Continuing Abuses Concerning the Marketing of Medicare Plans

Honorable Pete Stark
House of Representatives
239 Cannon Building
Washington, D.C. 20515

Via U.S. Mail and e-mail

Re: Continuing Abuses Concerning the Marketing of Medicare Plans

Dear Congressman Stark:

The undersigned organizations are writing to apprise you of continuing abuses that we are encountering concerning the marketing and sale of Medicare Advantage and Part D plans in California, and across the country. While we acknowledge that the Centers for Medicare and Medicaid Services (CMS) has taken some positive steps to address some of these concerns, we believe that much more needs to be done to stop these abusive practices. In particular, we respectfully request that Congress analyze: 1) the marketing of Medicare Advantage Private Fee for Service (PFFS) plans to individuals dually eligible for Medicare and Medicaid; and 2) the commission structures that plans pay agents for selling Medicare products.

CMS Actions

We would like to acknowledge that CMS has recently identified the need to improve beneficiary protections with respect to the marketing of Medicare products, as evidenced in their proposed enhanced oversight measures outlined in the Draft Call Letter to plan sponsors for 2008. While we support some of these efforts, including CMS’ development of disclaimer language for all marketing and enrollment materials as well as sales presentations, and mandating training of agents and brokers marketing PFFS plans, we understand that plan sponsors have already objected to some of these changes in their comments to the Call Letter. CMS has indicated to us that they plan to implement some of these changes, but we cannot be sure which additional oversight measures to curb marketing abuses will ultimately be put into practice. Attached are Joint Comments to CMS’ Call Letter submitted by several consumer organizations which outlines some of the areas in which we believe CMS can further improve its oversight.

Marketing of PFFS Plans to Dual Eligibles

We continue to see a disturbing trend of plan sponsors and their contracting agents marketing PFFS plans to dual eligibles, although enrollment in a PFFS plan appears to offer little, if any, tangible benefit to dual eligibles. Conversely, enrollment in a PFFS plan can leave, and, in many cases, has left, dual eligibles worse off by creating access to care issues, including loss of providers. Despite repeated requests to CMS and plan sponsors, we have been given little information about how the benefits offered to duals in PFFS plans are better or more comprehensive than what dual eligibles are already entitled to under Original Medicare and Medicaid (beyond statements such as they will receive “rich, incremental benefits” beyond Medicaid’s). We would like to see a direct comparison between benefits offered by PFFS plans and those available through state Medicaid programs. In addition, we have we been unable to get meaningful answers about how and whether state Medicaid programs pay cost-sharing for duals enrolled in these plans, what liability duals have for plan copayments when the provider is not participating in the state’s Medicaid program, and how both enrollees and providers are educated about this process. Individuals who counsel Medicare beneficiaries, including the State Health Insurance Programs (SHIPs), need such information in order to assist dual eligibles and other Medicare beneficiaries in making informed choices about plan enrollments.

As you are aware, Bay Area Legal Aid recently copied you on a letter to CMS concerning the inappropriate sale of the WellCare Duet plan (a PFFS product) to dual eligibles in the Bay Area. These inappropriate sales are occurring across California and the country. Agents continue to flaunt CMS marketing rules – and avoid CMS’ “secret shopper” scrutiny – by making unscheduled, unsolicited visits to senior residences, including subsidized housing, similar to the facility discussed in BayLegal’s complaint. We continue to receive reports of improper unsolicited door-to-door visits as well as mass enrollments over short time periods at such facilities. In order to curb this practice, we call for prohibitions against marketing in these facilities, particularly in facilities with large numbers of low income, vulnerable dual eligibles. Unless these plans can prove they provide better and more comprehensive benefits than those currently available through state Medicaid programs we also call for a ban on marketing these plans to dual eligibles.

With respect to the suitability of these plans for dual eligibles, in addition to meaningful comparisons with Medicaid benefits, we would be interested in obtaining information about PFFS plan enrollment and subsequent disenrollment rates among dual eligibles in California and elsewhere – particularly with respect to the WellCare Duet plan.

Commissions Paid to Agents

Based upon our collective experiences with cases of marketing misconduct associated with the sale of Medicare products, we believe that higher commissions paid for enrolling beneficiaries in PFFS plans in particular (and Medicare Advantage plans in general) have rewarded overly aggressive and unscrupulous behavior by agents, resulting in real harm to beneficiaries. Plans and agents that steer people towards PFFS plans may be driving up costs borne by the Medicare program since PFFS plans are currently reimbursed at a higher rate than other plans. All Medicare beneficiaries are therefore subsidizing PFFS plans, whether or not they are enrolled in one. During conversations with CMS, however, we were informed that CMS believes that it is unable to further regulate commissions paid by Medicare Advantage plans to agents and brokers. We would be interested in an examination of the commission structure and rates (both initial and annual renewal rates) that are paid for Medicare Advantage plans – particularly PFFS plans – versus commissions paid for Medicare Supplemental Insurance policies (Medigaps), and the relative impact on the sale of such products. Because enrollment in PFFS plans raise costs to Medicare, commission structures that create incentives for sale of PFFS plans over unsubsidized Medigap plans may bear scrutiny under anti-kickback and fraud and abuse statutes.

We would be happy to share more of our experiences and ideas for improving plan and agent oversight. Thank you for your attention to these important issues.


David Lipschutz
California Health Advocates

Vicki Gottlich
Center for Medicare Advocacy, Inc.

Paul Precht
Medicare Rights Center

Kevin Prindiville
National Senior Citizens Law CenterMarc Steinberg
Families USA

Cc: Honorable Nancy Pelosi, Speaker, United States House of Representatives
Honorable Henry Waxman, Member, United States House of Representatives

Karen Joy Fletcher

Our blogger Karen Joy Fletcher is CHA’s Communications Director. With a Masters in Public Health from UC Berkeley, she is the online “public face” of the organization, provides technical expertise, writing and research on Medicare and other health care issues. She is responsible for digital content creation, management of CHA’s editorial calendar, and managing all aspects of CHA’s social media presence. She loves being a “communicator” and enjoys networking and collaborating with the passionate people and agencies in the health advocacy field. See her current articles.