Predatory Sales Practices in Medicare Advantage

Predatory Sales Practices in Medicare Advantage

U.S. House of Representatives
Committee on Energy & Commerce
Hearing by the Subcommittee on Oversight & Investigations
June 26, 2007
Written Testimony of California Health Advocates


Chairman Stupak, Ranking Member Whitfield, distinguished Committee Members, thank you for the opportunity to testify today. My name is David Lipschutz and I am a staff attorney at California Health Advocates (CHA). 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.

Among the various options that Medicare beneficiaries have to access services through the Medicare program, we certainly recognize that Medicare Advantage (MA) plans can be a suitable choice for some. Since MA plans are offered by private insurance companies, as are all stand alone Part D prescription drug plans (PDPs), enrollment is generally pursued and performed by these companies and their contracting agents who compete with one another for the attention of (and dollars that follow) Medicare beneficiaries. Abuse surrounding the marketing and sale of Medicare products is not a new phenomenon. However, during the last year and a half, consumers and consumer advocates have witnessed an alarming epidemic of abuse surrounding the sale of Medicare Advantage plans.(1)Examples of some of these predatory practices are outlined below.

While we have witnessed marketing abuses concerning stand-alone Part D prescription drug plans as well as other Medicare Advantage plans, the majority of marketing problems we have seen stem from the sale of Private Fee-for-Service (PFFS) plans.(2) The Centers for Medicare and Medicaid Services (CMS) has taken certain measures in response to reports of marketing misconduct, culminating in a recent announcement of a voluntary suspension of marketing by seven PFFS plan sponsors until new guidelines specific to PFFS plans are implemented. While some of these new requirements may help educate beneficiaries and providers about PFFS plans, most do not apply to other types of MA plans nor do they go far enough to stem abusive conduct surrounding the sale of MA and PDP plans. In order to more effectively combat marketing misconduct and ensure that Medicare beneficiaries are making informed decisions about products that may be suitable to their individual needs, several underlying, structural issues must be addressed by both Congress and CMS, including: payments to Medicare Advantage plans; agent commission structures; the wide variation in plan benefits and designs; and the lack of adequate oversight and training of agents by plan sponsors. In addition to discussing these issues, we provide recommendations to stem further marketing abuse as well as improve the Medicare Advantage program in general in order to better serve Medicare beneficiaries.


The introduction of the Part D prescription drug benefit coupled with the dramatic growth in the types and numbers of Medicare Advantage plans being sold across the country have increased both the complexity of and confusion surrounding the Medicare program, leading to an environment that is ripe for abuse. The current landscape and choices facing Medicare beneficiaries, examples of how agents have exploited these choices, and the difficulty of undoing the damage of bad choices due to marketing misconduct are discussed below.

Medicare Landscape

The Medicare Modernization Act injected new incentives for private companies to offer a range of new products to Medicare beneficiaries, greatly increasing the number and types of plans available, all of which have significant flexibility to design their benefits and cost-sharing structures. 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. There are multiple variations between and among these different options. Some individuals are eligible for both Medicare and Medicaid, or some other program that can help pay for some or all of their costs.

Within the Medicare Advantage program there are multiple plan designs, including: Health Maintenance Organizations (HMOs); Preferred Provider Organizations (PPOs); Special Needs Plans (SNPs); Private Fee-for-Service (PFFS) plans; and Medical Savings Accounts (MSAs). Some MA plans offer Medicare Part D prescription drug coverage, others don’t. Depending upon what type of MA plan an individual is enrolled in, s/he may have a right to obtain separate prescription drug coverage outside of their MA plan. Depending upon where an individual Medicare beneficiary lives, there may be an overwhelming number of private plan options available to him/her.(3)Some of these combinations of Medicare, private and employer plans are compatible with one another while other combinations do not coordinate, and enrollment into a new plan might terminate or jeopardize eligibility for existing coverage. Further, although there are multiple options for beneficiaries, most individuals are limited in their ability to change plans during the course of the calendar year.

