TESTIMONY of CALIFORNIA HEALTH ADVOCATES
NAIC Senior Issues Task Force - Medicare Private Plans Subgroup
Public Hearing on Regulation of Medicare Private Plans
September 11, 2007
Washington DC 20001
INTRODUCTION
California Health Advocates (CHA) 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 provide support,
including technical assistance and training, to the network of California’s Health
Insurance Counseling and Advocacy Programs (HICAPs) which offer SHIP services in
California. CHA 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, as well as CHA’s long-standing participation as a funded
consumer representative to the NAIC.
Our written testimony begins with an overview of the landscape currently facing
Medicare beneficiaries, including: the vast number of plan options and variables; the
difficulty of making informed decisions; a summary of marketing misconduct witnessed
since advent of Part D; and both CMS’s and the insurance industry’s response to
marketing misconduct. Since CHA has commented extensively on these issues recently
in other settings1, we will focus most of our attention on suggested responses to these
problems, including a proposal for greater regulatory oversight by CMS, restoration of
state regulatory oversight, and strengthened consumer protections that include
standardization and simplification of plans providing coverage of Medicare benefits.
See, e.g., CHA reports drafted with Medicare Rights Center entitled “After the Gold Rush” (January
2007) at: http://www.cahealthadvocates.org/_pdf/advocacy/2007/CHA-MRC-Brief-AfterTheGoldrush2007-01.pdf, “The Reluctant Regulator” (July 2007) at:
http://www.cahealthadvocates.org/advocacy/2007/07.html ; also see CHA testimony before the House
Ways & Means Health Subcommittee (May 22, 2007) at:
http://www.cahealthadvocates.org/advocacy/2007/CHA_WaysMeans_testimony_0522.html ; and CHA
testimony before House Energy & Commerce Oversight Subcommittee (June 26, 2007) at:
http://www.cahealthadvocates.org/advocacy/2007/testimony-0626.html
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I.
LANDSCAPE FACING CONSUMERS
Selecting the appropriate Medicare coverage for an individual’s particular circumstances
has become immensely complicated for most Medicare beneficiaries since the enactment
of the Medicare Modernization Act of 2003.2 Whether an individual is just becoming
eligible for Medicare or is currently enrolled in a Medicare product, the number of factors
that must be considered to choose appropriate coverage has exploded with the
establishment and growth of the Medicare Advantage plans, with and without the Part D
prescription drug benefit, and freestanding Part D prescription drug plans. Mistakenly
enrolling in the wrong plan can result in the loss of employer sponsored retirement plans
that coordinate with Medicare, a loss of Medicare supplemental insurance (and the right
to get it back), and/or being locked into a plan for the remainder of the calendar year with
more expensive cost sharing, a restricted network of providers who will accept the plan,
or benefits that do not match an individual’s needs.
The 2006 Medicare Annual Election Period (AEP) presented Medicare beneficiaries with
a tsunami of product choices. Each of these choices involved several different types of
products, each with complex benefit variations, premium differences, and cost sharing
requirements. Beneficiaries in Los Angeles County, for instance, had more than 106 plan
options to consider including stand alone drug plans, HMOs, regional and local PPOs,
health plans with and without Part D benefits, Private Fee for Service plans, Special
Needs Plans, and a Medical Savings Account plan.
Too much choice can negatively impact consumer decision-making. Nobel Prize
winning economist Herbert Simon noted that "a wealth of information creates a poverty
of attention." His work showed that most consumers can manage only a very limited
amount of information before they reach information overload.3 Medicare Advantage
plan options create an algebraic puzzle that requires consumers to know and understand
impossible amounts of complex information to make an appropriate choice of health care
benefits. An individual’s out of pocket costs can vary enormously between plans in
unfamiliar ways. For instance, one plan might charge an upfront deductible for a
hospital stay, an unlimited per day coinsurance in another, or a daily coinsurance for a
limited number of days in a third. These variations can be confusing and often hide the
potential for out of pocket costs, making it almost impossible for consumers to compare
one method of cost sharing with another, or with the cost sharing of Original Medicare.
In addition, some plans carve out certain Part B services such as chemotherapy, radiation,
and certain Part B drugs applying a separate coinsurance or copayment that is not
credited towards the plan’s annual out of pocket limit. Only people who currently use
2
Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub.L. 108-173, 117 Stat.
