PRINTER FRIENDLY
 

Introduction

Another annual enrollment period (AEP) for Medicare Advantage (MA) plans under Medicare Part C and prescription drug plans (PDPs) under Medicare Part D begins on November 15th.  A key question for advocates is whether the misrepresentation and fraudulent marketing practices engaged in by some MA plans, PDPs, their agents and brokers will be reduced as a result of recent legislative and regulatory changes.

Congress included marketing protections in the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) that was enacted in July.[1] On September 18, 2008, the Centers for Medicare & Medicaid Services (CMS) issued final marketing regulations[2] as well as interim final regulations that contained additional marketing provisions to implement the MIPPA provisions.[3] CMS has also issued a number of different guidance documents to assist health plans in implementing the two sets of regulations.[4]  Some of the provisions codify or expand upon existing CMS guidance.  Others provide new protections for beneficiaries.  This Weekly Alert addresses the new marketing rules for private Medicare plans.

Unsolicited Marketing Contacts

Unsolicited contacts by sales agents and others are among the most frequently reported marketing complaints by Medicare beneficiaries. The new marketing rules prohibit most unsolicited door-to-door sales and outbound calls by health and prescription drug plans, even to confirm receipt of information mailed by the plan to the beneficiary.  The prohibition extends to plans and their representatives, including third-party organizations that contact plans and agents to provide services. In a document entitled "Summary of Marketing Questions" that was issued on October 8, 2008, CMS stated,

Third-party entities selling beneficiary leads that claim they are not subject to the unsolicited contact provisions are providing misinformation.  CMS reminds plans that they will be held accountable for all actions of agents/brokers selling their products, and plans/agents/brokers should be wary of any company selling beneficiary contacts they claim to be permissible under our guidance.

Nevertheless, CMS has created some exceptions to the unsolicited contacts prohibition.  Part D plans that no longer qualify as Benchmark plans may contact current low-income subsidy eligible members who are being reassigned to discuss with them their option to remain in their current plan and pay the minimal premium difference between their current plan's new premium and the benchmark amount.  CMS must approve the call scripts for plans that make such calls.

CMS also stated, in its October 17 guidance, that leads may still be generated through mailings, plan web sites, advertising and public sales events.

Plans may contact beneficiaries to conduct normal plan business or by express permission of the beneficiary, although such permission is to be considered short-term.  An agent or broker who enrolled the beneficiary in a plan may contact the beneficiary to discuss plan issues and to market other plan options.  Agents and brokers may call beneficiaries to confirm an appointment.

Educational Versus Marketing Events

The regulations distinguish between educational and marketing events. Educational events are designed to inform beneficiaries about MA plans and PDPs in general without steering them to a particular plan or plans. Agents who conduct informational or educational events may not engage in marketing at those events.  An event organized by another entity, such as a senior center or senior housing complex, will be considered to be educational if the event is advertised as educational.  If the event is not advertised as educational, however, CMS says that the plan may provide plan-specific information that complies with the marketing rules.

Agents, brokers, and plan representatives also cannot contact beneficiaries in the lobby or the parking lot before or after the educational event to market or enroll attendees in plans.

Health Care Settings

Plan sponsors can only conduct marketing or sales activities in the common areas of health care settings.  Common areas include hospital or nursing home cafeterias, community or recreational rooms, and conference rooms. Space outside the area where customers wait for services or to interact with the pharmacists would be considered a common area of a retail store that has a pharmacy counter.

No sales activities may be conducted in waiting rooms, exam rooms, hospital patient rooms, dialysis centers, and pharmacy counter areas where beneficiaries wait for services. Agents need an appointment to conduct sales activities with long-term care residents.

Providers may distribute marketing materials as long as they make available materials from all of the plans in which they participate. They may also display information describing the plans with which they participate unless plans fail to give the provider materials.

Gifts and Meals

Plans may no longer provide meals or have meals subsidized at marketing events.  Marketing events include any event at which specific plan benefits are discussed or where plan materials are handed out or are made available.  Plans may serve light snacks as long as the food served could not reasonably be considered a meal or be "bundled" together to be served as a meal.  Meals are permitted at educational events, but no steering towards particular plans or groups of plans is allowed at educational events.

Similarly, plans may provide gifts to individuals who attend marketing events as long as the gifts are nominal ($15 or less in value), may not be convertible into cash, and are not conditioned upon enrollment.

