Medicare Advantage Private Fee-for-service Plans: The Beneficiary Perspective

U.S. House of Representatives
Committee on Ways & Means
Hearing by the Subcommittee on Health
May 22, 2007
Written Testimony of California Health Advocates


California Health Advocates is an independent, non-profit organization dedicated to education and advocacy efforts on behalf of Medicare beneficiaries in California. Separate and apart from the State Health Insurance Program (SHIP), we do this in part by providing support, including technical assistance and training, to the network of California’s Health Insurance Counseling & Advocacy Programs (HICAPs) which offer SHIP services in California. California Health Advocates also provides statewide technical training and support to social and legal services agencies and other professionals helping Californians with questions about Medicare. Our experience with Medicare is based in large part on our close work with the HICAPs and other consumer assistance programs that are on the front line assisting Medicare beneficiaries.

We certainly recognize that Medicare Advantage plans can be a suitable option for some people with Medicare. The recent dramatic rise in the availability of and enrollment in a particular type of Medicare Advantage plan, private-fee-for-service (PFFS) plans, though, has come with alarming abuses surrounding their marketing and sale as well as access to care issues for many individuals once enrolled in these plans. While we have witnessed marketing abuses concerning stand-alone Part D prescription drug plans as well as other Medicare Advantage plans, the vast majority of marketing problems we have seen stem from the sale of PFFS plans.

In January of this year, California Health Advocates and the Medicare Rights Center released a report entitled “After the Gold Rush: The Marketing of Medicare Advantage and Part D Plans – Regulatory Oversight of Insurance Companies and Agents Inadequate to Protect Medicare Beneficiaries.”(1) In that report we: provided an overview of the current Medicare landscape; reviewed rules relating to marketing Medicare products; discussed advocates’ experiences with the marketing of PFFS plans to highlight agent misconduct; discussed Medicare’s oversight of Part D and Medicare Advantage plans; discussed state regulation of insurance agents; and provided recommendations for stricter oversight and accountability of plan sponsors and their agents.

In this written testimony, we revisit some of the issues highlighted in our joint report, and shed light on problems that individuals face with both abusive marketing of PFFS plans and provider access and coverage issues faced by people once they are enrolled in these plans. We also provide recommendations to: 1) address specific problems relating to PFFS plans; and 2) improve the Medicare Advantage program in general in order to better serve Medicare beneficiaries.


The confusing structure of PFFS plans, varying commissions paid to agents by plan sponsors, and the lack of adequate agent training all contribute to the epidemic of marketing abuses witnessed across the county. It is not our intent to malign all agents selling Medicare products; we have interacted with a number of honest, ethical, knowledgeable agents and brokers who go to great lengths to ensure that they serve their clients well. The problem of marketing abuses, though, is much deeper and more widespread than just a few “bad apples” as the industry argues. Instead, as discussed below, underlying systemic issues drive this growing problem of marketing misconduct.

PFFS Plan Structure

When choosing how to obtain coverage through Medicare, an individual has a range of variables s/he must consider, based upon any current coverage s/he might have. As consumers struggle to find the best combination of prescription drug and medical benefits for their individual needs, they must navigate a dizzying array of configurations and cost-sharing arrangements available through Original Medicare, Medicare supplemental insurance plans (Medigaps), Medicare Advantage (MA) plans, and retiree or other coverage. Among the choices within MA, of course, are private fee-for-service (PFFS) plans. PFFS plans, despite their meteoric rise in enrollment over the last couple of years, are perhaps the least understood type of MA plan due, in part, to their departure from the coordinated care model of other MA plans. At the same time, PFFS enrollments have been at the center of many of the incidents of marketing misconduct and abuse reported by Medicare counselors in California and across the country.

The main selling point for PFFS plans has been that they do not restrict enrollees to a specific network of providers. Instead, PFFS plans rely on “deemed” providers who knowingly provide services to plan members and are therefore required to accept the plan’s conditions and payments.(2) Providers who refuse to provide services to plan members are non-contracted providers. Generally, plan representatives have sought to create the impression that the structure of PFFS plans is comparable to Original Medicare or Original Medicare and a Medigap because of the absence of network restrictions on providers.