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Simon, H. 1979. Information processing models of cognition. Annual Review of Psychology, 30:363396.
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those services could be expected to know the financial impact of such a carve out if they
understand it is part of the plan they are considering.
Side-by-side comparison of any two plans, even of the same type if plan, can be
impossible for beneficiaries and their families. Attempts by consumer groups to produce
comparison charts to aid consumers in selecting a plan often result in complex
spreadsheets that must be explained to each consumer based on their current coverage
and needs. Individual counseling sessions often require several hours to give a consumer
enough information so that s/he can choose a plan that will best meet their needs.
Many Medicare beneficiaries have limited or low functional literacy and a significant
portion are cognitively impaired, both of which can impact informed decision-making.
Many others have limited English proficiency adding another layer of complexity to
choosing appropriate coverage. For those beneficiaries who seek more information
and/or help in their decision-making about their options through Medicare, roughly half
of beneficiaries rely on family and friends, many of whom are usually in the same
situation of having to compare plan options. The second-most used source of advice
about Medicare coverage options comes from insurance agents and the private Medicare
plans themselves.4
Information from Medicare private plans and their contracting agents is often inadequate
in scope and availability, and ultimately self-serving since it is motivated by maximizing
profit. Beneficiary confusion surrounding the multi-faceted and Byzantine Medicare plan
options and benefits can be – and has been – easily exploited by both plans and agents,
particularly when meeting with beneficiaries in person, often in their own home.
Marketing Misconduct
Consumer advocates, state insurance regulators, the media, and Congress have all found
appalling abuses surrounding the sale of Medicare Advantage and Part D plans over the
last year and a half, resulting in real harm to Medicare beneficiaries. This misconduct
has been well documented by all of these sources, including CHA.5
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MedPAC Report to Congress: Increasing the Value of Medicare re: choosing a plan: 49% of beneficiaries
cited using family members or friends as resources as they made decisions. Other sources of assistance
used by beneficiaries were insurance agents (17%), Part D plans (8%), pharmacists (3%), doctors (1%),
counselors (6%), nursing home/senior housing (3%), and employer/union (2%). (MedPAC, June 2006);
http://www.medpac.gov/publications/congressional_reports/Jun06_EntireReport.pdf.
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For an analysis of the factors contributing to marketing abuses, as well as example misconduct, see, e.g.,
CHA reports drafted with Medicare Rights Center entitled “After the Gold Rush” (January 2007) at:
http://www.cahealthadvocates.org/_pdf/advocacy/2007/CHA-MRC-Brief-AfterTheGoldrush-2007-01.pdf,
and “The Reluctant Regulator” (July 2007) at: http://www.cahealthadvocates.org/advocacy/2007/07.html ;
also see CHA testimony before the House Ways & Means Health Subcommittee (May 22, 2007) at:
http://www.cahealthadvocates.org/advocacy/2007/CHA_WaysMeans_testimony_0522.html ; and CHA
testimony before House Energy & Commerce Oversight Subcommittee (June 26, 2007) at:
http://www.cahealthadvocates.org/advocacy/2007/testimony-0626.html
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Misconduct surrounding the sale of MA plans has ranged from outright fraudulent sales
practices to misleading sales due to agent ignorance and inadequate plan oversight.
Examples of abuses include: Medicare beneficiaries signed up for plans without their
consent or knowledge; prospective MA enrollees told outright lies in order to entice them
to join plans; high pressure in-home sales following unsolicited (and prohibited) door-todoor marketing; behavior by agents meant to intimidate consumers; mass enrollments at
senior and/or disabled housing facilities following sales presentations, and agents who
misunderstood the plan benefits they were selling and enrolled their clients in
inappropriate plans.
Despite CMS and industry response, discussed below, marketing abuses are not
subsiding. For example, California’s Department of Insurance, which earlier this year
reported few consumer complaints, recently issued a warning about aggressive Medicare
marketing schemes (July 25th, 2007). In addition, CHA continues to receive reports of
marketing misconduct occurring in California and elsewhere.
