Medicare Follows Congressional Directions to Clamp
Down on Insurance Company Marketing
News rules aimed at protecting seniors from
‘deceptive or high-pressure marketing tactics’
Sept.
16, 2008 – There should be a lot more meat and a lot less sizzle in the
pitches tossed at senior citizens this year by insurance companies
selling Medicare prescription drug or Medicare Advantage plans. The
Centers for Medicare & Medicaid Services yesterday released final
regulations – some mandated by Congress – aimed at protecting seniors
from “deceptive or high-pressure marketing tactics.”
The regulations also include other non-marketing
related Medicare Advantage and prescription drug plan (PDP)
provisions.
The
two regulations include prohibitions on telemarketing and other
unsolicited sales contacts. The new rules also prohibit financial
incentives that could encourage agents and brokers to maximize
commissions by inappropriately moving, or churning, beneficiaries from
one plan to another each year. Plans must be in compliance with these
provisions when they begin their marketing activities on October 1.
“The
regulations give insurers bright-line guidance on what types of
marketing activities are acceptable and what types are not acceptable,”
said CMS Acting Administrator Kerry Weems. “Medicare beneficiaries can
be assured that we will monitor marketing activities and move
aggressively with enforcement measures or other actions if these rules
are violated.”
Weems emphasized CMS efforts that will build upon
the success of past marketplace surveillance program activities to
ensure that drug plans’ and health plans’ marketing practices reflect
the new requirements.
Kaiser analysis finds insurers spent more than twice
as much for Medicare Advantage than for stand-alone drug plan ads
Sept. 16, 2008 – As the marketing period for 2009 Medicare plans nears,
a new Kaiser Family Foundation study finds that insurers last year
placed three times more advertisements to promote Medicare Advantage
plans than they did to promote stand-alone Medicare drug plans.
The Centers for Medicare & Medicaid Services also issued new regulations
today the add new restrictions to insurance company marketing of
Medicare Advantage and drug plans.
Read more...
Surveillance will include:
● tripling the number of “secret shopper”
activities in which a Medicare official poses as a prospective enrollee
and monitors sales agents’ presentations for inaccurate information and
prohibited sales tactics;
● reviewing plans’ local print and broadcast
advertisements;
● reviewing recordings of enrollment calls to
ensure compliance with the new regulations; and
● ensuring that health and drug plans detect,
report, and respond to agent/broker marketing misrepresentation and
other issues.
During last year’s open enrollment period, CMS’
marketplace surveillance activities included secret-shopping 300 sales
and marketing events. As a result, three organizations were required to
develop corrective action plans and one organization’s marketing
activities were suspended. Other plans with lesser deficiencies
received warning letters, CMS reported.
“The vast majority of beneficiaries are extremely
pleased with their prescription drug and Medicare Advantage plans and
have not encountered heavy-handed sales tactics,” said Weems.
“CMS takes its enforcement role very seriously,
however, and we will monitor activities throughout this year’s
enrollment period to ensure that beneficiaries are protected from
aggressive marketing behavior from agents and brokers.”
One regulation makes final several marketing
revisions to the Medicare Advantage and Part D Prescription Drug
Programs Proposed Rule that CMS issued on May 16.
In July, Congress codified similar marketing
restrictions in the Medicare Improvements for Patients and Providers Act
of 2008 (MIPPA). The provisions prohibit:
● Providing meals to beneficiaries as part of
marketing activities;
● Telemarketing, door-to-door solicitation, and
other sales contacts made without a beneficiary’s express invitation;
● Cross-selling of non-health care related
products during any sales, marketing, or presentation for an MA plan or
PDP;
● Conducting sales presentations or distributing
and accepting plan applications in provider offices or other places
where health care is delivered; and
● Conducting sales activities, distributing, or
collecting applications at education events.
In addition, the regulation requires that agents
and brokers be state licensed and appointed in accordance with state
laws. The marketing provisions must be in place when plans’ marketing
activities begin October 1.