In the one-on-one marketing pitch, prospective enrollees are told, “You can see any doctor you want,” or “You can see any doctor that accepts Medicare” without regard to which providers will actually accept the plan’s payments. The reality is quite different. Enrollees can go to any Medicare provider only if the provider is willing to accept the specific PFFS plan’s fees and terms.(3) As discussed below, our experiences have shown that many PFFS enrollees have had problems finding providers who are willing to accept PFFS plans.

Commissions Paid to Agents

One of the primary forces driving inappropriate sales of certain plans, we believe, is the varying commissions that plans can pay agents selling Medicare products. The current commission structure employed by most (if not all) plans – and allowed by CMS – permits marketing agents to steer consumers to plans that generate higher commissions as well as revenues for the company, regardless of whether such products are the most suitable choice for an individual consumer. We have found that it is not uncommon for insurance companies to pay up to five times the commission for a Medicare Advantage enrollment versus a stand alone Part D prescription drug plan (PDP) enrollment.(4)

The link between aggressive marketing and the level of profitability for both agents and insurance companies is clearly demonstrated through the marketing of private-fee-for-service (PFFS) plans. 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 currently receive more in overpayments than other plans. All Medicare beneficiaries are therefore subsidizing PFFS plans, whether or not they are enrolled in one.

Agent Training

Consumer advocates have found that many agents selling PFFS plans lack adequate training and understanding of the products they are selling and are also unaware of the impact that enrolling in these products might have on prospective enrollees. This is particularly alarming because agents who convince individuals to enroll in a PFFS plan can disrupt current drug or supplemental insurance coverage and even trigger an irrevocable loss of retiree coverage. Despite much apparent effort on the part of plan sponsors to motivate their contracting sales-forces to maximize sales, plan efforts to properly train their contracting agents fall short as many agents appear to be uneducated or even misinformed about the products they are desperately trying to sell. As we have experienced in our conversations with several agents, even those who are trying to do the “right thing” sometimes find it hard to obtain adequate information about the plans, from the plans themselves.


The confusing structure of the PFFS plan model, the commission structures that pay agents more money to enroll beneficiaries in MA products, and the lack of adequate oversight and training of agents by plans offering PFFS products has led to a storm of marketing abuse over the last year and a half. While our agency has encountered marketing misconduct relating to the sale of other MA plan types as well as stand-alone PDPs, the vast majority of misconduct we have seen has related to the sale of PFFS plans. As reported by the National Association of Insurance Commissioners, 39 out of 41 states responding to a recent survey said they had received complaints about misrepresentations by insurance agents or companies in marketing Medicare-related products.(5) As discussed below, this marketing misconduct has ranged from outright fraudulent sales practices to misleading sales due to the general ignorance about PFFS plans among many agents.

Most egregiously, there have been reports across the country of Medicare beneficiaries being signed up for plans without their consent or knowledge. (6)

Example: Mrs. D., of rural Placer County, CA, a Medicare beneficiary who is legally blind, attended a seminar at a senior center presented by agents selling a PFFS plan. She was asked to sign an attendance sheet. At the end of the presentation, she decided to stay with her current PDP coverage, and when asked, made it clear to the agents that she was not interested. The next day she received a verification call from the plan sponsor of the PFFS product, and Mrs. D repeated that she did not want to join this plan. Nonetheless, she later received a letter from her PDP informing her that she was being disenrolled because she is now enrolled in the PFFS plan she did not want.

Prospective PFFS enrollees are also told outright lies in order to scare them into joining plans, such as “Medicare is going private” or that they will lose their Medicare or Medicaid unless they sign up for a particular plan.

Example: Ms. L., a dual eligible living in the Sacramento area, was told by an agent selling PFFS plans that Medi-Cal (the state Medicaid program) “was going out of business” and that coverage “was now transferred to private pay plans” in an effort to convince her to join the plan.