Industry & CMS Response
Facing mounting pressure from media stories and Congressional hearings, CMS and the
insurance industry took several measures in response to reports of marketing abuses. As
we have outlined elsewhere, though, these steps do not go far enough to fix the entire
range of marketing misconduct surrounding the sale of MA plans.6 The inadequacies of
industry and regulatory response include the following: corrective action plans already
imposed on sponsoring companies have not stemmed abusive conduct surrounding the
sale of their plans; CMS’ new marketing guidance for PFFS plans, while helpful, does
little to monitor and prevent ongoing abusive conduct, and has not been required of other,
non-PFFS MA plans; the “voluntary” PFFS suspension of sales announced in June is
already over for most plans, with questionable time and effort to correct deficiencies; and
plans are still not held accountable for the actions of agents selling their products. So
long as the number and complexity of plans continue to grow, consumers cannot easily
choose appropriate coverage, and the economic incentives to sell one plan over another
continues, marketing misconduct will continue as well.
Due, in part, to the design of Medicare’s regulatory structure, CMS as the federal
regulator has allowed Part D and Medicare Advantage plans to police their own
marketing activity. Federal law preempts traditional state authority over plans and their
actions. Allowing plans and their agents maximum flexibility to sell products has come
at the expense of adequate protection for consumers, including the ability of consumers to
make apples to apples comparisons between plans they are considering. We argue that
CMS should not be concerned with the “balance” between the interests of insurance
companies profiting from the Medicare program and people who depend on those
See, e.g., CHA report drafted with the Medicare Rights Center entitled “The Reluctant Regulator: The
Center for Medicare and Medicaid Services’ Response to Marketing Misconduct by Medicare Advantage
Plans” (July 2007) at: http://www.cahealthadvocates.org/advocacy/2007/07.html
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Medicare benefits. Instead, the federal government’s role as a federal regulator should be
to protect consumers by setting and enforcing standards that create a healthy marketplace
with an even playing field for all commercial participants.
Medigap Regulation: Past is Prologue
The complexity and number of permutations of Medicare Advantage plans mimics the
number and complexity of Medigap policies before Congress limited the number and
benefit designs of those products through federal legislation.7 The marketing abuses
surrounding the sale of MA and Part D plans is also with precedent: as the NAIC recently
noted in a June letter to Senators Baucus and Grassley, the “rampant abuses” in the
Medigap market leading to passage of OBRA ’90 “bear a striking similarity to the
problems we are seeing today with Medicare Advantage and Medicare Part D
prescription drug plans.”
Prior to the Omnibus Budget Reconciliation Act of 1990 (OBRA ’90) Medigap policies
had proliferated in number, each with different riders, benefit variations, deductibles, and
cost sharing requirements making it nearly impossible for consumers to compare one
policy with another. As a veteran of the policy debate surrounding Medigap
standardization noted at the time, consumers faced many challenges in the prestandardized Medigap market: “Polices are purposely incomprehensible in their language
and construction. They defy side-by-side comparison, and even singly are impossible for
consumers to understand.”8
The same factors that existed in the Medigap marketplace before OBRA ‘90 exist today
in Part D and Medicare Advantage plans; consumers cannot compare benefits and costs
and therefore must depend on what agents and plans tell them to choose appropriate
coverage. In hindsight, the variations in pre-standard Medicare supplement policies pale
by comparison. In addition, unlike Medigap plans, Medicare Advantage plans can
change their benefits – and participation in Medicare – annually, giving Medicare
beneficiaries far less stability than they enjoy through Medigap coverage and disrupting
their continuity of care.
Many of the current Medicare Advantage and Part D marketing abuses result from an
unfettered market in which agents and companies are able to put their own economic
interests first. Insurance companies and CMS – the agency tasked to regulate them –
have placed the blame for misconduct squarely on the shoulders of “rouge” agents, acting
without authority from the plans whose products they are selling. Congress heard the
same refrain during hearings in the late 1980’s on Medigap abuses until a district attorney
in Santa Cruz, California brought a civil case against an insurance agency for those
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Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508, OBRA 90) and the Social Security Act
Amendments of 1994 (P.L. 103-432, SSAA 94).
8
Bonnie Burns, Hearing testimony on Medicare Supplement Policies, Subcommittee on Health of the
Committee on Ways and Means House of Representatives, March 13, 1990
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practices and provided Congressional investigators with exhibits from the case which
included vivid examples of systemic marketing misconduct in the Medigap marketplace.