Behind these private plan options, of course, are companies and their contracted agents trying to sell them to Medicare beneficiaries. Some agents and plans are able to exploit the complex choices facing Medicare beneficiaries by steering them towards certain products, regardless of whether it is the best option for an individual. As a result, consumer advocates have found that many people with Medicare have been enrolled in Part D or Medicare Advantage plans they do not understand, did not want, or are inappropriate for their needs. Some have faced greater cost-sharing requirements than their previous coverage, and some have been cut off from doctors who refuse to accept the plan they enrolled in. Some have lost or jeopardized their eligibility for coverage they already had, such as retiree or Medicare supplemental (Medigap) insurance.

Examples of Misconduct

Marketing misconduct surrounding the sale of Medicare Advantage plans ranges from outright fraudulent sales practices to 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).

Medicare Advantage Private Fee-for-Service (PFFS) plans 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. Despite their meteoric rise in enrollment over the last couple of years, they are perhaps the least understood type of MA plan due, in part, to their departure from the coordinated (or managed) care model of most other MA plans. Often these plans are pitched as allowing individuals to see any provider that they want, without an adequate explanation that a provider must agree to accept the terms and conditions of a given plan, and that providers are free to refuse to do so. Despite CMS efforts to make this clearer to prospective enrollees and providers (discussed below), many providers appear to remain unwilling to treat PFFS plan enrollees. In addition, CMS has done nothing to restrict the targeting of individuals dually eligible for Medicare and Medicaid (dual eligibles) for these plans, despite the apparent lack of suitability of many such plans for dual eligibles.(4)

While the majority of marketing abuse cases we are aware of involves PFFS plans, the following types of abuses have occurred surrounding the sale of other types of MA plans as well.

  • Medicare beneficiaries are being signed up for plans without their consent or knowledge.

Example: Mrs. N., a 78-year old dual eligible living in Sacramento on less than $800 a month, was approached outside her housing complex by an agent selling a PFFS plan and asking many questions. Mrs. N. answered the agent’s questions, but says she did not sign up for the plan, yet later received the PFFS plan’s 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.

  • Prospective enrollees are 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.
  • Individuals who sought out one product end up in another they did not want, primarily impacting Medicare beneficiaries who were sold MA products thinking they were enrolling in either a Medigap plan or a stand-alone PDP offered by the same company. (Beneficiaries switching from Original Medicare to managed care often must change providers and face different and sometimes greater cost-sharing structures often not adequately explained by an agent selling them one of these plans.)
  • Individuals dually eligible for Medicare and Medicaid (dual eligibles) are being targeted by some sponsors of MA plans, even though certain plans (notably many PFFS plans) may not suitable for them. In part, dual eligibles are targeted because they are one of the few groups of individuals who can change plans on a monthly basis. While many PFFS plans appear to target dual eligibles, sponsors of other plans pursue them as well.

Example: Ms. T, a dual eligible living in the Central Valley of California, was visited by an agent at her home who told her that the HMO the agent was selling would pay “all of her medical costs” and pressured her to enroll in the plan. Ms. T. subsequently found that neither her primary care physician nor her specialists accept her plan, and she has had to pay out of pocket for co-payments and diabetic supplies she could not obtain through her plan.

  • Medicare Advantage plans, in competition with one another, try to “poach” members of other plans offering comparable coverage.