CMS Marketing guidelines prohibit unsolicited door-to-door sales by agents selling MA and PDP products. Despite this prohibition, though, this practice continues unabated as we regularly hear about Medicare beneficiaries who receive such visits. Some agents, perhaps aware of this prohibition, will cold call an individual but not appropriately identify themselves and/or the purpose of their call, and will later show up at the person’s house (and, if necessary, use the “cover” of their previous call to argue that the visit was not unsolicited). Some agents misrepresent themselves as being from Medicare, Social Security, or even the local State Health Insurance Program (SHIP). Others do not identify themselves as agents selling plans, but instead as a “Certified Medicare Advisor” or “Senior Advisor” who would like to pay a friendly visit to educate you about changes to Medicare.

Example: Ms. F., a Medicare beneficiary in rural Tehama County, CA, was called by someone saying they were “with Medicare” and that seniors “do not have to have a Medicare Supplemental insurance plan” and that “Medicare is calling 65,000 seniors in the area to tell them that they should drop their plan, and choose one without a premium.” The caller then said that someone would call Ms. F. to set up an appointment to come to her home and explain everything. Ms. F. then reports that an agent selling PFFS plans subsequently showed up at her door without an appointment after the first solicitation call, however Ms. F. did not enroll in the plan. Mr. M., however, who lives nearby and who received virtually the same call, was later visited by an agent selling a PFFS plan who told him that he could go to any doctor that accepted Medicare and as a result he signed up. Mr. M. later found out that half his doctors do not accept this plan.

Some agents have been outright abusive to prospective enrollees either in an attempt to make a sale at any cost, or in response to complaints made about an agent’s previous conduct.(7) In culturally and linguistically diverse states such as California, some agents take advantage of individuals with limited English proficiency by making sales when neither the agent nor the applicant can adequately communicate with one another.

Example: Ms. S., a dual eligible living in California’s Central Valley whose primary language is Spanish, received an unsolicited visit at her home by an agent selling a PFFS plan but who spoke little Spanish. Ms. S. understood the agent to tell her that the PFFS plan would not affect her Medicare and Medi-Cal coverage, however if she did not sign up for the plan, Medi-Cal would take her house away from her. She enrolled in the plan but subsequently found that her doctors do not accept this plan, she has had to pay co-payments out of pocket that she previously did not have, and found that the PFFS plan does not cover all of her prescriptions that she previously had covered.

A frequent – and disturbing – practice by agents involves going to senior or disabled subsidized housing complexes or senior centers either without invitation or under false pretenses such as giving a presentation about “Medicare changes.” After a minimal (or no) presentation about a particular plan, the agents enroll a large number of beneficiaries all at once, without taking the time to explain the plan and the consequences of enrollment to each individual.(8)

In addition to outright fraudulent sales practices, many PFFS marketing misconduct cases stem from the misrepresentation of plans that appears to be the result of either an agent not understanding the product s/he is selling, and/or the applicant not understanding the way the plan works (but the agent makes the sale anyway). The sheer number of Medicare Advantage and Part D plan options, the confusing structure of PFFS plans, the commissions paid to agents for the sale of certain plans and inadequate training of agents by plan sponsors (as discussed above) lead to many individuals enrolling in plans that they did not want or do not need.

Example: Mr. S. attended a breakfast sales presentation by an agent selling PFFS products at a local coffee shop in rural Northern California. Mr. S. wanted a Medigap plan, but the agent showed him brochures for several different kinds of plans. Since the agent made a PFFS “sound like it was a Medigap,” Mr. S. enrolled in the plan but later found out that his providers did not take this plan.

Many agents describe PFFS plans as allowing enrollees to see “any doctor you want” – including prospective applicants’ current providers – without explaining the crucial caveat that seeing an individual provider depends upon that provider accepting the terms and conditions of a given plan. As discussed below, many enrollees find that their own doctors will not accept such plans, and many have trouble finding any local doctor, clinic, hospital or other provider willing to do so.


As an agency that provides technical support to California’s SHIP network, it is natural for us to primarily hear about problems that arise versus successes within the Medicare program. While we do occasionally hear about a PFFS enrollee who not only fully understands the way his/her PFFS plan works and is satisfied with it, or a doctor who is willing to accept a PFFS plan, this scenario is not the norm.