Other Provisions of New Medicare Law
CMS also issued an interim final rule that would
implement other provisions included in the new Medicare law. A key
provision specifies restrictions on how agents and brokers are paid for
signing up a beneficiary in a plan to eliminate incentives for agents or
brokers to move beneficiaries from plan to plan, a practice known in the
industry as churning.
These guidelines, designed to protect beneficiaries
from agents and brokers who may have been acting in their own financial
interest rather than meeting the needs of the beneficiary, are based on
existing industry standards for agent and broker compensation structure.
“This fall, Medicare beneficiaries will need to
compare their current plan’s offerings for 2009 against those of other
plans. As seniors compare the value and price of the plans offered, we
want them to have complete confidence in the information insurers
provide on benefits and costs of available plans,” said Weems.
“These rules, in conjunction with other regulations
CMS will issue before the annual enrollment period begins November 15,
establish tighter performance standards and tougher penalties for
non-compliance, ensuring a positive experience for beneficiaries as we
move toward the start of annual enrollment.”
Sept. 16, 2008 -
CMS on Monday issued new rules governing insurance companies, agents
and brokers regarding the marketing of Medicare prescription drug plans
and Medicare Advantage plans, the
AP/San Francisco Chronicle reports (Freking, AP/San Francisco
Chronicle, 9/15).
The new rules -- some of which were mandated by
Medicare
legislation passed earlier this year -- will take effect Oct. 1, the
first day marketing efforts for the Medicare open enrollment period that
begins Nov. 15 are allowed.
The rules will prohibit unsolicited sales pitches,
including telemarketing and door-to-door sales; meals at sales
presentations; promoting products not related to health care at sales
presentations; conducting sales presentations at physicians' offices or
other locations where health care services are provided; and attempting
to sell plans at events billed as educational (Young,
The Hill, 9/15).
In addition, commission for sales agents will be
required to conform to a structure used in other parts of the insurance
industry. First-year commission for a new customer cannot exceed 200% of
the commission for the next five years, in order to remove the incentive
for agents to "churn" beneficiaries between different plans each year
(Armstrong,
CQ HealthBeat, 9/15).
The rules also include stricter requirements for
CMS reviews of marketing materials. CMS will perform about 900 "secret
shopper" reviews of sales presentations.
CMS also will monitor print and broadcast
advertisements, listen to recorded calls between plans and customers and
verify that plans are reporting agents and brokers in violation of the
rules to federal and state authorities (The Hill, 9/15). Penalties for
violations will include fines of up to $25,000 per beneficiary affected
or potentially affected (CQ HealthBeat, 9/15).
Comments
CMS Acting Administrator Kerry Weems said, "These regulations give
insurers bright-line guidance on what types of marketing activities are
acceptable and what types are not acceptable," adding, "Medicare
beneficiaries can be assured that we will monitor marketing activities
and move aggressively with enforcement measures or actions if these
rules are violated."
According to The Hill, the Bush administration with
the rules was seeking to "allay insistent criticism for congressional
overseers and advocates for senior citizens" regarding sales practices.
Senate Finance Committee Chair Max Baucus (D-Mont.), who sponsored
the bill, said, "CMS is moving in the right direction by following the
new Medicare law's call to draw clear lines that will weed out
unscrupulous marketing agents who prey on seniors for profit. Now, CMS
must follow up and follow through for seniors in Medicare." He added
that the Finance Committee "will watch CMS to make sure the effort to
protect seniors doesn't stop here" (The Hill, 9/15).
Sept.
16, 2008 – There should be a lot more meat and a lot less sizzle in the
pitches tossed at senior citizens this year by insurance companies
selling Medicare prescription drug or Medicare Advantage plans. The
Centers for Medicare & Medicaid Services yesterday released final
regulations – some mandated by Congress – aimed at protecting seniors
from “deceptive or high-pressure marketing tactics.”
Extra payments pushed to $33 billion since 2004, will
remain significant even after payment reductions in new legislation
Daily
Report by KaiserNetwork.org