Studies Highlight Marketing Concerns and Pitfalls of Navigating Enrollment Choices
Medicare Advantage (MA) and Part D plans can start marketing their product offerings for the 2024 plan year starting October 1, in advance of the Medicare Annual Election Period (AEP – sometimes referred to as “open enrollment”). The AEP lasts from October 15 through December 7 each year and is the period during which people can change the way they obtain Medicare, including traditional Medicare possibilities, MA, and Part D coverage for the following calendar year if they choose to do so.
Recently, both KFF and the Commonwealth Fund issued reports about Medicare marketing and the challenges faced by Medicare beneficiaries who are trying to navigate the Medicare coverage landscape.
KFF and Commonwealth Fund Reports re: Medicare Marketing
On September 20, 2023, KFF (formerly Kaiser Family Foundation) issued three publications and held a webinar relating to Medicare marketing and the annual enrollment period (links can be found here). An accompanying press release describes the reports: “KFF Research Shows that Medicare Open Enrollment TV Ads Are Dominated by Medicare Advantage Plans Featuring Celebrities, Active and Fit Seniors, and Promises of Savings and Extra Benefits Without Fundamental Plan Information” (Sept. 20, 2023).
One KFF report titled “How Health Insurers and Brokers Are Marketing Medicare” (Sept 20, 2023) “reviewed more than 1,200 unique television ads that aired more than 643,000 times last year”, more than 85% of which were for Medicare Advantage (MA) products (the rest were for Part D and Medigap plans). Among the reviewed ads, the report “found a heavy reliance on celebrity endorsers, liberal use of what appear to be official hotlines and images of government-issued Medicare cards, and suggestions that seniors who do not sign up for a plan could miss out on benefits to which they are entitled.”
KFF’s analysis highlighted the significant imbalance of, and incomplete information concerning, coverage options in Medicare. As noted in the press release:
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. [Emphasis added.]
As described in the press release, “Key insights from the research include:
- More than a quarter of all airings of Medicare Advantage ads (27%), included an official Medicare card or an image that resembled it. Additionally, more than 80% of airings sponsored by brokers and other third parties urged viewers to call a toll-free number described as “Medicare” hotline. But the number was not the official 1-800-Medicare hotline, and the entities behind such messages did not represent the government. New CMS rules in effect for the upcoming open enrollment period prohibit misleading use of the Medicare name, logo, or card in private marketing and communication materials, or any use of the Medicare card without prior approval from CMS.
- Some ads suggest that seniors may miss out on financial savings, or benefits to which they are entitled, if they don’t sign up for a Medicare Advantage plan. While Medicare Advantage plans do typically offer extra benefits, that can leave viewers with the impression that they have incomplete coverage if they have traditional Medicare, and that they have an entitlement to extra benefits under Medicare Advantage.
- Nearly all Medicare Advantage ad airings emphasized extra benefits, such as dental, vision, and hearing (92%) or the potential for lower out-of-pocket spending (85%). Less than 4 percent of airings referenced quality star ratings, even though CMS created the ratings in part to help shoppers compare Medicare Advantage plans.
- One-in-four Medicare Advantage ad airings (26%) showed physically robust seniors engaging in activities such as hiking, yoga, tennis, and even bouncing on a trampoline. This may suggest that they are targeting relatively healthy, lower cost enrollees. Few ads showed people with visible disabilities (4%) or the appearance of serious illness (1%), though one-fifth of Medicare beneficiaries are in fair or poor self-reported health.
- Celebrity endorsers, including actor William Shatner, comedian J.J. Walker and former Arkansas governor Mike Huckabee, appear more often in Medicare Advantage ads sponsored by brokers and other third-party entities than in ads sponsored by insurers. The celebrity endorsers are almost always men. Ex-NFL star Joe Namath was the most prolific, appearing in ads that aired nearly 56,000 times over the period, or about 10 percent of all airings of Medicare Advantage ads that season. More than two-thirds of ad airings sponsored by brokers and other third parties mentioned getting money back in your Social Security check, even though just 17% of Medicare Advantage plans offered in 2023 include this benefit.”
A second KFF report titled “What Do People with Medicare Think About the Role of Marketing, Shopping for Medicare Options, and Their Coverage?” (Sept. 20, 2023) is, according the press release, “based on focus groups conducted in fall 2022, which confirms that many Medicare beneficiaries and their family members feel overwhelmed by the annual onslaught of TV ads and are sometimes confused about whether the government or private companies are behind them.”
Confirming previous research by KFF and others, the report found that “[m]any participants said they relied on agents and brokers when making coverage decisions. Few used government resources, such as the Medicare Handbook or 1-800 Medicare, but those who did generally found them helpful” [emphasis added].
