State officials soon will ask Congress to grant them more regulatory authority over the marketing of private Medicare drug benefit and Medicare Advantage plans to respond to continuing complaints of aggressive marketing practices, the New York Times reports. In a draft report by the National Association of Insurance Commissioners, state officials propose creating a set of marketing standards for private Medicare plans that states, if they adopt them, would enforce.
The report says that the "current federal regulatory framework does not adequately protect consumers from marketing and sales abuses." It also says that states cannot help the beneficiaries who register complaints or hold insurance companies accountable because doing so is under the jurisdiction of the federal government. States currently are permitted to regulate insurance agents and brokers who market private Medicare plans, but they generally are not permitted to regulate the insurance companies who do so, according to the Times. According to the report, this creates "a bifurcated regulatory system" between states and CMS that confuses consumers.
According to the report, the rate CMS pays to MA plans -- 13% higher on average than traditional Medicare -- creates a "tremendous incentive" for insurers to market the plans aggressively. Some insurers pay higher bonuses or commissions to agents for selling MA plans over other plans. "State insurance regulators and consumer groups feel very strongly that these financial incentives have resulted in significant agent misconduct ranging from unsuitable sales to outright fraudulent activity," the report says.
The report makes several recommendations for new private plan regulations, including: