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The Medicare Advantage unit within the Centers for Medicare and Medicaid Services (CMS) is keeping a watchful eye on improper marketing activities in the new, revamped Medicare product market. Medicare officials at CMS have received numerous complaints about the aggressive sales tactics being used by some insurance agents and insurers in the marketing of new Medicare prescription drug plans.
The Medicare market primarily provides health insurance coverage to the senior sector (those who are 65 years and older) and the disabled. It is estimated that the new prescription drug plans will provide coverage to approximately 42 million people. The cost of these prescription drug plans largely will be covered by the federal government, but the plans will be administered by private insurers.
While CMS may sanction the insurers that provide the coverage, the regulation of agent activities is largely within the domain of state insurance departments. The sharing of these regulatory roles is somewhat awkward in that CMS establishes the rules for marketing prescription drug plans, but the states have jurisdiction over the licensing and discipline of the key marketing force-the independent agents.
CMS's stated goal for insurer marketing is the development of "accurate, consumer-friendly marketing materials that will assist beneficiaries in making informal healthcare choices." Their guidelines cover the waterfront. They deal with marketing material development and guidelines for advertising (including formatting requirements), and provide specific guidance on pre-enrollment materials, evidence of coverage and summaries of benefits, post-enrollment materials, and the permissible uses of Medicare trademarks in advertising. The guidelines also contain specific requirements with respect to co-branding; endorsements and testimonials; outdoor advertisements; drawings, prizes and giveaways; and Internet marketing. Any type of promotional activities must also comply with federal anti-kickback and rebate statutes.
The recent complaint activity may be one of those situations in which a few bad apples are spoiling the whole barrel. Insurers and their agents will obviously play an important role in explaining the new product features to the senior market. However, those insurers and agents that plan to pursue their sales efforts in an earnest manner will need to be very familiar with the marketing rules established for these programs. And these rules are as comprehensive as they come in the insurance industry.
Barry Senterfitt is a partner in the insurance industry practice of Akin Gump Strauss Hauer & Feld LLP, and is located in the firm's Austin, Texas, office.
This column is written for informational purposes only and should not be construed as legal advice.