KFF also released a fact sheet “What to Know about the Medicare Open Enrollment Period and Medicare Coverage Options”.
Highlighting this work from KFF, MedPage Today issued a Special Report titled “Medicare Advantage Ads Should Look Different This Year — KFF examines past predatory ads as new CMS regulation goes into effect” by Cheryl Clark (Sept. 21, 2023). Describing the KFF webinar accompanying the release of these reports, the article quotes CMS Administrator Chiquita Brooks-LaSure as saying that:
[t]hings are going to be different with this year’s ad campaigns before and during the annual Medicare re-enrollment period […] That’s because ads like last year’s are going to be strictly curtailed under new regulations in which CMS must pre-approve all television MA plan advertising. Complaints to the agency about misleading agent and advertising practices are now not only strongly encouraged, but CMS has beefed up its ability to investigate them, she said.
(Note that the Center for Medicare Advocacy issued a Special Report titled “Recent Medicare Advantage (MA) and Part D Rule – Important Consumer Protections re: MA Prior Authorization and Marketing” (May 2023) that describes these new marketing rules effective October 1, 2023, the first day that MA and Part D plans can marketing their 2024 products.)
The Commonwealth Fund also released a report focusing on a survey they conducted during last year’s open enrollment period titled “The Private Plan Pitch: Seniors’ Experiences with Medicare Marketing and Advertising” (Sept. 12, 2023).
The report describes its highlights as follows:
- “Nearly all people age 65 and older said they received some plan marketing, with three-quarters seeing one or more television or online ads per day. One in three reported receiving seven or more phone calls per week.
- Some reported experiences with Medicare marketing that would violate federal rules, including marketers asking for Social Security or Medicare numbers outside the enrollment process and advertising special, time-limited discounts, which are not permitted.
- The vast majority (96%) said that when they have what feels like too many plan options, they are likely to stick with their current plan rather than try a new plan. Most turned to friends, family, or insurance brokers or agents for advice.
- More than one in three people age 65 and older said they would like to know more about out-of-pocket costs and benefits of their coverage options, and one in four said that they would like more one-on-one help to make their coverage decision” [emphasis added].
The report noted that certain populations seemed to be disproportionately impacted by marketing misconduct. For example, the report notes that “[r]eports of seeing, reading, or receiving advertising information that was later found to be untrue were significantly more common among people with incomes of less than $25,000 than those with incomes above that level”; and “[a] larger share of Black adults than white adults reported unsolicited calls in the past 12 months (88% vs. 76%; data not shown).”
The report also highlights one of the most significant pitfalls faced by Medicare beneficiaries when it comes to switching coverage (as discussed in a recent CMA Alert (Sept 14, 2023)):
Switching from Medicare Advantage to traditional Medicare can be difficult. In most states, there are limited opportunities to purchase a Medigap policy without medical underwriting or denial of coverage. More than half of adults age 65 and older in our survey said they weren’t sure how easy or difficult it would be to switch (Exhibit 9). This suggests beneficiaries may choose their coverage without knowing they may not be able to change it easily if the plan they select doesn’t meet their needs [emphasis added].
Together, these KFF and Commonwealth Fund reports highlight that most information that people get about Medicare coverage options, which they use to make coverage choices, is driven by Medicare Advantage advertising that is self-serving and incomplete.
Access to Care and Affordability in MA Plans
There are trade-offs between choosing Medicare Advantage over traditional Medicare; see, e.g., the Center for Medicare Advocacy’s publication “Choosing Between Traditional Medicare and Medicare Advantage” (2013). As noted in the KFF report cited above, however, MA advertising generally excludes any reference to the trade-offs inherent in MA plan enrollment.
As discussed in many previous CMA Alerts (see, e.g., here, here and here) despite MA plans being significantly overpaid, they often impose significant barriers to care for their enrollees. Among other things, there has been growing scrutiny of the improper use of prior authorization by MA plans, and the resulting inappropriate denials and delays in care.
Further, despite MA sponsors often claiming that MA plans are more affordable for their enrollees than traditional Medicare, the evidence is decidedly mixed. The Commonwealth Fund recently released another report titled “Medicare’s Affordability Problem: A Look at the Cost Burdens Faced by Older Enrollees” (Sept 19, 2023) that assess problems across types of Medicare coverage. Among other things, the report found that, among “[p]eople who incur high out-of-pocket costs from using health care […] [t]he likelihood of having problems paying medical bills or debt was significantly higher for older adults with Medicare Advantage than those with traditional Medicare” [emphasis added].