Many Providers Unwilling to Accept PFFS Plans

While Medicare Advantage coordinated care plans are required to maintain an adequate provider network, PFFS plans have no such requirement. As a result, our experience with PFFS plans has shown that many enrollees have found that they are unable to see their current longtime physician or obtain services from trusted hospitals, clinics and other providers in their area as they learn that these providers are unwilling to accept the terms and conditions of their plan. Numerous PFFS enrollees report difficulty in finding any physicians who will agree to treat them. Similarly, many physicians are expressing frustration with these plans, including feeling “forced into an unacceptable choice of either abandoning established patients who sign up for [PFFS plans] or having to accept the terms of participation.”(9)

While it is virtually impossible to determine how many providers in a given service area are willing to accept any PFFS plans because such plans do not rely on established networks, it has become abundantly clear that many providers are unwilling to do so. Advocates across the country report counseling Medicare beneficiaries who enrolled in PFFS plans only to find that their own doctors won’t accept their plan, and that often they can find no doctors who will do so. This phenomenon is reflected in recent media reports as well.(10)

Access to Benefits and Out of Pocket Costs

In addition to problems finding providers who are willing to treat them, some PFFS enrollees face higher out of pocket costs for services in PFFS plans or find that services that were previously available to them are not covered by their new plan. Some Medicare Advantage plans in general, and PFFS plans in particular, charge greater out of pocket expenses for certain services than the Original Medicare program, such as in-patient hospital stays, skilled nursing facility visits, cost-sharing for drugs covered under Part B, and durable medical equipment. Rarely are these caveats explained to prospective enrollees.

Example: Mr. and Mrs. H. who live in Visalia, CA, signed up for a PFFS plan after being promised by an agent that this plan “would not replace their coverage under the regular Medicare plan; it would just make it better”, “all doctors would take” their plan, and that “they’d pay less under the new plan.” The H.’s found that their doctor would not accept the plan, and that Mrs. H.’s $1,600 injection she needs every two weeks for her congestive heart failure was not covered (as it was under her previous plan). (11)

Undoing the Damage

Many victims of marketing abuse as well as PFFS enrollees who encounter trouble accessing services in their plans do not know where to turn. Plan sponsors – who are charged with policing the activity of their agents – often prove less than helpful when beneficiaries complain to them about marketing abuse. When new PFFS enrollees complain to their plan that they cannot find any providers willing to accept the plan, beneficiaries are commonly told that the plan will simply send an “information packet” to their physician, in an attempt to persuade the doctor to accept the plan.

Most Medicare beneficiaries are restricted in their ability to switch, change, or disenroll from MA and Part D plans to certain times of the year. If a PFFS enrollee wants to get out of a plan that is not right for them outside of an applicable enrollment period, they must first be aware of their right to do so, and then be able to demonstrate to CMS that marketing misconduct has occurred in order to be entitled to a special enrollment period (SEP) to disenroll from the plan. Many Medicare beneficiaries are unaware of both their rights and their ability to get help from SHIP programs and other types of assistance.

Working with CMS to process these SEPs and retroactive disenrollments can be problematic as there are no standard timelines for CMS to render decisions, follow up is inconsistent, and often decision-making about whether to grant such requests is passed back to the plans themselves. Advocates report very mixed results when trying to use CMS processes to resolve enrollment and disenrollment disputes, with timeliness and level of feedback often dependent upon which CMS personnel ends up with a particular case. Sometimes disenrollment due to marketing misconduct – or other reasons – can take many weeks (or months), and, in some instances in which beneficiaries are retroactively disenrolled from a Medicare Advantage plan with Part D prescription drug coverage, can leave a beneficiary with no Part D coverage at all.