Example: Ms. O, a Ventura Co. resident who was enrolled in HMO “A” in 2006, decided to change plans for 2007 and enrolled in HMO “B” in November 2006 (effective 1/1/07). In December 2006, HMO “A” called her numerous times and sent her letters trying to convince her to remain in their plan, but she repeatedly informed them that she no longer wanted the plan, and had enrolled in a new plan. Nonetheless, Ms. O found herself in her old plan, HMO “A” as of January 2007. With the help of her local HICAP program, she was able to fix the problem and re-enroll in her desired HMO “B.” In March 2007, Ms. O received a phone call from an agent asking her to re-enroll in HMO “A”; she again said no and asked not to be contacted anymore. She soon found, however, that she had been disenrolled from HMO “B” — her desired plan – and was back in HMO “A.” She called 1-800-MEDICARE but was told there was nothing they could do. When she called HMO “A” to tell them she did not want to be in their plan, and did not authorize enrollment, she was told that she would have to call 1-800-MEDICARE again. With the help of HICAP and a subsequent call to 1-800 MEDICARE, she was able to get back into her desired plan.

  • Despite CMS’s prohibition of unsolicited door-to-door sales by agents selling MA and PDP products, this practice continues unchecked.
  • Agents 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.
  • 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.
  • 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. G., a 72 year old dual eligible living in California’s Central Valley who is limited English proficient and relies on family members to assist her with her medical and financial needs, received an unsolicited visit from an agent while she was home alone. Ms. G. subsequently found herself enrolled in a PFFS plan, and learned that her primary physician does not take the plan.

  • Agents sell plans at 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.

Example: Mr. & Mrs. S, who live in a senior housing complex in Butte County, CA, attended a presentation at their complex by a sales agent who had set up the presentation with the resident manager under the guise of presenting on “changes to Medicare”, but did not disclose that he was an insurance agent. After the presentation on “Medicare Plan C,” the agent sold several PFFS plans, but had not disclosed the way PFFS plans work, and had indicated that most providers take the plan. Along with several residents, Mr. & Mrs. S. signed up for the PFFS plan, and dropped their Medigap insurance. They subsequently found that their providers refused to accept their 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.

Example: Mrs. B, who lives in a mobile home in rural Northern California, was cold called four times by an agent seeking to enroll her in a PFFS plan. When Mrs. B expressed hesitancy, the agent became verbally abusive towards her, cursed and asked for the phone numbers of her doctors. After giving the agent her address, the agent told her that he would come and stand on her doorstep if she refused to sign up for the plan.

Undoing the Damage of Marketing Misconduct

Many victims of marketing abuse who are enrolled in plans that they did not want do not know where to turn. Many Medicare beneficiaries are unaware of both their rights and their ability to get help from SHIP programs and other types of assistance. 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; plans are often unable to fix enrollment/disenrollment problems, discourage disenrollment from their plan, or simply inform the individual that “nothing can be done.”

Consumers and consumer advocates report problems both seeking resolution through and lodging complaints with 1-800-MEDICARE and CMS. Processing Special Enrollment Periods (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 or CMS contractors. 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. Undoing the damage of marketing misconduct often requires the extensive involvement of advocates, a type of assistance many people do not know how to access.


Marketing misconduct surrounding the sale of Medicare Advantage plans has received growing attention from the public, the advocacy community, the media and Congress. Over the last several months, CMS has issued the 2008 Call Letter to MA and Part D plans which proposed some new requirements relating to the marketing of PFFS plans(5), and in late May released new guidance for PFFS plans, some to be implemented immediately and some before the start of the next Annual Election Period (AEP). Recent CMS activity surrounding marketing abuse culminated on June 15th, 2007, when CMS held a press conference announcing that in response to concerns about marketing practices seven insurance companies signed an agreement to suspend voluntarily the marketing of their Private-Fee-for-Service (PFFS) products.(6) CMS stated that the suspension for a given plan will be lifted only when CMS certifies that the plan has systems and management controls in place to meet all of the conditions outlined in CMS’s 2008 Call Letter and the May 25th Guidance.