Overall, aside from those with significant medical expenses, the report found few differences in affordability between MA and traditional Medicare:
While Medicare Advantage plans limit enrollees’ out-of-pocket expenses, often have lower premiums for Part D drug coverage, have the option of lower cost-sharing requirements, and typically include some coverage for dental care, there doesn’t appear to be much difference between these plans and traditional Medicare with respect to affordability. Adults age 65 and older in Medicare Advantage plans were as likely as those in traditional Medicare to report problems affording premiums and health care expenses, including dental care and prescription drugs, as well as problems with medical debt and bills [emphasis added].
One of the restrictions inherent to managed care – limited provider networks – is also gaining growing attention as more providers are deciding to no longer contract with MA plans. For example, MedPage Today recently issued a Special Report titled “Two Large Medical Groups Shun Medicare Advantage Plans” by Cheryl Clark (Sept. 25, 2023). The article states that:
Signaling what may be an emerging national trend, two influential medical groups with San Diego-based Scripps Health are cancelling their Medicare Advantage contracts for 2024 because of low reimbursement and prior authorization hassles, leaving 30,000 enrolled seniors to look for new doctors, or different coverage.
Clark notes that “[m]any health systems have announced that they’re terminating their MA contracts, or are strongly considering it” [emphasis added]. The article quotes the CEO of one of the medical groups ending their MA contracts:
We are a patient care organization and not a patient denial organization and, in many ways, the model of managed care has always been about denying or delaying care – at least economically. That is why denials, [prior] authorizations and administrative processes have become a very big issue for physicians and hospitals – not to mention that the reimbursement is insufficient in most government programs as we all know.
A recent Axios article titled “Rural hospitals feel squeeze from Medicare Advantage” by Arielle Dreher (Aug 21, 2023) states that “[a]lready struggling rural hospitals see an increasing financial threat from the steady growth in Medicare Advantage enrollment.” Noting that “some rural hospitals are losing money on private coverage like Medicare Advantage” due to the lack of bargaining power of their larger peers, MA’s “popularity with seniors is cutting into a typically better funding source for rural hospitals — traditional Medicare — as hundreds of rural hospitals face down financial calamity.”
Axios notes that the impact can be seen in “a few states where it’s possible to parse out the difference between Medicare and Medicare Advantage payments:
- Small rural hospitals in California lost more money on services for MA patients than Medicare patients. MA accounted for the most profit loss for kind of insurance for small facilities, nearly double the losses experienced by those facilities for traditional Medicare patients.
- In Tennessee, where rural hospitals actually make money on commercial payers, they still lose money on Medicare Advantage patients, at about an 18% profit loss on average.”
Similarly, a Becker’s Healthcare article titled “Hospitals take aim at Medicare Advantage” by Jakob Emerson (Aug 16, 2023) states that “[h]ospitals have been dropping Medicare Advantage plans over high claim or prior authorization denial rates since at least 2018, but it was an uncommon move until recently.” The article cites a number of hospital systems across the country that have dropped or planned to drop their contracts with MA plans, including the Mayo Clinic in Florida and Arizona. One hospital, Stillwater Medical Center in Oklahoma, made the decision to end “all in-network contracts with Medicare Advantage plans amid financial challenges” due, in part, to “a 22 percent prior authorization denial rate for Medicare Advantage plans, compared to a 1 percent denial rate for traditional Medicare.” Another hospital system based in Bend, Oregon, Charles Health System, “has taken it a step further and is not only considering dropping all Medicare Advantage plans, but is also encouraging its senior patients not to enroll in the private Medicare plans during the next open enrollment period.” A follow-up article by Emerson titled “Hospitals are dropping Medicare Advantage left and right” noted that San Diego-based Scripps health, facing a $75 million loss from MA plans, has begun the process of terminating all MA contracts. The article goes on to list seven more examples of hospitals dropping MA contracts, from Ohio, Virginia, Oregon, Missouri, South Dakota, Oklahoma and Kentucky.
The annual advertising onslaught for 2024 Medicare products is about to saturate TV and radio airwaves and household mailboxes, and subject people to unsolicited (and often inappropriate) in-person and phone solicitations from those who sell such products. Such advertising almost always paints MA in a light most favorable, and omits critical considerations and downsides of MA enrollment. The Center for Medicare Advocacy is hopeful that the new marketing rules will reduce misleading advertising and foster more informed decision-making, but the rules’ efficacy will come down to plan compliance and CMS oversight. Perennial advice to Medicare beneficiaries navigating Medicare coverage options: Look before you leap.
September 28, 2023 – D. Lipschutz