After the Centers for Medicare & Medicaid Services (CMS) reported earlier this year that Medicare beneficiary complaints about Medicare Advantage (MA) marketing more than doubled between 2020 and 2021, the Senate Finance Committee launched an inquiry in August 2022 and collected information on marketing complaints from 14 states. On November 3, 2022, the Senate Finance Committee Majority Staff issued a report titled “Deceptive Marketing Practices Flourish in Medicare Advantage” stating that it “found evidence that beneficiaries are being inundated with aggressive marketing tactics as well as false and misleading information”.
The full report can be found here. An appendix for the report with additional examples of deceptive marketing materials can be found here. An accompanying Press Release “Wyden Reports Deceptive Marketing Practices in Medicare Advantage that Harm Seniors – Following Multi-State Survey, Finance Chairman Finds Substantial Increase in Marketing Materials and Tactics Designed to Trick Seniors” (Nov. 3, 2022) is available here.
As noted in the Press Release, “Wyden’s report exposes numerous tactics used by insurance companies, brokers, and third-party marketers to push seniors to sign up for their plans, including deceptive mail advertisements, misleading claims about increasing Social Security benefits, aggressive in-person marketing tactics, and enrolling beneficiaries, particularly those dually eligible for Medicare and Medicaid, in a new plan without their consent.”
The report outlines some of the impact on beneficiaries affected by such misconduct:
This investigation found seniors and people living with disabilities can experience higher out-of-pocket costs and difficulty accessing their providers after being enrolled in a plan without one’s consent or enrolled in a plan only to find out the agent misrepresented the plan’s benefits. Some people who fall victim to marketing and enrollment scams delay care because of confusion over their benefits and coverage instability. Many feel frustrated and embarrassed that they were scammed.
Among other things, the report highlighted that a number of state regulators responding to the Committee’s inquiries “raised concerns with the use of ‘Medicare’ in the naming and branding of marketing companies to suggest that a marketing company is representing the Medicare program. These practices are intentionally deceptive as they blur the lines between official government communication and private health plan marketing.”
The report cited, for example, an insurance agency that uses MedicareAdvantage.com as its website. Other examples of websites that the Center for Medicare Advocacy has recently come across which can be misleading, including by using “Medicare” or related terminology, include: https://www.medicareplanfinder.com/ (which, of course, is impersonating the official Medicare Plan Finer at https://www.medicare.gov/); https://mymedicareapp.com/ (an agent-driven plan comparison tool offering a limited range of Medicare products); http://medicareadvantagespecialists.com/ (an independent marketing organization serving agents); https://medicare.com/ (“powered by eHealth” which seems to try to capture traffic to the official medicare.gov site); and https://mypolicyrelief.com/ (a website masking its links to insurance agents).
Deceptive TV and online advertisements, mailers, and other agent and broker efforts to influence prospective enrollees were also highlighted in the report. As the Committee noted, “beneficiaries are inundated with fraudulent and misleading communications across all modes of communication (in-person, television, telemarketer, and robo-calls).”
One of our own Medicare-eligible staff at the Center for Medicare Advocacy recently received emails designed to appear as if they are health updates sent from her physician’s office from a “Follow My Health” platform, imploring her to sign-in to her account to view a secure message. When opened, it is an advertisement for MA plans – the message prompts one to “Review your 2023 Medicare Advantage choices”.
A January 2020 CMA Alert highlights how an individual we assisted saw a TV commercial for a Medicare Advantage plan while he was in a nursing home recovering from a fall, called the phone number and enrolled in a plan, and found himself unable to access any of his providers.
The Committee report highlighted some national, well-known ads featuring retired athletes and actors. More local fare, with fewer viewers, can be equally misleading. A particularly condescending TV advertisement available online – that was not referenced in the report, but brought to our attention – plays on the tired “cranky senior” trope. It features 75-year old “Martha” in a nightgown who “has been on Original Medicare for 10 years now” but wants her “additional benefits.” The ad is produced by Medicare Advantage Advisors, offering to connect callers with an agent who can give a “free Medicare benefits review” in relation to 2023 plans now available.