Sales Appointments

Agents and brokers must identify in advance with the beneficiary the "line of business" to be discussed at a sales appointment.  PDPs, Medicare Advantage plans, and Medigap plans are considered separate lines of business. The lines of business to be discussed must be documented by the plan in a writing signed by the beneficiary or by recorded telephone call if the appointment is made over the telephone. Agents who do not have recording devices on their phones may mail the written appointment form to the beneficiary and ask that it be read, signed, and mailed back before the meeting. If an appointment is made by the plan in response to a reply card, the agent may only discuss the line of business that was included in the advertisement.

Beneficiaries who want to discuss additional lines of business must request the information.  They will need to set up a separate appointment with the agent or broker.  The new appointment to discuss other lines of business must be at least 48 hours after the initial appointment.  For example, if an agent makes an appointment to discuss PDPs, the agent cannot discuss MA plans at the same appointment, even if the issue arises during the meeting and the beneficiary asks questions.  The agent may leave information about MA plans, but must make a separate appointment to discuss them in detail.

Co-branding Limitations

The name and logo of co-branded network providers may not be on plan membership cards.  The name of a specific provider or hospital network that was selected by the beneficiary, for example a primary care provider, may appear on the membership card.

The name and logo of co-branded network providers may be included on other marketing materials only if the information includes a disclaimer that other providers are available in the plan's network.  They also may be included if the provider is the exclusive provider, without any disclaimer.

Current guidance that prohibits providers from steering beneficiaries towards specific plans remains in effect.

Using the Term "Medicare" as a Marketing Tool

In its October 17, 2008 guidance document, CMS reminded plan sponsors that it is a violation of the Medicare statute to use "Medicare "or a reference to CMS or the Department of Health and Human Services to imply falsely that the plan is "approved, endorsed, or authorized by Medicare…"  The prohibition applies to plan sponsors, plans, their contractors and subcontractors.[5]

Agent/Broker Requirements

Many of the new requirements are designed to address misconduct by agents and brokers.

Training and Testing: All plan contracted and staff agents or brokers must be trained annually on Medicare rules and regulations and plan-specific coverage and procedures. According to the October 17 guidance, agents and brokers tested after September 18, 2008, must receive a test score of 85% or better to pass.

State Appointment Rules: All agents and brokers marketing 2009 Medicare plans must comply with state appointment laws concerning the licensing, certification, and/or registration of agents and brokers. Plans or agents must pay any state appointment fees. Customer service representatives do not need to be state-licensed, as long as the scope of their activities is limited to answering questions with factual information, providing plan materials as requested by a beneficiary, or completing enrollments for individuals who had already decided to enroll.  Effective January 1, 2009, a plan must report the termination of an agent or broker and the reasons for the termination to the state in which the agent or broker was appointed.

Compensation: MIPPA required CMS to develop limits on agent and broker compensation to prevent them from steering beneficiaries to plans that paid them higher compensation and that might not serve the needs of the beneficiaries.  The compensation limits must also be designed to reduce "churning" that occurs when agents enroll beneficiaries in a new plan every year in order to earn a higher commission. Compensation for sales is to be structured over a 6 year period, the first year and no fewer than five renewal years, provided the beneficiary remains enrolled in the plan. First year aggregate compensation may not exceed renewal compensation by more than 200 percent, and compensation may be adjusted if the beneficiary changes plans.[6] 

Problems Have Not Gone Away

Marketing has just begun for 2009, and there are already reports of problems.  Several participants on the October 28, 2008, National Medicare Training Partnership call sponsored by CMS said that all the problems that led to the enactment of stricter marketing requirements continue, regardless.

The problem of how plans compensate their agents and brokers is on-going.  Many advocates believe that the high rates of compensation, including awards, bonuses, and commissions, leads to marketing abuses.  Senator Max Baucus (D. Montana), chairman of the Senate Finance Committee,[7] and Representative Pete Stark (D. California), chairman of the Health Subcommittee of the House Committee on Ways and Means, both criticized Medicare Advantage plan commission structures that are giving agents incentives to churn beneficiaries into inappropriate health plans.  Rep. Stark, in a letter to CMS, complained that, "… in a clear attempt on the part of plans to skirt the intent of CMS's new MA marketing regulations the commissions offered this year (and thus, for the following four years) are greatly increased, and in some cases, four times higher than previous years."[8]

In response, CMS issued a memo to health plans on October 24, 2008, that rescinded guidance issued on October 8, 2009, concerning agent compensation structure. The brief notice indicated that CMS is aware of concerns about agent and broker commissions and expects to be taking further action shortly. [9]

The Center for Medicare Advocacy will keep advocates advised of changes to the marketing guidance.  We are interested in hearing from you about any problems you and your clients encounter.