Submitted Written Testimony from the Center for Medicare Advocacy re: Senate Finance Committee Hearing: “Medicare Advantage Annual Enrollment: Cracking Down on Deceptive Practices and Improving Senior Experiences”
(Hearing Held on October 18, 2023)
November 1, 2023
Associate Director/Senior Policy Attorney
Center for Medicare Advocacy
Licensed in CA and CT
The Center for Medicare Advocacy (the Center) is a national, non-profit law organization that works to ensure access to comprehensive Medicare, health equity, and quality healthcare. The organization provides education, legal assistance, research and analysis on behalf of older people and people with disabilities, particularly those with long-term conditions. The Center’s policy positions are based on its experience assisting thousands of individuals and their families with Medicare coverage and appeal issues. Additionally, the Center provides individual legal assistance and, when necessary, challenges patterns and practices that inappropriately deny access to Medicare and necessary care. We appreciate the opportunity to submit this written testimony for the record.
The Center applauds the Senate Finance Committee for holding a hearing focusing on marketing abuses surrounding the sale of Medicare Advantage (MA) plans. In November 2022, the Senate Finance Committee issued a report titled “Deceptive Marketing Practices Flourish in Medicare Advantage” which “found evidence that beneficiaries are being inundated with aggressive marketing tactics as well as false and misleading information.” More recently, reports by KFF and Commonwealth Fund show that during last year’s open enrollment period, 85% of Medicare-related ads focused on MA plans, three-quarters of Medicare beneficiaries faced daily TV or online ads, and 1 in 3 reported receiving 7 or more unsolicited phone calls per week. Lower income individuals were more likely be to subject to “advertising information that was later found to be untrue” and a larger share of Black adults than White adults reported unsolicited calls.
Amidst this onslaught of marketing promoting enrollment into MA plans, most people with Medicare are not making informed decisions about their health care coverage. According to KFF ’s analysis of MA marketing:
Ads rarely mentioned traditional Medicare, or potential limitations with plan coverage, such as provider networks or prior authorization requirements, leaving beneficiaries with an incomplete view of their coverage options and the tradeoffs among them.
There are many things that Congress and the Centers for Medicare & Medicaid Services (CMS) can and should do to address Medicare Advantage problems, including marketing misconduct. The Center supports all of recommendations from November 2022 Committee report, in particular shoring up the State Health Insurance Assistance (SHIPs) and addressing agent/broker commissions, as discussed below. But larger systemic issues plaguing Medicare Advantage also demand broad, systemic solutions.
Policy Suggestions to Address Medicare Advantage Marketing Misconduct
Rein in Wasteful Overpayments to MA Plans
One of the major drivers of marketing misconduct is the massive financial incentives for insurance companies to maximize enrollment in their most profitable products and, in turn, the corresponding incentives of those who sell these products. As mentioned by Senators Stabenow and Warren at the hearing, MA plans are paid at a higher rate than the traditional Medicare program spends on a given beneficiary. While estimates of the extent of MA overpayments vary, such wasteful payment is receiving more attention from both the media and policymakers. While the Medicare Payment Advisory Commission (MedPAC) estimates wasteful overpayments to be almost $27 billion in 2023, as noted in a CMA Alert (Aug. 3, 2023), in July 2023 the Committee for a Responsible Federal Budget (CRFB) posted research suggesting that MA plans might be overpaid by between $180 billion and $1.6 trillion over the next decade. More recently, as discussed in another CMA Alert (Oct 5, 2023), Physicians for a National Health Program (PNHP) released a report stating that MA plans are overpaid by as much as $140 billion a year.
Strengthening Traditional Medicare
These wasteful overpayments allow MA plans to offer extra benefits that are used to entice people while distracting from more important considerations. Not only do such wasteful overpayments put strain on Medicare’s finances, they crowd out coverage expansion in traditional Medicare program. Congress should rein in wasteful MA overpayments and use them to both shore up Medicare’s finances and add benefits to traditional Medicare – such as dental, hearing and vision coverage – which would accrue to all Medicare beneficiaries, including those who choose to enroll in MA plans. Adding these benefits, as well as an out-of-pocket cap, would help level the playing field between MA and traditional Medicare, and allow for a true choice of coverage options. Due to extra money to offer extra benefits, and massive insurance company marketing budgets aimed to maximizing enrollment into MA plans, today, the deck is stacked in favor of enrollment into Medicare Advantage. This disparity is exacerbated by the lack of freedom of movement between coverage options. Free movement between types of Medicare coverage must be made more fair and equitable. This includes expanding federal Medigap rights beyond the current rules, which generally do not require Medigap companies to sell a policy to someone who disenrolls from an MA plan after a year of being in such a plan.
