- Health Insurers Stop Marketing Some Medicare Plans
- July 2, 2007 | Authors: Jeffrey S. Edelstein; Linda A. Goldstein
- Law Firm: Manatt, Phelps & Phillips, LLP - New York Office
Some health insurers are suspending marketing of some U.S. government health plans after complaints that unscrupulous agents were duping elderly Americans into buying the coverage.
The companies made the decision voluntarily while they work with the government to stop agent misconduct and improve reporting of problems, the Centers for Medicare and Medicaid Services said on June 15, 2007.
Insurers are suspending sales of private “fee-for-service” plans that account for about 20 percent of Medicare Advantage, a $60 billion-a-year U.S. program that offers privately run health insurance to the elderly. Congress is considering cutting payments for Medicare Advantage, which costs about 12 percent more than government-administered Medicare benefits.
The Senate panel heard testimony that health insurance agents tricked elderly customers into buying Medicare Advantage policies that they couldn’t afford, cutting off access to their doctors. Agents also forged signatures, signed up the dead, and enrolled mentally disabled people without consulting their guardians, state insurance officials said.
The ban on marketing will have little effect on sales because the open enrollment period for Medicare beneficiaries to switch plans or enroll in Medicare Advantage runs from November 15 through the end of December. Insurers are expected to meet new guidelines for better marketing practices by October 1, according to the statement released by Medicare.
Medicare Advantage provides health care to 7.5 million of the 43 million people in Medicare. Private fee-for-service plans are the fastest-growing part. Enrollment increased 72 percent to 1.3 million members in February 2007 from 774,000 in July 2006. This year, Medicare was budgeted to spend about $440 billion.
The companies include Wellcare Health Plans Inc. of Tampa, Florida; Universal American Financial Corporation of Rye Brook, New York; Coventry Health Care Inc. of Bethesda, Maryland; Blue Cross/Blue Shield of Tennessee; and Sterling Life Insurance, a subsidiary of Aon Corporation of Chicago, according to a statement by the Medicare program.
State insurance officials testified that they had little to no authority to address complaints regarding the marketing practices of Medicare Advantage carriers. And they said federal officials did little to stop the abusive sales practices. Senator Herb Kohl, D-Wisc., who is chairman of the committee that held the hearings, said he would work with the National Association of Insurance Commissioners to pass a law expanding state authority over insurance sellers.
Medicare received 2,700 complaints about Medicare Advantage from beneficiaries in the five months ending in April, most of them regarding the fee-for-service plans, said Abby Block, director of the Center for Beneficiary Choices, part of Medicare.
Like traditional Medicare, the fee-for-service plans don’t limit recipients to a network of doctors and hospitals. They generally don’t offer benefits such as dental and eye care, extras frequently provided in other Medicare Advantage plans. The plans sometimes carry lower monthly premiums than regular Medicare, although benefits may not be the same as those offered by the government insurance program.
Under the agreement announced last week, the suspension on marketing will be lifted when a company meets certain guidelines. Sales materials will have to remind beneficiaries that not all providers may accept the plan. Insurers must make information easily available to medical providers, and beneficiaries interested in enrolling must be contacted to make sure they understand the plan’s rules.
Significance: Consumer health advocates applauded the move as a positive development although they pointed out that the ban would have little impact on the companies’ bottom line, since virtually all sales of fee-for-service plans occur at the end of the year. Regardless, the ban sends a signal to unscrupulous sales agents that they will no longer be able to conduct business as usual.