In the Medigap context, after hearing numerous complaints that consumers were unable
to make informed decisions about their health care coverage in a market with too many
complex choices, Congress acted to establish mandatory federal benefit standards,
consumer protections, and loss ratios requirements to ensure that consumers received fair
value for the products they purchased. During the last 15 years consumers have benefited
enormously from the simplicity of choosing a Medigap plan, and many have asked why
other insurance purchases can’t be similarly simplified. Below, we offer both broad and
specific recommendations concerning the Medicare Advantage and Part D programs
aimed towards providing consumers with greater protection.
II.
RECOMMENDATIONS for STRENGTHENING CONSUMER
PROTECTIONS
We are convinced that much of the marketing abuse prevalent in the Medicare Advantage
marketplace stems from several factors, including: the flow of money – both paid to
Medicare Advantage sponsors by the Medicare program, and to agents selling these plans
through commissions; the inability of consumers to compare plans and make informed
choices on their own; and the preemption of traditional state authority over products sold
in their state. Below, we make a number of recommendations to address marketing
abuses in the Medicare Advantage marketplace. These recommendations range from
broad suggestions that would require fundamental changes to the Medicare program, to
more specific recommendations that NAIC, on behalf of state regulators, and CMS, as the
federal regulator, can implement.
1) Apply the standardization and simplification requirements of the NAIC Medigap
Model Act and Regulation to all Medicare Advantage and Part D plans
We strongly endorse NAIC’s request to Congress to consider the current regulation of
Medigap insurance as a regulatory model for Medicare Advantage and Part D plans. As
noted in a recent letter drafted by NAIC, the “regulation of Medigap insurance provides a
good model for enforcement, as states have the ability to take action against both the
agents and the companies themselves.”
Standardization and simplification requirements should include:
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Loss ratio standards to limit administrative costs and ensure adequate funds for
medical care;
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Guaranteed renewability requirements to ensure stability of benefits;
Suitability requirements to ensure the right set of benefits is sold to meet
individuals’ needs;
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 documents and standards to ensure that people
understand differences between current benefits and replacement coverage and
restrictions.
2) Create standard benefit packages for Medicare Advantage and Part D Plans
The proposal to standardize Medicare Advantage (previously Medicare+Choice) plan
benefits is not a new one.9 We believe it is time for Congress to delegate to the NAIC a
charge to standardize and simplify Medicare Advantage and Part D plans. The NAIC’s
original and continuing work on Medigap polices offers a structure and format for
convening a similar group of interested parties to produce a limited number of benefit
packages and simplify products that promise to provide Medicare covered services.
There can be little argument that this is a necessary step given the striking parallels to the
inability to make an informed choice of a Medigap policy prior to 1990, and the almost
instant reforms benefiting consumers that resulted from standardizing those products.
While the nature of Medicare supplement insurance and Medicare Advantage products
are very different, important lessons can be learned from the federal standards established
in OBRA 90. Following OBRA 90, it was easier for consumers to compare products and
prices and to choose the health benefits they needed at a known cost. In addition,
complaints about carriers and agents were reduced.10 There are no hidden out of pocket
costs in these products and there are no changes to their benefits once enrolled. Over the
years, choosing a Medicare supplement policy has become one of the easiest insurance
decisions older Americans are required to make, although cost remains an issue for many
low-income beneficiaries. Consumers often ask why other insurance products couldn’t
be made as easy to compare. It’s a good question and one that can and should be applied
to Medicare Advantage and Part D plans.
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. We believe that standardization should
include the following elements:
See, e.g., Fox, Peter, Snyder, Rani, Dallek, Geraldine, Rice, Thomas, “Should Medicare HMO Benefits be
Standardized?” Commonwealth Fund (February 1999); Dallek, Geraldine, Edwards, Claire, “Restoring
Choice to Medicare+Choice: The Importance of Standardizing Health Plan Benefit Packages”
Commonwealth Fund (October 2001).
10
Hahn, Jim; Standardized Choices: Medigap Lessons for Medicare Part D, CSR Report for Congress,
(Received through the CRS Web) March 8, 2006 (Order Code RL33300)
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Limits on annual out-of-pocket spending;
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.) and a limitation on the number of permissible
cost sharing methods;
Development of more comprehensive disclosure documents to ensure that people
with Medicare will understand the changes they are making to the way they get
their Medicare benefits and any effect on their Medicaid benefits. For instance,
MA marketing materials should clearly disclose – in plain language – that
purchase of this product may change how the individual receives Medicarecovered services. Managed care products should clearly warn potential members
that enrollment may limit which doctors and other providers they can see. Such
important changes in coverage should not be buried in fine print;
Requirement that all MA and Part D product names clearly specify what they are.