We continue to see a disturbing trend of plan sponsors and their contracting agents marketing PFFS plans to individuals who are dually eligible for Medicare and Medicaid, although enrollment in a PFFS plan appears to offer little, if any, tangible benefit to dual eligibles. Dual eligibles in Original Medicare are already entitled to zero cost-sharing and benefits ancillary to Medicare. Any potential added benefits a dual eligible might receive through enrolling in a Medicare Advantage coordinated care plan are diminished by PFFS plan enrollments. 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, and greater out of pocket expenses. Despite repeated requests, neither CMS nor plan sponsors are able to explain how the benefits offered to duals are better or more comprehensive than what duals already receive under Original Medicare and Medicaid (beyond statements such as they will receive “rich, incremental benefits” beyond Medicaid’s).(12)

Example: Mrs. P., a dual eligible living in California’s Central Valley whose primary language is Spanish, was recently widowed and had relied on her husband to take care of her health and financial dealings. She visits her physician 3-4 times a month due to a heart ailment. Mrs. P. received an unsolicited visit from an agent selling a PFFS plan who she says pressured her into signing up for the plan. Mrs. P. found out that her doctor does not take her plan, and she has been charged co-payments that she did not previously have to pay.

There is evidence that even some sponsors of PFFS plans realize that such plans are not the best option for dual eligibles. In a February 2007 memo to agents selling their product, Coventry/Advantra states: “Coventry Health Care believes that our Private Fee for Service Advantra Freedom products may not be the best health care coverage solution for Medicare beneficiaries who have both Medicare and Medicaid coverage (dual eligible).” The memo goes on to state several reasons for this conclusion, including: “[o]ur Advantra Freedom products will in many cases increase their financial exposure for covered services in the form of increased co-pays or coinsurance”; “[c]oordination of benefits with most states is often arduous and in some cases, state Medicaid departments prohibit coordination of benefits with Medicare Advantage plans.” (13)

Other sponsors offering PFFS plans, however, have ignored this reality and continue to target this vulnerable population. Dual eligibles are being signed up for plans that their doctors will not accept and do not cover the drugs that they take. They are facing large bills that they should not have and cannot afford, and do not understand why they cannot get the medical services to which they previously had access. Duals have been enrolled without their knowledge into new plans, and some duals have been enrolled into many plans, which has confused their coverage and billing, their doctors and the plans themselves.


The problems concerning PFFS plans relate not only to their sale, but to their structure, requiring both broad and specific changes. In our joint report with the Medicare Rights Center entitled “After the Gold Rush” we made several recommendations about the marketing of PFFS plans, including ensuring that enrollees had adequate access to providers in their area.(14) CMS has recently offered some proposals to address marketing abuses, but we believe that these measures do not go far enough to fix the entire range of problems generated by PFFS plans specifically and Medicare Advantage plans generally.

Specific Recommendations re: PFFS Plans

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 Final 2008 Call Letter to Medicare Advantage and Part D Plans.(15) CMS does not, however, take immediate, decisive action that would send a clear message to plan sponsors. The Call Letter states that CMS is “considering several plan oversight features” including: required disclaimer language in all marketing and enrollment as well as sales presentations; requiring plans to provide documented training of marketing agents and brokers; using a contractor to conduct “secret shopper” tests on sales and outreach activities; and requiring plans to perform “outbound verification calls” to all new applicants to verify that they understand the plan features and do in fact want to enroll. We strongly encourage CMS to implement and strengthen their proposals under consideration, as well as mandate new requirements as follows:

  • Verification calls – must be scripted by CMS and performed by an entity independent of the plan; we continue to hear from individuals who received such calls (from companies that have already been required to do so through CMS corrective plans) yet still are confused about what they were told and who still wish to disenroll.
  • Secret shopper programs, while helpful, appear to be reliant upon information that plans and agents provide regarding scheduled sales presentations. Such efforts will not effectively prevent prohibited door-to-door visits or monitor unscheduled, unsolicited sales at residences/facilities that often result in mass, one-time plan enrollments. 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.
  • PFFS plans should be required to verify that a prospective enrollee’s doctor(s) will accept the plan prior to processing enrollment.
  • PFFS plans should not be sold in areas in which a threshold number of providers do not accept the plan. Therefore plan sponsors should, prior to selling plans in a given area, poll major providers (e.g. hospitals, clinics, physician groups) in that area to ensure that enrollees will have sufficient access to providers.
  • Mandatory agent training – CMS should require all MA plans (and PFFS sponsor in particular) to provide a standard curriculum with accompanying testing by an outside 3rd party. Minimum training should include: an overview of Medicare and all types of products (MA, PDP, Medigap); and how Medicare interacts with other coverage such as Medicaid, retiree coverage, VA, etc. In addition, agents should be required to provide information to each prospective enrollee about how to reach their local SHIP program.
  • CMS must standardize and streamline the process through which plan enrollment and disenrollment disputes are handled, including SEPs and retroactive disenrollment requests. Absent a meaningful, standardized appeals process designed for these issues, resolution of beneficiary problems will remain inconsistent and incomplete.
  • Public disclosure of corrective actions – when advocates file complaints with Medicare about plan conduct, the results of these complaints, if any, are rarely made available. In an effort to encourage Medicare beneficiaries to report bad plan conduct – and to deter plans from engaging in such conduct – CMS should make sanctions and other corrective plans/efforts it imposes on plans publicly available and easily accessible, including through their website.
  • Dual eligibles and PFFS plans – as discussed above, enrollment in a PFFS plan appears to offer little, if any, tangible benefit to dual eligibles, and in many cases leaves them worse off regarding access to care and out of pocket expenses. Despite repeated requests, neither CMS nor plan sponsors have been able to explain how the benefits offered to duals are better or more comprehensive than what they already receive through Original Medicare and Medicaid. Dual eligibles and those that counsel them should have access to direct comparisons between benefits offered by PFFS plans and those available through state Medicaid programs. In addition, clear information about how and whether state Medicaid programs pay cost-sharing for duals enrolled in these plans, what liability duals have for plan co-payments when a provider is not participating in the state’s Medicaid program, and how both enrollees and providers are educated about this process, needs to be made available. Unless plans can prove they provide meaningfully better and more comprehensive benefits than those currently available through state Medicaid programs, we call for a ban on the sale of PFFS plans to dual eligibles.
  • Special exemptions that allow PFFS plans to operate without the basic consumer protections that currently apply to other MA plans should be removed. The most egregious of these exemptions forbids CMS from reviewing PFFS benefit packages to ensure they fairly and equitably reflect the payment they receive from Medicare.

Broad Medicare Advantage Recommendations

Many Medicare experts – from academics to advocates – question both the wisdom of the PFFS plan model and relative expenditures between the Original Medicare program and Medicare Advantage plans generally and PFFS plans specifically. As a general principle, we believe that PFFS plans should play by the same rules as all other MA plans, and should be held to the same standards; the value of their benefit package should be commensurate with what they are paid. We are convinced that much of the marketing abuses flow from money – both paid to PFFS plan sponsors by Medicare, and to agents selling these plans through commissions. Unless payment to Medicare Advantage is on par with the Original Medicare program, and commissions are more uniform, financial incentives will continue to contribute to abusive sales of these products. In addition, there are several ways in which the Medicare Advantage program in general can be improved to better serve enrollees. We offer the following broad recommendations:

  • Product standards and simplification – we believe that MA and Part D plans should be standardized and simplified so that Medicare beneficiaries can make meaningful comparisons, and plans can be held accountable for providing adequate benefits. Among other things, standardization should include limits on out-of-pocket spending, and a requirement that MA plans charge no more cost-sharing for services than what is charged under Original Medicare (e.g. inpatient and SNF stays, home health services, Part B drugs, DME, etc.)
  • Apply the standardization and simplification requirements of the NAIC Medigap Model Act and Regulation to all Medicare Advantage and Part D plans, including:
    • Loss ratio standards to limit administrative costs and ensure adequate funds for medical care
    • Guaranteed renewability requirements to ensure stability of benefits
    • Suitability requirements to ensure the right set of benefits is sold to meet individuals’ need
    • Required disclosures that include notice of availability of SHIP counseling
    • 30 day “free look” to allow time to examine plan documents and seek counseling
    • Replacement disclosure and standards to ensure that people understand differences between current benefits and replacement coverage
  • State enforcement of marketing standards – all plans supposedly have protections in place, but marketing abuses continue; in addition, CMS has so far been lax in its oversight role of plans. Unless there is enforcement by state regulators that penalizes plans – instead of just agents – abuses will continue. States should be empowered to enforce marketing guidelines along the same lines as the Medigap Model.
  • Commission standards – the current commission structure employed by plan sponsors creates an incentive to sell certain MA plans over PDP plans, regardless of whether it is the best option for an individual. Medicare should require plans to adopt the concept of limiting replacement commissions to discourage inappropriate replacements (in other words, an agent should not get the same commission for selling a person a second PDP or MA plan versus the first time they enroll in one). Further, because enrollment in PFFS plans raise costs to Medicare, commission structures that create incentives for sale of PFFS plans over subsidized Medigap plans may bear scrutiny under anti-kickback and fraud and abuse statutes.
  • Eliminate the lock-in provision – instead of restricting most beneficiaries to making plan choices to certain times of the year, we believe that all Medicare beneficiaries should be allowed to change plans on a monthly basis. Coupled with the recommendations we make above re: suitability standards and replacement commissions, this would allow enrollees to undo bad choices more easily.


In order to ensure that Medicare beneficiaries are able to access timely and quality health care as well as make informed decisions about how they wish to access their benefits through the Medicare program, Congress and CMS must: 1) act to protect Medicare beneficiaries from abusive practices relating to the sale of PFFS plans; and 2) assess the overall suitability of the PFFS plan model in relation to enrollees’ ability to access benefits.

Thank you for the opportunity to provide these comments. For more information, please contact California Health Advocates. Respectfully submitted by:

David A. Lipschutz
Staff Attorney
California Health Advocates

Bonnie Burns
Training & Policy Specialist
California Health Advocates
Ph: (831)438-6677
Fax: (831)438-2441