New PFFS Requirements

Some of the new requirements imposed by CMS will be helpful in educating beneficiaries and providers about PFFS plans and will hopefully stem at least some marketing abuse. Here is a brief review of some of the key new requirements, along with some unanswered questions, perceived shortcomings, and specific recommendations for improvement:

Disclaimer Language – CMS is requiring disclaimer language in marketing material that will more accurately describe how PFFS plans work, including the option of physicians to decline to accept the terms and conditions of a given plan. While CMS requires that the disclaimer language be included in all sales presentations (both public presentations and private meetings with beneficiaries), it is unclear how this will be done – and enforced – during face-to-face meetings. Although written marketing materials will “prominently display” such language – how will this be presented to individuals in person?

  • Given the confusion over how PFFS plans work for dual eligibles (which can vary by state), there should be disclaimer language specific to dual eligibles (re: cost-sharing and access to Medicaid benefits). CMS should require that any information the plan does provide about state Medicaid benefits is accurate, and should be confirmed by the state Medicaid agency.

Verification Calls – PFFS plan sponsors are required to conduct outbound education and verification calls to all beneficiaries requesting enrollment to ensure that they understand plan rules. Education letters must follow an unsuccessful attempt to contact the beneficiary. CMS provides model scripts and letters but the model scripts for verification calls do not provide an enrollee with the option to disenroll (or cancel the enrollment) during the verification phone call itself. The education letter explains the limits on an individual’s enrollment options but does not explicitly warn enrollees that failure to disenroll immediately will leave them locked in to the plan for the remainder of the year.

  • Although these requirements do not reference languages other than English, we believe that verification calls must be placed in the primary language of the caller; for example, many instances of marketing misconduct we are aware of in California involved the sale of plans to individuals who spoke Spanish or Chinese as their primary language, and as a result were not able to adequately communicate with agents who did not speak their language (but signed them up for plans anyway).
  • Moreover, while we believe that verification calls can be an important tool to combat marketing misconduct, there are not enough requirements in place to ensure that such calls will be effective. 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. Even when conducted by plans and duly recorded, verification calls can still fail to work as intended if a plan fails to recognize that an enrollee does not adequately understand the way the plan works.(7) In order to eliminate plan bias, verification calls should performed by an entity independent of the plan.

Reporting of Scheduled Sales Presentations — Under CMS’s new requirements, all PFFS plans must provide their CMS Regional Office Plan Manager with a schedule of all sales and marketing events it will conduct in the following month so that these presentations can be subject to CMS “secret shopper” monitoring.

  • CMS should go farther by requiring agents to submit copies of all flyers and other ads announcing events, and disclose how and under what circumstances events are scheduled. As referenced above, there are many reports of agents scheduling presentations at senior/disabled subsidized housing residences or centers under the guise of discussing “Medicare changes” or “Medicare Part C” without disclosing that it is their intent to sell a product, leading many residents and managers duped into thinking that they are getting a substantive presentation instead of a sales pitch. Will plans and agents report these “educational” presentations as sales presentations?
  • Further, this reporting requirement presumably applies to neither in-home sales visits by agents nor unscheduled, drop-in visits to senior centers and subsidized housing facilities, all locations in which the most egregious marketing violations appear to occur. 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.
  • More broadly, CMS should implement reporting requirements surrounding how each sale/enrollment is made, including additional information collected by agents in the field. CMS and plans should verify whether enrollments are performed during scheduled events. How was contact with the beneficiary instigated? Who initiated the contact? What was date of the call/visit? If a sale is made in an individual’s home, when was the call to set up the visit made to the prospective enrollee? How much time did the agent spend explaining the product to the individual?
  • Among other things, there should be a minimum time that agents must spend explaining plan features to prospective enrollees (for example, if there are 30 enrollments in a senior/disabled housing complex performed in one hour, the plan features are clearly not being explained to applicants).

Finally, while it appears that the majority of marketing misconduct has surrounded the sale of PFFS plans, there are still many abuses concerning the sale of other Medicare Advantage and stand-alone PDPs. These new rules (and the above recommendations) should apply to all Medicare Advantage plans, not just sponsors offering PFFS plans.

Will the Voluntary Suspensions of PFFS Marketing Do Any Good?