The findings of the Senate Finance report comport with the Center for Medicare Advocacy’s experiences and observations. The report also makes several policy recommendations to CMS and Congress to address this misconduct. The Center agrees with all these recommendations, including the assertion that “CMS has broad authority to regulate the marketing and enrollment activities of MA and Part D plans” and can and should do more to rein in marketing misconduct. While enhanced oversight is critical, what are the underlying factors driving such misconduct?
Insurance Industry Response: Who – Us?
In a New York Times article profiling the Senate Finance report, “Private Medicare Plans Misled Customers Into Signing Up, Senate Report Says” by Reed Abelson and Margot Sanger-Katz (Nov. 3, 2022), a spokeswoman for AHIP, the nation’s leading insurance industry trade group, is quoted as saying “‘Health insurance providers are clear: Americans should be protected from bad actors who engage in misleading advertising and marketing tactics.””
Similarly, insurance industry group Better Medicare Alliance issued a press release titled “Better Medicare Alliance Statement on Senate Finance Committee Report on Medicare Advantage Marketing” (Nov. 3, 2022). In an effort to distance the industry from any wrongdoing, the release stated:
We strongly agree with the report’s recommendation that CMS use its enforcement authority to hold bad actors accountable and we welcome increased direct oversight of third-party marketing organizations, whose activities are currently regulated differently from the marketing conducted by health plans. […] If outlier third-party marketing entities fail to maintain the high standard of accuracy and trust that Medicare beneficiaries deserve, those entities should face serious consequences.
Unfortunately, the problem is much broader than a few “bad actors” or “outlier third-party marketing entities.” Instead, the Senate Finance report found a “consistent national picture” of fraudulent and misleading marketing practices that are “widespread, not isolated events.”
We appreciate the insurance industry’s concerns about marketing misconduct. But what is driving these bad actors to do these bad things? Could the blame for misconduct be more broadly shared? Is it not possible that major drivers of marketing misconduct include systemic problems motivated by 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?
These financial incentives are recognized in much of the media coverage that addresses the Senate Finance Committee report. For example, the above-referenced New York Times article quotes Tricia Neuman, a senior vice president at the Kaiser Family Foundation, as saying “‘Medicare Advantage has become a highly lucrative market for health insurers. […] Because it’s such a profitable line of business, they have an incentive to do more marketing’[…] “And they have more money to do marketing, which increases revenue.”
In “Medicare enrollees warned about deceptive marketing schemes” by Amanda Seitz, AP (Nov. 5, 2022), the author states:
Business is booming in the Medicare Advantage plan marketplace, which offers privately run versions of the government’s Medicare program for people who are 65 and older or have disabilities. Competition for customers is fierce, with insurers turning to marketing agencies and brokers in an effort to help stick out among dozens of plans offered through the program. [Link omitted]
“They’re Here: Medicare Insurers on the Hunt” by Virginia Hammerle, Dallas Morning News (Nov. 6, 2022) states:
Once a year it is open season on seniors. The signs are obvious: envelopes spilling out of your mailbox, huge ads popping up in your Facebook feed and fliers left on your doorstep.
The hunters? Medicare insurance companies [emphasis added].
More simply put, “Medicare Advantage insurers face high marketing stakes” by Kara Hartnett and Nona Tepper, Modern Healthcare (Nov. 8, 2022) states: “Medicare Advantage plan carriers—and their marketers—are following the money” [emphasis added].
As we highlighted in a recent CMA Alert (Oct. 31, 2022), journalists and other observers seem to be paying more attention to how commissions paid to agents and brokers can drive enrollment and highlight incentives that might push promotion of MA plans over other options.