Instead of “value”, “reward”, “gold”, “silver” etc., there should be clear
descriptive terms in the name of each product, such as “HMO” or “PDP” and a
proscribed disclosure developed by CMS to alert people with Medicare to any
changes they are making to their health care delivery system.
While MA and Part D plans vary considerably by plan type and benefit design there are
elements of each that could be standardized to make it easier for consumers to
differentiate one plan from another and to readily identify costs associated with each
plan. For instance, for CMS could:
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Limit companies to two plans for each type of plan and eliminate unnecessary
duplication and confusion;
Limit the variables between plans such as deductibles and other cost sharing and
eliminate some of the complexity of comparing plans;
Prohibit cost sharing for specific medical services and end a discriminatory
practice against people with critical or chronic medical conditions;
Require a standardized format for displaying benefits and cost sharing to achieve
the goal of side-by-side comparisons.
3) Rescind the statutory preemption that prevents states from enforcing state laws
on consumer protections and the marketing of insurance products.
The primary obligation of state insurance departments is to protect the buying public who
purchase the promise of immediate or future insurance benefits by the payment of
premiums to insurance companies. States license, monitor and enforce state law for
insurance companies that make insurance products available for sale in their state and the
agents authorized to sell those insurance products. However, states have been stripped of
their authority to apply and enforce state law in regard to companies selling products
related to the federal Medicare program under the Medicare Modernization Act
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(MMA).11 Federal preemption limits a state’s authority to the issuance of a state license
to companies under contract to the federal government, unless the Centers for Medicare
and Medicaid (CMS) issues a waiver allowing a company to escape this requirement.
State insurance departments must be able to exercise their authority to enforce state law
and regulate companies and the products sold in their state. The federal preemption of
state authority should be repealed.
We strongly support NAIC’s request to Congress to restore state insurance regulatory
authority over Medicare Advantage and all Part D plans (see NAIC’s 6/19/07 letter to
Senators Baucus and Grassley). States should have the authority, when a pattern of
marketing misconduct by a Medicare Advantage or Part D plan is demonstrated, to order
plans to “cease and desist” from enrollment, to levy financial penalties and to revoke the
licensure of state plans. States should have the authority to require plans to appoint their
independent agents and brokers and hold the plans accountable for the actions of these
plan representatives. In addition, state insurance appointment laws should be applied
towards Medicare Advantage and Part D plans; as noted by NAIC, “state insurance
regulators’ already limited ability to hold companies responsible for the acts of their
agents has been eroded even further by CMS’ interpretation that state insurance
appointment laws, which help create an agency relationship between plans and their
agent/brokers, are pre-empted and unenforceable” (NAIC letter to Sens. Baucus and
Grassley, 6/19/07). Unless there is enforcement by state regulators that penalizes plans –
instead of just agents – abuses will continue. States should have similar authority to that
which they have in the Model Act and Regulation for Medigap policies
4) Prohibit plans from offering differential commissions based on what type of plan
is selected by the enrollee.
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. Basing higher commissions on the amount of time necessary to explain a plan
option serves as a convenient rationale for allowing plans to reward agents that sell plans
that generate more revenue, whether or not the plan is suitable for the consumer. Agents
should receive compensation based not solely on initial enrollment into a plan, but also
based on continued enrollment. This would ensure stability in plan enrollment and
encourage agents to sell appropriate coverage and is the compensation system used for
most insurance products.
High commissions, sales contests and other devices are far more likely to attract agents
who have little interest in the industry as a profession and have far more interest in a
quick buck. These agents are more likely than career agents to be responsible for
continued marketing abuses. Some career agents are unwilling to be associated with a
11
See Section 232(a) of 42 USC 1395w-26(b), which expands federal preemption of Medicare Advantage
and PDP plan regulation by states.
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product that creates such bad press for the profession. 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.
5) Repeal lock-in and allow people with Medicare to change MA plans and
prescription drug plans during the course of the year.
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 recommendations concerning suitability standards and
replacement commissions, this would allow enrollees to undo bad choices more easily.
Excessive movement out of a plan would be clear cut evidence that enrollees were not
sold appropriate coverage.
6) Offer the Part D prescription drug benefit through Original Medicare.
