Medicare Part D differs from other parts of Medicare (A, B, and C) in that it is only available through private, commercial plans. With Parts A, B, and C, people have a choice; they can either get their Parts A and B through Original Medicare, or can use Part C to get their Parts A and B through a Medicare Advantage plan. Part D, however, has been turned over to the insurance industry. As a result, advocates have braced for sales abuses, such as having sales agents ‘piggybacking’ on Part D to advertise and sell other unrelated products (e.g. life insurance and/or annuities). Also, even though these new private plans operate in the state, federal law takes precedence over any state law, meaning that California’s regulatory agencies do not have authority over these Medicare plans as they do over other plans that operate in the state. California’s Department of Insurance, which handles complaints about insurance companies, and Department of Managed Health Care, which handles complaints about health maintenance organizations (HMOs) and preferred provider organizations (PPOs), cannot handle the complaints from consumers enrolled in these plans.
Federal law preempts all state regulation of these federally approved plans with the exception of requiring Part D companies to apply for a state license. States do retain their authority over agents who are licensed to sell these plans, but they do not have regulatory control over the benefits, provider contracts, appeals processes, advertising or other practices of the plans. Consumers who experience problems with these plans must seek help from the Centers for Medicaid and Medicare Services (CMS), the federal agency that administers the Medicare program.
Some third parties who advertise or sell Part D plans take advantage of the confusion around these plans. In the guise of helping beneficiaries with their complex choices, some make enticing offers by mail, over the phone, or in person for products completely unrelated to Medicare Part D, such as burial policies, annuities, or long-term care insurance. While the Department of Insurance retains authority over these sellers, inappropriate sales, or sales made under false pretenses, often go unreported out of ignorance or embarrassment.
To make matters worse, several insurance companies sell many if not most of the various kinds of plans allowed under Medicare Advantage and Part D. This variety of plans (e.g. Medicare HMOs, PPOs, Private-Fee-for-Service plans, Medicare Select plans, Medicare Advantage prescription drug plans (MA-PDs), and stand-alone prescription drug plans (PDPs)) can be confusing for both the sales people and beneficiaries. Sales people themselves may not clearly understand the differences in how these plans offer Medicare-covered services, resulting in the sale of a product that neither the salesperson nor the beneficiary fully understands. Advocates have reported on many people who thought they signed up for one company’s Medigap plan only to find out later that they had been enrolled in that company’s PPO plan with a large deductible.
Medicare beneficiaries, their families and caregivers should report purchase errors and inappropriate sales to both the Department of Insurance and to CMS to ensure that corrective action is taken. In many instances the local Health Insurance Counseling & Advocacy Program (HICAP) can help people sort out these issues and direct consumers and their families to the appropriate state or federal agency.