For example, in a recent series of Medicare Advantage-related stories by reporter Cheryl Clark published in MedPage Today, including “Brokers Earn More to Steer New Beneficiaries to Medicare Advantage” (Oct. 14, 2022), Clark highlights how commissions for sales of MA plans can be twice as much compared to a Medigap plan. Similarly, a 2021 Commonwealth Fund blog highlights that CMS has set the maximum national commission for initial enrollment in MA plans in 2022 at $573 per beneficiary in most parts of the country, whereas the maximum national commission for first-time Part D plan enrollment, for those in traditional Medicare, is $87 (the blog post also notes that while MA commissions are increasing, those for Medigap policies which, like the separate Part D plans are for those in traditional Medicare, are decreasing).
Websites geared to agents and brokers are replete with entreaties to sell MA products, in large part, because one can make a lot of money doing so. For example, one field marketing organization blog post encouraging agents to sell Medicare products, under the heading “A Lucrative Career”, asks:
Are you wondering if it is a good financial decision to add Medicare Advantage (Part C) to your portfolio? The answer is yes. An average Medicare Advantage (Part C) policy pays out about $287 each year for a plan renewal. For new clients, that number almost doubles at $573.
Consider one replacement policy to be $300 in commissions to simplify the math. If you sell 250 Medicare Advantage (Part C) plans in your first year, you will have made $75,000 in commissions alone. If you continue to maintain your client base and add to it each year, you could be looking at years where you earn six figures or more in commissions!
Another national field marketing organization posted a blog titled “Selling Medicare: The Definitive Guide” (October 2022) which includes the following:
How much can you make Selling Medicare?
Selling Medicare is part of the financial services industry, which has a track record of generating more millionaires than any other industry.
One of the reasons that selling Medicare is so lucrative is your ability to make ongoing, residual income. When you work a job earning $15 per hour, your paycheck is the same regardless of how much effort you put into it.
With Medicare sales, you sell a policy and receive an initial commission (let’s say $500), and then every year that you retain that client you receive ½ of the commission AGAIN in monthly payments.
If you can get your “book of business” up to several hundred clients, then you should have no problem whatsoever making a six-figure income – all while getting to be your own boss!
A different “Medicare-focused Field Marketing Organization” or FMO, offers a blog post titled “How to Retire on Medicare Renewals” and includes the following advice:
Why Sell Medicare? To Secure Your Retirement
Medicare’s commission structure and ability to grow commissions with ancillary products make selling Medicare a smart choice now. It’s an even smarter choice long term. Take a look at the numbers:
• Retire with 100 clients on your books, and you’ll be earning $27,000 a year in renewal commissions.
• Make it 250 clients, and you’ll be earning $67,500 a year in retirement.
• With 500 clients, you’ll retire with an income of $135,000 annually, just from Medicare sales commissions [emphasis in original].
Agents and brokers can earn even more for doing additional things for MA plans sponsors, including assisting with the completion of health risk assessments (HRAs) for new enrollees. BlueCross BlueShield of Rhode Island informs agents in a flyer that for the entirety of 2022, if they “motivate” new enrollees “to call a dedicated number and complete a short, 10-minute HRA survey […] you will earn a one-time incentive payment of $50 per enrollment” [emphasis in original]. Among other things, the plan can use enrollee answers to “Improve our CMS 5-Star rating”.
A Pennsylvania plan sponsor, Health Partners Plans, notes on its webpage for brokers that it is “now offering an incentive payment to all brokers who complete a Health Assessment during a 2023 enrollment in our Special (SNP HMO) plan, Silver (HMO-POS) and Platinum (HMO-POS) plan.” Similarly, Zing Health, a mid-west MA plan sponsor, states on its broker webpage that “A value-based enrollment incentive is available for each Health Risk Survey completed.”
