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:
- Marketing for plans should specify the exact type of plan being offered, such as HMO or prescription drug plan, instead of labels such as "gold," "silver" or "value" plan, which do not have a standard definition of benefits;
- Agents should be prohibited from selling other products, such as long-term care coverage or life insurance, to beneficiaries at the same time they are selling Medicare plans;
- Agents should not pressure beneficiaries to buy MA plans when they ask about prescription drug plans;
- Insurance companies should register all sales agents authorized to sell Medicare plans with state regulators; and
- Agents should be required to disclose to the states bonuses and commissions obtained through Medicare plan sales.
According to the Times
, the Bush administration and health insurance groups have recognized marketing issues with privately offered Medicare plans and "have taken steps to curtail abuses." CMS sent "secret shoppers" to 240 Medicare plan marketing events last fall and found "inaccuracies and omissions" in 75% of the sales presentations. In addition, trade groups America's Health Insurance Plans
and the National Association of Health Underwriters
have developed a training program for agents who sell private Medicare plans. However, Guenther Ruch -- chair of the panel that wrote the report and chief of regulation and enforcement for the Wisconsin Insurance Department -- said, "It does not appear to us that the misconduct has been reduced much," adding, "We saw a huge uptick in complaints in the last two or three weeks of March, as the annual open enrollment period for Medicare Advantage plans was ending" (Pear, New York Times