'Toole told the Senate committee that CMS should require MA plans to adhere to state rules on agent licensing and should limit total commission compensation paid to sales reps. Humana also backs more stringent limits on cold calling and cross-selling, standardized benefit terms, and clearer comparisons of plans and benefits.
Congress may include new marketing rules in pending legislation to rescind cuts in Medicare payments to physicians. One proposal would encourage state insurance commissioners to develop standardized Medicare marketing and sales regulations and permit states to supplement CMS oversight efforts. Advocates of this approach point to similar action adopted 15 years ago to tame abuses plaguing the Medigap market. Reformers also talk of establishing select model MA plans, as was done to simplify the Medigap program.
Weems emphasized that CMS does not want to curb choices available to seniors. He said it was alright to standardize rules governing marketing practices and materials, but opposed efforts that might lead to diverse MA marketing requirements. If one state required call center reps to be licensed, he explained, that could end the ability of plans to have centralized call centers.
Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.