Plan Sponsor Incentives
United Healthcare (UHC) has the most MA enrollees and is the most profitable MA plan sponsor. As noted by in a Kaiser Family Foundation report (Aug. 25, 2022), “UnitedHealthcare has had the largest share of Medicare Advantage enrollment and largest growth in enrollment since 2010, increasing from 20 percent of all Medicare Advantage enrollment in 2010 to 28 percent in 2022.”
Analyzing insurance company profit, Fierce Healthcare (Nov. 7, 2022) notes that UnitedHealth “continues to lead the way on insurer profits” reporting $5.3 billion in profit in the third quarter, ($15.35 billion in profit through the first nine months of 2022).
On its website, UnitedHealthcare has a page wherein they provide an “overview of producer compensation” because “[w]e believe it is important that our customers understand how these independent producers are compensated.” UHC explains that it “relies upon a large network of independent insurance agents and consultants (collectively referred to as “producers”) to present our products to our customers.” When describing “bonuses and override programs”, UHC notes that
Certain producers are able to accumulate large numbers of customers. We reward producers who have high volumes of customers with us by allowing them to receive extra compensation in the form of bonuses and overrides. […] UnitedHealthcare will occasionally enter into a limited number of marketing and distribution agreements with some larger firms.
UHC continues with a discussion of “non-cash programs” in which it notes that “Producers who have the greatest number of customers with us may also have access to enhanced service programs” and “[f]rom time to time, UnitedHealthcare may also establish contests for producers to encourage the introduction of new products, stimulate sales of existing products, or similar goals. Contests may offer top producers the chance to win a non-monetary prize, such as a trip, products, a donation in the producer’s name to the charity of the producer’s choice, etc.”
One such example – not advertised on the UHC website – is the “A2Oh! Rewards” program, as described in a flyer encouraging agents to “REACH FOR PLATINUM IN 2022 […] be an Authorized to Offer Elite agent (also known as a Level 2 agent) for AARP Medicare Supplement Plans and get cash rewards from UnitedHealthcare Insurance Company or an affiliate. It’s an amazing opportunity that allows you to grow your reward potential as you reach for new levels of achievement — base, silver, gold, and platinum.” One can reach “Platinum Level with 100+ commission-eligible, accepted and paid sales of AARP® Medicare Supplement Insurance Plans, insured by UnitedHealthcare® Insurance Company or an affiliate” – the highest “Diamond” level is available to “Elite agents who sell 200+ accepted and paid sales during the qualification period.” Travel rewards include “20 different destinations to chose from. Let’s GO!” Destinations include Hawaii, Grand Cayman, Turks & Caicos, Italy and more.
Perhaps to compensate for higher commissions paid for MA enrollment compared to Medigaps, similar to United Healthcare, a number of other plan sponsors appear to be providing added incentives to agents to sell Medigap plans. Here is a sampling.
Aetna’s “Senior Supplemental Insurance Rewards 2022” as described in this flyer, informs agents that they can receive a “reward payout” based on volume of sales, or “get a voucher to redeem for a vacation wherever you like. There are no travel restrictions, and you can upgrade or add to a chosen trip, all using a special concierge service for booking.”
According to this flyer, agents can get “Jaw-dropping, unlimited bonuses” for selling Humana Achieve Medicare Supplemental plans in 2022. Perhaps less exciting than trips to exotic locales or cash bonuses, but still rewarding nonetheless, those selling Empire BlueCross Blue Shield products could participate in an “AEP Mystery Raffle Prize” between October 30 and November 5, 2022, to win a 50 inch Smart TV – “1 entry for being Ready to Sell” and “Each Anthem Sale gives you more chances to win!” Similarly, those selling Anthem CT products were offered a one day contest for the first day of AEP – October 15 – to win Apple AirPods – “1 entry for being Ready to Sell” and “Each Anthem Sale gives you more changes to win!”