Despite much media attention paid to the voluntary suspension of PFFS plan marketing by several sponsors, it is questionable whether the suspension will actually curb marketing abuses in the long run or have any meaningful deterrent impact on the companies involved. At least some of these plans were already operating under corrective action plans that required them to implement some of the new rules, meaning CMS might “clear” plans to begin marketing again in the short term. While giving dual eligibles a reprieve from aggressive marketing, this suspension will not greatly impact PFFS plan enrollment since it is between Medicare enrollment periods when most individuals are able to make plan elections (the Medicare Advantage Open Enrollment Period, or OEP, from January through June, and the Annual Election Period, or AEP, from November 15th through December 31st). Not only will this suspension have a minimal impact on plan enrollments, but the industry also projects that it will have minimal impact on finances, including share prices, of these companies.(8)

Despite the added benefit of some of CMS’s new requirements for PFFS plans, and the temporary voluntary suspension of some sponsors selling these plans, none of these actions address deeper, structural problems that are behind the epidemic of marketing misconduct surrounding the sale of all Medicare Advantage plans.


In the press release announcing the agreement by some plans to voluntarily suspend the marketing of their PFFS plans, CMS focuses attention on agents selling the plans, stating that “‘there are a few bad actors that need to be removed from the system for good’” and declares that “CMS is proactive in protecting beneficiaries from rogue agents.”(9)

Attention to agents who are engaged in misconduct is certainly warranted. The plan sponsors themselves, though, must shoulder a large portion of the blame for marketing misconduct. They push agents to maximize sales but do not adequately prepare them through training and monitor them through oversight. CMS contributes to the problem by allowing the plans to operate with maximum flexibility with seeming impunity.

Agent and Plan Profit

One of the primary forces driving inappropriate sales of certain plans, we believe, is profit: 1) the high payments that Medicare Advantage plans receive (particularly PFFS plans)(10); and 2) 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.(11)

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.

Oversight and Training of Agents

CMS has largely delegated oversight and enforcement of marketing guidelines to the plans themselves. Plan sponsors are largely left to police their own conduct, and oversee the activity of agents and other downstream marketers who are selling their products.

Plans appear to exert considerable effort to motivate their contracting sales-forces to maximize sales through contests, including TVs, trips to Vegas, and extra money for extra volume of enrollments. Plan efforts to properly train their contracting agents, though, fall short as many agents appear to be uneducated or even misinformed about the products they are eagerly trying to sell. Consumer advocates have found that many agents selling MA plans (particularly 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 an MA plan can disrupt current drug or supplemental insurance coverage and even trigger an irrevocable loss of retiree coverage. 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.

CMS’s new requirements for PFFS plans includes testing of agents, but there are no real training and testing standards in place. In its 2008 Call Letter, CMS “considers” requiring PFFS plans to provide documented training of marketing agents and brokers on Medicare Advantage policy as well as unique aspects of the PFFS product. CMS’s press release concerning the voluntary suspension says “All representatives selling the product to beneficiaries on behalf of the plan sponsor will pass a written test that demonstrates their thorough familiarity with both the Medicare program and the product they are selling.” While these are clearly desirable goals, current plan requirements do not ensure this outcome.

Finally, as noted above, the growing number of private plans, plan types, benefit structures and complex interactions between these factors are making it more difficult for Medicare beneficiaries to meaningfully compare plans and make informed decisions about how they want to access their benefits through the Medicare program. Our policy recommendations below seek to address some of the underlying structural problems with Medicare Advantage that contribute to misconduct during the sale of Medicare products.


In our joint report with the Medicare Rights Center entitled “After the Gold Rush” we made several recommendations about the marketing of Medicare Advantage and Part D plans.(12) 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 marketing misconduct surrounding the sale of MA plans. More fundamental changes are required in order to adequately protect Medicare beneficiaries from fraud and misrepresentation.