Similarly, there are unequal rights to move in and out of MA plans vs. stand-alone Part D plans (PDPs). The Medicare Advantage Open Enrollment Period (MA-OEP) allows someone to make changes to their coverage during the first 3 months of the calendar year if they began the year with MA coverage. No similar right exists for individuals in traditional Medicare and PDPs. As Senator Grassley suggested during the hearing, there should be a corresponding right for enrollment in PDPs.
Strengthen Oversight and Enforcement
With more than half of the Medicare population now enrolled in MA plans, it is unclear if CMS’ resources and staff have been allocated accordingly in order to provide necessary regulatory oversight and enforcement. Congress should invest additional funding in the agency’s oversight, and provide CMS with additional tools to hold plans accountable, including enhanced enforcement measures such as higher civil monetary penalties and more meaningful sanctions, including the ability to terminate plan contracts due to misconduct. Further, CMS should work more closely with state departments of insurance and the National Association of Insurance Commissioners (NAIC) to ensure that agents, brokers, and plan sponsors are held accountable for misconduct.
Foster Informed Decision-Making
In order to assist Medicare beneficiaries to make fully informed decisions about their coverage options in a more consumer-friendly manner and without undue pressure from agents and brokers, Congress and CMS should work to reform agent/broker commissions, standardize and limit plan offerings, and better support the SHIP network.
Reform Commissions Paid to Agents and Brokers
During the hearing, Ms. Hogland, CEO of Security Health Plan, testified about how the lure of “add-on payments” available to agents and brokers can negatively impact enrollment in small, regional health plans. The Center agrees that additional payments to agents and brokers beyond commissions are problematic and further skew enrollment towards certain MA plans. For example, we discussed plan sponsor incentive payments, health assessments and the sale of ancillary health products in CMA Alerts last fall. Add-on payments to agents/brokers should be prohibited. MA plans should not be able to provide additional compensation to agents and brokers to complete health risk assessments, which further incentivizes agents and brokers to sell MA over other products.
As noted in our CMA Alert summarizing the hearing, what was not discussed, however, was the disparate commission rates paid for MA enrollments vs. other Medicare products, such as Part D plans and Medigaps. As noted in a February 2023 Commonwealth Fund report, agents and brokers report being paid more to enroll people in MA than in traditional Medicare, by some reports three times as much. Payments are also higher for new enrollments as opposed to renewals, which incentivizes churning of enrollment. When it comes to Part D, agents report that a lot of carriers don’t pay at all for Part D enrollments. Overall, “[c]ommissions for stand-alone Part D plans were viewed as too low and not worth the time”. Further, “[a]ll brokers and agents who have served people dually eligible for Medicare and Medicaid said they enroll them in Special Needs Plans only.” The report also highlighted extra income that agents can earn from conducting beneficiary health risk assessments and bonus payments for reaching enrollment benchmarks.
In addition to the financial incentives insurance companies have to maximize profitable enrollment in MA plans, skewed commissions and other payment incentives drive agents and brokers to push people towards MA plans and away from traditional Medicare. Thus, we urge that agent and broker commissions for MA and Part D plans be equalized. Further, agents and brokers should be required to disclose any and all commissions they receive for the sale of a Medicare product to prospective enrollees.
Standardize MA Benefits and Limit Plan Offerings
In order to make it easier to make meaningful choices among plans, Congress should explore standardizing MA plan benefits, and should limit the number of plans offered per sponsor in a given area. Further, CMS should reinstate meaningful difference requirements with respect to multiple plans offered by the same sponsor.
Invest Further in SHIPs
The nationwide State Health Insurance and Assistance Program (SHIP) is a critical source of unbiased information about the Medicare program and coverage options, yet the SHIP network cannot compete for attention with MA marketing and agents and brokers seeking commissions. As suggested in the Committee’s November 2022 report, the SHIP network must be strengthened. More recently, Senator Menendez suggested at the hearing that proving more resources to SHIPs might help; similarly, Senator Casey noted that SHIPs might not have the resources they need.