Some companies are trying to maximize their Medicare sales along with sales of ancillary, or additional types of insurance coverage. For example, an Aetna-sponsored website (“Aetna Senior Supplemental Insurance part of the CVS family of companies”) promotes both Medicare Supplement plans and a separate line of “complementary insurance products” called “Protection SeriesSM ” which includes: Cancer and Heart Attack or Stroke/Plus; Dental Vision and Hearing/Plus; Home Care/Plus; Hospital Indemnity/Flex; Recovery Care; and Final Expense whole life insurance.
Aetna is paying extra bonuses when agents sell Medicare supplements and these ancillary products together. According to one agent/broker communication, Aetna is offering bonus payments for sales of their “Medicare Supplement and Ancillary products” for sales in late 2022. “Ready, set, go … get your bonus!” Payouts are available for a minimum number of monthly signed applications, and additional bonuses ($25 bonus per application) if a qualifying Medicare Supplement application is submitted with a qualifying ancillary product (including Dental, Vision and Hearing, Cancer and Heart Attack or Stroke/Plus).
Cigna is currently offering a “Ticket to St. Thomas” – “the sales reward trip of a lifetime” – for the sale of Cigna Medicare Supplemental products and Cigna Supplemental Health products (including Flexible Choice Cancer, Flexible Choice Heart Attack & Stroke, and Flexible Choice Hospital Indemnity). Those eligible include national marketing organizations (with a minimum of $3,000,000 in production credits during the qualification period), recruiting agencies (with a minimum of $1,250,000 in production credits) and all agents with a minimum of $100,000 in production credits. The copyrighted tagline at the bottom of the flyer, across from Cigna’s logo, is “Together, all the way.”
We strongly agree with the policy recommendations made in the Senate Finance Committee report. As summarized in the report’s Executive Summary, the Committee “urges CMS and Congress to take the following actions:
- Reinstate requirements loosened during the Trump Administration.
- Monitor MA disenrollment patterns and use enforcement authority to hold bad actors accountable.
- Require agents and brokers to adhere to best practices.
- Implement robust rules around MA marketing materials and close regulatory loopholes that allow cold-calling.
- Support unbiased, sources of information for beneficiaries, including State Health Insurance Assistance Programs and the Senior Medicare Patrol.”
These recommendations are flushed out in more detail at the end of the report. With respect to the State Health Insurance Assistance Programs (SHIPs) and the Senior Medicare Patrol (SMP), the report “recommends Congress provide sufficient resources to meet the needs of the nearly 60 million seniors and people living with disabilities who could benefit from access to these unbiased counselors.” The Committee also suggests that CMS “[r]eview the agent/broker compensation model to ensure that agent/broker incentives align with a beneficiary’s interest and do not distort the incentives for choosing in an MA, standard alone Part D, or Medigap plan.” We could not agree more with these recommendations. The onslaught of Medicare marketing – particularly concerning Medicare Advantage – and the legions of agents and brokers incentivized by commissions, bonuses and other rewards, requires a robust counter-weight. An enhanced and expanded SHIP program would be a critical start.
More fundamental and structural change is necessary, however, in order to truly right the Medicare ship. As the Center for Medicare Advocacy has long argued, legislative and administrative efforts are required to address the growing inequities between Medicare Advantage and traditional Medicare that favor MA, and thus encourage the growing privatization of the Medicare program. These inequities include overpayments to MA plans that unnecessarily drive-up programmatic spending, coverage expansions in MA only (such as supplemental or extra benefits) and inequities in enrollment opportunities (including limited federal guarantee issue rights to purchase a Medigap plan).
These factors combine to further tip the scales away from traditional Medicare, and foster marketing misconduct driven by imbalanced incentives. Medicare trust fund dollars should be used to provide necessary health care and should not be siphoned off, depleting the trust fund at an increasingly alarming rate, to fund sales incentives trips, broker/agent individual retirement accounts, and billions in private insurance profits. We urge policymakers to act accordingly.
November 10, 2022 – D. Lipschutz