With respect to Private Fee-for-Service (PFFS) plans, which account for the majority of marketing misconduct that we are aware of, we believe that problems concerning these plans relate not only to their sale, but to their structure. In our recent testimony before the House Ways & Means Health Subcommittee, we made several recommendations specific to PFFS plans.(13) Most of these recommendations, though, are not addressed by CMS’ recent new requirements. Perhaps most pressing, we urge Congress and CMS to carefully review the sale of PFFS plans to individuals dually eligible for Medicare and Medicaid.

  • Unless PFFS plans can prove that they both provide meaningfully better and more comprehensive benefits than those currently available through state Medicaid programs and are accepted by a broad range of providers in a given service area (including physicians, hospitals, clinics, etc.), we call for a ban on the sale of PFFS plans to dual eligibles.

There are further steps CMS should take to combat marketing abuses. In addition to the recommendations contained in the text above, we ask CMS to implement the following:

  • Mandatory agent training – CMS should require all MA plans (and PFFS sponsors 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.
  • Standardize and streamline the process through which plan enrollment and disenrollment disputes are handled, including Special Enrollment Periods (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.

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.


Although CMS and the insurance industry would like to blame Medicare Advantage marketing problems on a handful of insurance agents engaged in fraudulent activity – a “few bad apples” – the entire Medicare Advantage orchard is subject to rot as long as underlying structural problems continue to remain. Marketing abuses will continue unchecked unless: 1) plans are truly held accountable for the actions of those who sell their products; and 2) beneficiary protections outlined above are put into place. Congress and CMS must act to ensure that Medicare beneficiaries are able to access timely and quality health care as well as make informed decisions – without undue influence – about how they wish to access their benefits through the Medicare program.

Thank you for the opportunity to provide these comments.


  1. See, e.g. a January 2007 report issued by California Health Advocates and the Medicare Rights Center 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” available.
  2. California Health Advocates recently had the honor of testifying before the House Ways & Means Committee, Subcommittee on Health, during a hearing on PFFS plan on May 22, 2007; California Health Advocates’ written testimony is available at:… and
  3. E.g., by our count, there are 106 plan options available in Los Angeles County in 2007: 55 stand-alone prescription drug plans (PDPs), available statewide; 36 “health plans” (including 2 regional PPOs, 1 local PPO, 26 local HMOs [2 of which are only available in parts of the county], 6 PFFS plans and 1 MSA); and 15 Special Needs Plans (SNPs). See
  4. For a discussion of PFFS access to care concerns, the targeting of dual eligibles, and other issues relating to PFFS plans, see California Health Advocates’ 5/22/07written testimony before the House Ways & Means Health Subcommittee available at:… and
  5. For comments specific to the 2008 Call Letter, see Joint Comments submitted by National Senior Citizens Law Center, Center for Medicare Advocacy, Inc., Families USA, Medicare Rights Center, California Health Advocates and Pennsylvania Health Rights Project; some of these Joint Comments are incorporated herein; the Joint Comments are available at:…
  6. See 6/15/07 press release on CMS website at:…
  7. See, e.g, Oklahoma Insurance Department Limited Market Conduct Report of Examination of Humana Insurance Company for the period as of September 15, 2006.
  8. See, e.g., HealthLeaders-InterStudy’s Special Analysis Report: “New Agreement On Medicare PFFS Keeps Critics At Bay”
  9. See 6/15/07 press release on CMS website at:…
  10. See, e.g., MedPAC Report, March 2007, finding that MA program payments are 112% of original Medicare fee-for-service levels, and PFFS payments reached up to 119% — report available at:….pdf
  11. See, e.g., “Oklahoma Chides Insurer in Medicare Marketing Case” by Robert Pear, New York Times, May 15, 2007 – the 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); also, California Health Advocates conversations with various agents, plan and CMS representatives.
  12. California Health Advocates’ written testimony is available at:…
Karen Fletcher
Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.

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October 8, 2020 » 2 - 4 p.m. PDT » Fee: $45

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