Medicare Advantage Plans are provided by an alphabet soup of insurers including, Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), Private Fee-for-Service Plans, Medicare Special Needs Plans and Medicare Medical Savings Account Plans (MSA).  The sometimes hard sell marketing tactics used by commission-based agents of the Plans has come under much recent criticism by consumer advocates and federal and state officials.

In June 2007, the government announced that seven of the leading companies in this market, including UnitedHealth, Humana and Coventry, had agreed to suspend marketing of certain Medicare Advantage plans.  Later Medicare allowed these companies to resume marketing after they took steps to more closely monitor their sales agents.

On May 8, 2008, the Centers for Medicare & Medicaid Services (CMS) issued a proposed new rule to deal with some of the perceived abuses in marketing Medicare Advantage health plans and Medicare prescription drug plans. In a statement, CMS said the proposed rule is intended to provide "enhanced protections" for senior citizens enrolled in these plans and to "strengthen marketing standards and extend additional protections to all beneficiaries including those receiving the low-income subsidy (LIS) and beneficiaries enrolled in special needs plans."

The proposed rule incorporates a number of requirements that CMS previously imposed through operational guidance.  It also introduces several new requirements for Medicare Advantage and prescription drug plans.  Included are prohibitions on door-to-door marketing and cold-calling that go well beyond what the insurance industry recently endorsed as necessary.

The new marketing standards would:

    ● Prohibit cold-calling and expand the current prohibition on door-to-door solicitation to cover other unsolicited circumstances.  Agents will be able to respond to telephone inquiries, but not make "cold calls" to potential Medicare beneficiaries.  Any appointment with a beneficiary to market health care-related products would have to be limited to the scope that the beneficiary agreed to in advance.  The proposed rule would also prohibit agents from offering annuities, life insurance and other "non-health care related products" while selling Medicare Advantage or Part D plans.

    ● Prohibit sales activities at educational events such as health information fairs and community meetings or in areas such as waiting rooms where patients primarily intend to receive health care-related services, as well as limit the value and type of promotional items offered to potential enrollees.  The rules would set a $15 limit on the value of gifts and promotional items offered to potential customers. In addition, insurers will no longer be able to follow the common practice of purchasing meals, whatever their value, for attendees of sales presentations. 

    ● Require that Medicare Advantage organizations that use independent agents to market Medicare Advantage and Part D plans use State-licensed agents for such marketing, and require that Medicare Advantage organizations report to States, in a manner consistent with State appointment laws, that they are using those agents.

    ● Require commission structures for sales agents that are level across all years and across all Medicare Advantage plan product types.  Under the proposal, the commission paid for the initial sale and first year of coverage could not exceed the commission paid for renewal of coverage in a subsequent year. Commission structures for prescription drug plans would also have to be level across the sponsors' plans.  These requirements are designed to discourage "churning" of beneficiaries from plan to plan each year in a manner that earns agents and brokers the highest commissions and would ensure that beneficiaries are receiving the information and counseling necessary to select the best plan based on their needs.

The rule also proposes new protections for beneficiaries enrolled in special needs plans (SNPs).  SNPs are a type of Medicare Advantage plan that provides coordinated care to individuals:

-In certain institutions such as nursing homes,

-Who are eligible for both the Medicare and Medicaid programs and/or

-Have certain severe or disabling chronic conditions. 

Provisions in the proposed rule would:

    ● Require that 90 percent of new enrollees in SNPs be special needs individuals, to ensure that SNPs focus on the population for which these Medicare Advantage plans are designed.

    ● More clearly establish and clarify delivery of care standards for SNPs.

    ● Protect beneficiaries from being billed for cost-sharing that is not their responsibility. 

For SNPs that target beneficiaries who are eligible for both Medicare and Medicaid, the rule would establish standards designed to ensure that those beneficiaries are able to access essential services that are available through Medicaid in addition to those benefits available through the SNP.

The rule also contains provisions to streamline eligibility determinations for extra help for low income Medicare beneficiaries.  

While the proposed rule is seen as an improvement, it does not go as far as some state officials had desired.  In particular, the proposed rule specifies that "states do not have the authority to regulate the marketing" of private Medicare plans. 

The proposed rule and related materials are available on the CMS website,  http://www.cms.hhs.gov/HealthPlansGenInfo   

For information on Special Needs Plans see "Do we know if Medicare Advantage Special Needs Plans are Special?" Kaiser Family Foundation, January 2008.

http://www.kff.org/medicare/upload/7729.pdf

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