Snowe targets fraudulent Medicare pitches

WASHINGTON – The federal government isn’t doing enough to protect Medicare recipients from aggressive and fraudulent marketing strategies by sales agents for Medicare Advantage plans, Sen. Olympia Snowe, R-Maine, said at a Senate Finance Committee hearing Wednesday.

“Given the complexities of this program, and the material one must navigate – such as a 110-page Medicare guide – and all the marketing materials seniors are receiving, we must see prompt action to address the problems of these plans,” Snowe said. “One key aspect is the system must become more user-friendly. It is extremely confusing today, and that simply makes beneficiaries more vulnerable to unethical marketing.”

Medicare Advantage plans are privately marketed plans that replace Medicare’s Part A, which is hospital insurance, and Part B, which provides medical insurance. Some Advantage plans also include Part D, which provides prescription drug coverage.

“The story of sales by private Medicare plans is a tale of trust,” the committee’s chairman, Sen. Max Baucus, D-Mont., added. “Seniors justifiably trust Medicare. But there are sales artists who are abusing that trust.”

Victims of the deceptive practices described their experiences for the Finance Committee last week, recalling salesmen misrepresenting themselves as Medicare officials and forging applications to enroll new members without their consent.

“I am hearing that seniors who are perfectly happy with their health coverage are getting a hard sell to change plans each year,” Sen. Charles Grassley, R-Iowa, said at last week’s hearing. “I am hearing stories about agents visiting the homes of elderly people sick with flu and insisting on enrolling them in a private Medicare plan. I am hearing that health plans are buying beneficiaries lunches and dinners as part of the sales pitch. Some people feel obliged to enroll as a result.”

There are more than 8.9 million people enrolled in Medicare Advantage plans nationwide, said Jeff Nelligan, spokesman for the Department for Health and Human Services’ Centers for Medicare and Medicaid Services. There are almost 4,000 Maine residents enrolled in Medicare Advantage plans.

Consumer complaints, along with a 2006 fraud case, prompted the Maine Legislature to pass a bill last April prohibiting insurance agents from making cold calls, door-to-door sales or engaging in cross marketing.

“We’ve heard anecdotally that these sales practices were occurring,” said Judith Shaw, deputy superintendent of Maine’s Bureau of Insurance. “These prompted us to pass the legislation.”

The 2006 case involved an insurance agent who persuaded a customer to withdraw from his current plan, which included independent prescription drug coverage, and enroll in a new Medicare plan, which did not include the prescription drug benefits. The agent said he did not know that switching plans would cause the customer to lose the independent coverage. The state ruled that the agent demonstrated incompetence and he was forced to take a course in ethics to settle the case.

Humana, a health care insurance company, offers a $10,000 bonus to agents who enroll 150 seniors into private Medicare plans by April, Baucus said at the hearing.

“Plainly, seniors should never trust these shady private Medicare sales artists,” said Baucus, “But we want to maintain seniors’ trust in Medicare.”

The insurance industry has been working with members of Congress since the issue was raised to assure that people are not falling prey to unscrupulous practices and is reacting immediately to any complaints, said Mohit Ghose, spokesman for America’s Health Insurance Plans, a national association representing almost 1,300 insurance companies.

“I think we can all agree that it’s in everyone’s best interest to protect Medicare beneficiaries in the long term,” said Ghose. “While we must address unscrupulous marketing practices, we can’t overlook the fact that more than 9.5 million beneficiaries were able to receive better benefits at lower costs because of the Medicare program.”

Ghose said the association hopes members of Congress will hear from their constituents about the importance of these programs.

“We are committed to reporting, monitoring and disciplining agents and brokers,” said Ghose, “along with providing better service at a lower cost to beneficiaries.”

The association made recommendations last year on how to improve the system and is working with Congress, Ghose said. One such recommendation is to require agents to arrange appointments to talk about their companies’ plans instead of making sales pitches over the phone. Many companies have begun to enforce this requirement.

Snowe questioned Kerry Weems, acting administrator of the Centers for Medicare and Medicaid Services, regarding what she considers the department’s lax oversight of private Medicare plans and where their subsidy dollars are being used. As federal subsidies directed to the private Medicare plans increased to $50 billion over the last five years, the department’s oversight declined by almost half in the same period, Snowe said.

Nelligan said the center, known as CMS for short, is committed to protecting people with Medicare from potential abuses.

“Acting Administrator Weems has made it his top priority for CMS to be more proactive and transparent than ever before in overseeing the Medicare Advantage program, and in addition to actions already taken, the center is considering additional administrative actions,” Nelligan said.

Snowe offered several suggestions at the hearing, including a post-enrollment “cooling off” period, allowing Medicare participants to give the plan a trial run before being locked in. In addition to avoiding the hassle of a long appeal process to be released from the plan, the “cooling off” period would prevent some private companies from engaging in deceptive practices.

“I know the difficulties seniors have to make in choosing their plans from year to year,” Snowe said.

“It shouldn’t be that complicated. If a beneficiary finds out their coverage isn’t exactly what they wanted, then they should have the opportunity to cancel.”

Snowe also suggests lengthening the enrollment period, which occurs during the Thanksgiving to New Year’s holiday season, to give seniors more time to decide the right plan for them.