With so many Medicare Advantage and Part D plans to choose from, beneficiaries are often overwhelmed and confused with the options, how to find the best combination of prescription and medical benefits for their individual needs, and how to navigate the cost sharing arrangements that vary for each plan. This dizzying array of choices differs dramatically from Original Medicare which offers the same benefits and cost-sharing for all beneficiaries. For example, beneficiaries in Los Angeles County alone have over 106 health plan options for 2007. This includes:
- 55 stand alone prescription drug plans (PDPs)
- 36 ‘health plans’ (29 of which offer Part D coverage):
- 2 regional PPOs
- 1 local PPO
- 24 local HMOs (2 with no Part D coverage)
- 2 local HMOs available in only parts of the county
- 6 Private-Fee-For-Service (PFFS) plans (4 with no Part D coverage)
- 1 Medical Savings Account (MSA) (prohibited from offering Part D)
- 15 Special Needs Plans (SNPs)
Navigating these choices are not only confusing to beneficiaries, but also to sales agents who receive little training on how the products they sell work and affect enrollees’ health care. Instead, sales agents receive more thorough ‘training’ in the benefits/incentives of selling certain MA products. (More details on this to come in the next California Health Advocates/Medicare Rights Center Issue Brief). Agents may often gloss over basic selling points and focus on the incentives for selling these plans which in many cases is the bulk of the information they receive in training.
Because companies who sell the whole gamut of Medicare products (i.e. they have HMOs, PPOs, PFFS plans, stand-alone Part D plans, and Medigap polices) receive the largest Medicare reimbursement rates for their PFFS plans, they are pushing hard for enrollment into these plans. Agents’ commission varies depending on the type of plan they sell and the highest commissions are given for PFFS plans, often five to six times higher than other plans. For example, average commissions for PDP plans are $60-80 per plan while average commissions for PFFS plans from the same company are $400-$500. The bonus points and contests mentioned above are often offered in addition to this high commission.
While the Centers for Medicare and Medicaid Services (CMS) allows this variation in commissions, advocates fear and are seeing that this situation is creating an environment ripe for abuse. Besides friends and family, sales agents are often beneficiaries’ top source of information when choosing how to supplement their Medicare and/or what kind of Part D plan to buy. In this scenario, agents can easily encourage beneficiaries to enroll in a PFFS plan without consideration as to whether that is really their best choice. In other cases, consumers have found that they were enrolled in a company’s PFFS plan when in fact they thought they were enrolling in either that company’s Medigap plan or stand-alone PDP. Also, sometimes when people call for information on a company’s PDP, they are sent materials on their PFFS plan instead.
Another disturbing trend is that agents are targeting dual eligible beneficiaries and populations with limited English proficiency. Because people with both Medicare and Medicaid (Medi-Cal in California) have the right to switch MA and Part D plans on a monthly basis (as opposed to the general population which is for the most part has limited times they can enroll into a new plan), agents can market PFFS plans to them year round. With this population, they are not limited by the Annual Coordinated Election Period (November 15 – December 31) and the MA Open Enrollment Period (January 1 – March 31). [Note: With the new limited open enrollment period (L-OEP), people in the original, fee-for-service Medicare program have one opportunity during the year in 2007 and 2008 to enroll in a Medicare Advantage-only plan (meaning an MA plan without Part D coverage). This new enrollment period means that agents can also market to this population year round as well.
Again these PFFS plans are being aggressively marketed to this dual eligible population without any consideration to the consequences of enrollment – mainly being that many of these beneficiaries’ providers do not accept PFFS plans. For example, in Alameda County, one agent went to a federally-subsidized senior housing complex with mainly limited English proficient Chinese Americans and gave a presentation with no CMS-approved language appropriate materials. In his English presentation, he stated that with the PFFS plan the residents could see any doctor they wanted, would get extra coverage for eyeglasses and hearing aids (which they don’t need as they can get these benefits from Medi-Cal), and would receive $20/mo. in ‘personal care extras.’ Forty-four of these LEP Chinese American residents enrolled into the plan that day only to find that many of their doctors and the County Hospital (Highland) does not accept the plan. (For more information on this case, see Bay Area Legal Aid’s complaint to CMS.)
While Program Managers with the Health Insurance Counseling & Advocacy Program (HICAP) have met with a company representative about this agent’s actions and numerous others like it, no definitive action from the company has yet been taken to correct the situation.
Who oversees plan and agent conduct?
While CMS has certain marketing standards that plan sponsors and their agents must follow, CMS largely relies on plans to provide their own oversight and enforcement of these standards. At the state level, under state law the California Department of Insurance (CDI) handles complaints about insurance companies, and the Department of Managed Health Care (DMHC) handles complaints about managed care plans. Yet, both the CDI and DMHC have essentially no authority in regulating Medicare MA and Part D plans. Congress stripped them of their authority which effectively deregulates these companies and their Medicare insurance products. Federal law preempts state regulation and enforcement. Therefore, beneficiaries cannot rely on state regulatory agency assistance when encountering a problem with a Part D or MA plan. Instead, they must go through Medicare, who often times sends them back to their plans for resolution.
States do, however, still have licensing authority over agents who sell Part D products. CMS requires Part D plans to use licensed agents to market their plans when a state requires licensing for such an activity, as California does. Yet, as stated in the paper, After the Goldrush: the Marketing of Medicare Advantage and Part D Plans: “There is one practical gap, however, when a state agency with authority over the seller of an insured product under Part D is faced with determining if and when the state’s rules have been violated when the sale involves a product not approved under state law or is written by a company that has a federal waiver from state licensure. Even when a company is licensed, the state has no jurisdiction over the product and often no clear understanding of how that product delivering a public benefit works, or how and when a sale is inappropriate according to federal regulations.” Without having a clear understanding of the product and its federal regulations, the CDI or DMHC is inadequately equipped to determine if a violation has occurred.
In addition, CMS has no process or system that companies selling MA and Part D plans must use to deal with the misconduct and/or abuses of their agents. Each plan is expected to devise their own ways to deal with these situations.
Many advocates feel that the lack of oversight and regulation on these plan sponsors and their agents is unacceptable. One way to encourage policy change is to bring this situation to the media and to the general public. California Health Advocates and Medicare Rights Center published the above mentioned paper, After the Goldrush: the Marketing of Medicare Advantage and Part D Plans, which has generated a high volume of press coverage. It also contains a comprehensive set of recommendations to both Congress and CMS. In addition, California Health Advocates and the National Senior Citizens Law Center (NSCLC) publicize these marketing abuse issues in their Low-Income Advocate Alerts, and are continuing to collect stories from beneficiaries and advocates in their efforts to promote change.
Complaints regarding agent or plan marketing abuse or misconduct should be reported directly to California Health Advocates’ Senior Medicare Patrol (SMP) project. Advocates and beneficiaries can either call or email Julie Schoen or Anne Gray, SMP Project Director and Project Community Outreach Coordinator respectively at 714-560-0309 and
firstname.lastname@example.org and email@example.com. The SMP project logs complaints into SmartFacts, which is the nationwide reporting system, and forwards them on to the appropriate Medicare Integrity Partner. For general non-fraud or abuse complaints, report these first to 1-800-Medicare. If there is insufficient resolution, report the complaint directly to CMS Region IX at 415-744-3501 (tel) and 415-744-3517 (fax). For quality of care complaints such as in HMOs, hospitals or skill nursing facilities, contact Lumetra, California’s Medicare Quality Improvement Organization (QIO), at 415-677-2000 or fax at 415-677-2195.