Give people with Medicare the choice of a drug coverage option under the Original,
Medicare program. If people with Medicare do not want to deal with private plans and
their marketing agents, they won’t have to.
7) Eliminate the overpayments to Medicare Advantage plans and put payments on
par with local costs under Original Medicare.
Pegging Medicare Advantage payment benchmarks to Original Medicare costs will
encourage plans to devote their resources to improving efficiency and adding value to
their products and eliminate the windfall profits that are driving aggressive marketing
strategies and paying for commissions and bonuses to unscrupulous agents. OBRA 90,
which stemmed abusive marketing of Medigap supplemental plans, was successful in part
because it tempered the profitability of Medigap plans by establishing minimum medical
loss ratios—minimum percentages of premium income that must be spent on medical
benefits —and thus the financial incentives for aggressive marketing. Putting Medicare
Advantage payments on par with Original Medicare costs should likewise dampen
incentives for aggressive marketing.
8) 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.
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9) 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.
In addition, MA and Part D plans should be required to report all complaints about their
agents to CMS and to the appropriate state regulatory agency. CMS should keep records
of the agents reported to them and work with the appropriate state agency to resolve those
complaints. Agents fired by one company selling Medicare products should not be
allowed to sell another company’s Medicare products. CMS should provide technical
training to state insurance departments to help them understand how the purchase or
replacement of coverage is related to a state’s rules for inappropriate or abusive sales.
10) Hold sponsoring companies accountable for the actions of agents selling their
insurance products.
When an agent engages in misconduct while selling a plan’s product, the plan should be
forced to take corrective measures, including the imposition of monetary sanctions
against the sponsors and agents. People with Medicare harmed by these practices should
be held harmless and any debt they have incurred should be the responsibility of the
sponsoring company.
11) Agent-specific recommendations
Agent activity should be further regulated to include:
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Prohibition against agents cross-selling unrelated products (e.g., annuities and life
insurance) during a Medicare product solicitation or sales session. We share
NAIC’s concern about these high-pressure sales tactics, and we call for a
prohibition of these activities;
Prohibition against cold calling;
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., and should highlight that
individuals with certain kinds of insurance are in danger of losing it if they enroll
in an MA or PDP. Training scripts should include clear, unbiased explanations of
the coverage options available, including Original Medicare, Medigap
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supplemental plans, Medicare Advantage, Medicaid and Medicare Savings
Programs, as well as marketing guidelines. Training should not be limited to
company product lines. In addition, agents should be required to provide
information to each prospective enrollee about how to reach their local SHIP
program. Ultimately, the training should enable agents to help beneficiaries make
the most appropriate choice among their coverage options;
Sales reporting requirements –CMS should ban sales in senior or disabled housing
facilities, and implement reporting requirements that enable plans and CMS to
identify and prevent unsolicited door-to-door sales. All in-home enrollments
should be flagged and agents should be able to document how an invitation for an
in-home presentation was secured. Mass enrollments at sale presentations should
also trigger increased plan efforts to verify suitability of their product for the new
enrollee and should be discouraged or barred in the commission structure for
agents. Mass enrollments indicate an absence of individualized attention on the
part of the agent necessary to ensure the product sold is appropriate to an
individual’s needs. Similarly, plans should monitor monthly enrollment figures
for individual agents in order to ensure that high production does not indicate a
failure to adequately explain suitable coverage options to consumers.
CONCLUSION
Standardization of Medicare supplemental policies came only after years of complaints of
bad sales practices and confounding benefit structures. Medicare Advantage and Part D
plans, though, provide the sole access to one or more of Medicare’s benefits and have a
much more profound impact on the health care status of beneficiaries. In addition, once a
choice is made beneficiaries have few options to make any changes during the current
year. Given the central role MA and Part D plans play in the Medicare arena, it is
unreasonable to delay action that would make it easier for consumers to choose coverage,
make benefits and costs more transparent, and allow consumers to realistically determine
their ability to absorb the costs of the plan they choose.
Thank you for the opportunity to provide these comments. Respectfully submitted by:
Bonnie Burns
Training & Policy Specialist
California Health Advocates
Ph: (831)438-6677
FAX: (831)438-2441
[email protected]
David Lipschutz
Staff Attorney
California Health Advocates
3435 Wilshire Blvd., Suite 2860
Los Angeles, CA 90010
FAX: (213) 381-7154
[email protected]
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