  1. (back)
  2. (back) PFFS can also contract with providers to form a network. Most PFFS plans, however, rely on “deemed” providers who can choose treat enrollees on a per patient, per episode basis.
  3. (back) A provider will become a “deemed” contracted provider of a PFFS plan and treated as if s/he has a contract in effect with the plan if: the services are covered in the plan and are furnished, and, before furnishing the services, the provider was informed of an individual’s enrollment in the plan and given a reasonable opportunity to obtain information about the terms and conditions of payment under the plan. See, e.g. 42 CFR §422.216(f).
  4. (back) See, e.g., “Oklahoma Chides Insurer in Medicare Marketing Case” by Robert Pear, New York Times, May 15, 2007 – Oklahoma Insurance Dept. found that Humana paid agents selling MA plans “five times as much as the commission for selling” a PDP; also see “What Stakeholders Should Expect from Medicare Part D in 2007,” presentation by Gorman Health Group (December 2006).
  5. (back) “Oklahoma Chides Insurer in Medicare Marketing Case” by Robert Pear, New York Times, 5/15/07
  6. (back) See, e.g., “Oklahoma Chides Insurer in Medicare Marketing Case” by Robert Pear, New York Times, 5/15/07 – “Twenty-two states reported complaints of fraudulent activity like falsifying signatures on applications”; also see “Insurance Agents Charged with Defrauding Elderly” by Kelli Hernandez, The Valdosta Daily Times (Valdosta, GA) /Union-Recorder (Milledgeville, GA) 4/12/07 — profiles the arrest of two former insurance agents selling Medicare Advantage products who “are alleged to have visited nursing homes and convinced seniors to fill out paperwork under false pretenses or gained personal information through conversation and forged signatures to sign consumers up for the products without their knowledge”; also see “Medicare Plans Under Scrutiny – Complaints are Adding Up from Seniors Upset with Private Health Care Packages” by Victoria Colliver, San Francisco Chronicle, 1/26/07 – profiles Mrs. N., a 78 year old dual eligible living in Sacramento on less than $800 a month, who was approached by an agent selling Secure Horizons PFFS plans outside her housing complex last summer asking many questions; Mrs. N. answered the agent’s questions, but says she did not sign up for the plan, but later received Secure Horizons enrollment materials. As she began to rack up hundreds of dollars in bills for medical expenses, her daughter asked the company for a copy of the enrollment application, and found that her mother’s signature was forged.
  7. (back) See, e.g., “Sales Tactics Unhealthy for Care Plans” by Victoria Colliver, San Francisco Chronicle, 5/16/07 – profiles “strong-arm tactics used by a health care salesman” who “became verbally abusive” with a prospective plan enrollee when she was hesitant to enroll.
  8. (back) See, e.g., “A Multitude of Medicare Plans” by Tom Kisken, Ventura County Star, 4/1/07 – profiles a sales session at an adult day care center by an agent selling PFFS plans, leading to “about 30 area seniors [to] say they were misled by overly aggressive agents and are trying to revoke their private Medicare plans.” “The agent gave a short presentation on the plan and then he and others started signing up people, asking for Medicare identification numbers and other information … ‘They were very aggressive about going to each table and getting people to sign up,’ said [a] social worker … ‘They were very pushy.’ Center administrators and the seniors said they thought the agent was selling a supplemental plan that added to their Medicare benefits.”
  9. (back) See American Medical Association House of Delegates, New Mexico Delegation, “Deemed Participation and Misleading Marketing by Medicare Advantage Private Fee for Service Plans” Late Resolution: 1001 (I-06), Received 10/25/06
  10. (back) See, e.g., “Growing Pains of Private Medicare Plans” by Jane Zhang, Wall Street Journal, 5/8/07 – “while most doctors accept patients who are in the traditional [Medicare] program, some have declined to treat patients in PFFS plans”; the article also profiles Mr. S. who signed up for a PFFS plan in Oregon but “soon discovered that his doctor wouldn’t accept PFFS payments, though, and that no other internists were available in his area”; “Any, Any, Any Plan May be in Trouble” by Harry Wessel, Orlando Sentinel, 3/15/07 – “Many doctors and hospitals do not accept the Any, Any, Any plan”; “Medicare Headache: Health Care Providers Refuse to Accept Advantage” by Naseem Sowti, Star-Banner (Ocala, Fla.), 3/29/07 – the article profiles Mr. B., who enrolled in a PFFS plan and “is yet to find a provider here who accepts the plan.” The article notes that “many providers are now refusing to accept Medicare Advantage plans”; “Medicare Advantage Often Useless” by Karen Garloch, Charlotte Observer (NC), 2/25/07 – article states “Some health insurance companies are misleading seniors into buying Medicare Advantage plans that are not accepted by many North Carolina doctors and hospitals, state insurance officials warned Thursday”; “Promises, Promises – Better check the fine print on that newfangled Medicare plan” by Michelle Andrews,U.S. News & World Report, 2/19/07 “Although the lack of networks makes the PFFS plans seem similar to original Medicare, many doctors and hospitals are wary of these plans and refuse to treat patients who sign up for them”; “Medicare Plans Under Scrutiny – Complaints are Adding Up from Seniors Upset with Private Health Care Packages” by Victoria Colliver, San Francisco Chronicle, 1/26/07 – the article profiles a 74-year old Oakland man who signed up for a WellCare PFFS plan that was supposed to provide free medication, but found that his pharmacy and doctor refused to accept it.
  11. (back) Note: the H.’s are profiled in “Promises, Promises – Better check the fine print on that newfangled Medicare plan” by Michelle Andrews, U.S. News & World Report, 2/19/07.
  12. (back) Note: our own analysis of the benefits of one PFFS plan being marketed towards duals in California – WellCare’s Duet plan – has revealed that a dual eligible is only entitled to the additional nominal benefit of a pair of eyeglasses every year, whereas the state Medicaid agency provides eyeglasses every two years.
  13. (back) See Coventry/Advantra Freedom memoranda to “Advantra Freedom Agents” entitled “Private Fee For Service Dual Eligible Enrollment” (….pdf )
    and a companion memo entitled “Institutionalized Member Enrollments.” (….pdf )
  14. (back)
  15. (back) The Final Call Letter is available at:….pdf

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.