Close Current Loopholes in Medicare Marketing Rules
CMS has made significant improvements in marketing rules in recent regulatory updates. Notably, the final Part C & D rule for 2024 brings some needed consumer protections. But this work is not done – more is needed in order to adequately protect Medicare beneficiaries from unwanted, often misinforming, and sometimes harassing sales pitches. Among other things, CMS should:
- Prohibit contacts due to pre-existing relationships (from both agents/brokers and insurance plans – e.g. Part D plan sponsor calling a current enrollee to convince them to enroll in same sponsor’s MA product)
- CMS did tighten rules re: opt-out from contact but didn’t go far enough – We often hear about individuals enrolled in a stand-alone Part D plan being contacted by the plan sponsor in an attempt to get the individual to switch to one of the sponsor’s Medicare Advantage products. This is not a solicited contact, rather it is a cold call, and has nothing to do with the provision of care or benefits of an individuals’ current coverage, and therefore should be prohibited. In other words, CMS should prohibit plan sponsors from calling current members to discuss Medicare products. At the very least, members should be able to opt-in to receiving such contact rather than having to actively opt-out under current rules (even if they are notified at least annually under CMS’ proposal).
- CMS proposed 6 month time period limit for contact after Scope of Appointment (SOA) or Business Reply Card (BRC) filled out, they finalized a 12 month period – this should be shorted to 3 months, or the current enrollment period
- Prohibit cross-selling of other health related products during the sale of MA and Part D plans
- In marked contrast to the proclamations of the insurance industry, many of the same people selling Medicare Advantage products both highlight and rely upon MA products’ shortcomings in order to promote the sale of ancillary products.
- Under current Medicare marketing rules, MA organizations may not “Market non-health care related products to prospective enrollees during any MA sales activity or presentation. This is considered cross-selling and is prohibited.” 42 CFR §422.2263 (b)(4). This limited regulation has such a limited definition of “cross-selling” that it allows a broad range of exploitative behavior, including the sale of ancillary health products during MA sales.
- Prohibit collection of Business Reply Cards (BRCs) or other information during educational events
- Direct CMS to revisit distinction between “marketing” and “communications” and corresponding requirements – we disagree with the agency’s assertion that documents which may impact an enrollment decision, but are not intended to do so, don’t qualify as marketing documents. If a beneficiary uses a plan-issued document to make enrollment choices, the sponsor’s intent is irrelevant. Plan- and agent/broker-issued content should be subject to stringent oversight by CMS to ensure accuracy and readability.
- Address Marketing of supplemental benefits, particularly SSBCI that might not be available to everyone in a given plan
- We have heard from SHIP programs that in some areas, the top issue that drove people to seek SHIP counseling during the last annual enrollment period were plan-issued debit cards, or flex card benefits – people demanded to be enrolled in the plan that offered the most money, without regard to any other considerations. One example provided by a SHIP counselor concerned a client who was convinced to look at issues in addition to debit card she wanted, and discovered that none of the five providers she was currently seeing were in network of the plan that offered the highest value debit card she sought. At the beginning of the year, the same SHIP programs report that one of the top issues they have heard about concern how such debit or flex cards don’t, in fact, work as the beneficiary was led to believe by the plan or agent/broker.
- Further strengthen new requirements re: explaining the effect of an individual’s enrollment choice on current coverage
- Pre-Enrollment Checklist (PECL) – needs to address prior authorization; needs to inform bene that providers can leave/be terminated from network mid-year; should be an articulation of right to seek care outside of a plan’s network when an in-network providers or benefits is unavailable or inadequate to meet an enrollees’ medical needs
- Require that agents and brokers sign an attestation form that whatever product is being sold is appropriate for that beneficiary. Such an attestation is currently required for the sale of Medigap (Medicare supplemental insurance policies).
- Finalize the rule (proposed, but not finalized in the 2024 C&D rule) that personal beneficiary data collected by a TPMO may not be distributed to other TPMOs
Increase Transparency and Strengthen Reporting Requirements
Require Medicare to collect and publicly report more information about how people access their MA benefits, including denials and delays in care. As Senator Bennet suggested during the hearing, access to information about plan denial rates would help with beneficiary decision-making.
KFF issued a report in 2023 that highlights data gaps – both in information that CMS collects but does not report, as well as information that is not required to be reported by MA plans. This report should be used as a roadmap for additional, required reporting requirements by plans relating to information that should be publicly available, including:
- What share of Medicare Advantage enrollees use supplemental benefits offered by their plan and how does use vary by race/ethnicity, income, or health condition?
- What services and subgroups of enrollees, such as those with specific health conditions, have the highest prior authorization denial rates?
- Reason for prior authorization denials – Do certain insurers attribute denials of prior authorization requests to medical necessity more often than others?
- Do certain insurers respond to prior authorization requests more quickly?
- How often do Medicare Advantage insurers deny payments for Medicare-covered services?
We appreciate the opportunity to submit this written testimony. For additional information, please contact David Lipschutz, Senior Policy Attorney, dlipschutz@MedicareAdvocacy.org at 202-293-5760.
 See, e.g., CMA Alert: https://medicareadvocacy.org/ma-and-selling-extra-products/