On October 18, 2023, the Senate Finance Committee held a hearing entitled “Medicare Advantage Annual Enrollment: Cracking Down on Deceptive Practices and Improving Senior Experiences” – a recording of the hearing, along with Member Statements by Chairman Wyden and Ranking Member Crapo and witness statements are available here. The invited witnesses were: Christina Reeg, Ohio Senior Health Insurance Information Program Director, Ohio Department of Insurance; Cobi Blumenfeld-Gantz, Co-Founder & Chief Executive Officer of Chapter; and Krista Hoglund, Chief Executive Officer, Security Health Plan. This hearing comes almost a year after the Committee issued a report entitled “Deceptive Marketing Practices Flourish in Medicare Advantage” in November 2022 which “found evidence that beneficiaries are being inundated with aggressive marketing tactics as well as false and misleading information.”
In his opening statement, Chairman Wyden focused on “marketing middlemen” including “big private marketing companies” that get “in the middle between seniors and their coverage.” The Chairman described how such middlemen “hijack personal information” from Medicare beneficiaries and “funnel this information to the health insurance plans that pay these sleazy marketers the most.” He added:
To sum it up: these marketing middlemen have made seniors their product and they are trying to sell as much as they can.
And what’s more, it’s your taxpayer dollars that are lining these middlemen’s pockets. In fact, insurance experts have estimated that marketing costs taxpayers at least $6 billion in 2022 alone. Let that sink in, folks. Six billion taxpayer dollars went to marketing middlemen who may have sold your elderly parents, grandparents, and neighbors the wrong plan. [Emphasis added.]
Ranking Member Crapo described how he has “long championed MA” and expressed a need to “promote a vibrant and competitive broker landscape”. He also noted that “the complexity of the health care system poses significant challenges for Americans from all walks of life, including those enrolled in MA plans. Seniors need clear, credible and accurate information to navigate the coverage and service landscape.”
Ms. Reeg, the Ohio SHIP Program Director, described the critical role that SHIPs play nationwide by “providing objective counseling and education to Medicare patients, their families, and their caregivers.” She described the challenges that Medicare beneficiaries face in making informed decisions about their Medicare coverage, including, with respect to MA plans, ascertaining what providers are part of a plan’s network. She described that low-income and limited health literacy Medicare populations have added challenges, and “are more apt to join a plan based on added benefits, specifically over-the-counter allowances, or other cash rewards.” She noted that a focus on advertised MA extra or supplemental benefits “masks the need to review critical plan health benefits, prescription drug coverage, and plan networks. This often leads to poor enrollment decisions and undesirable outcomes.”
Mr. Blumenfeld-Gantz, CEO of Chapter, which provides licensed insurance agency services through a subsidiary, commented on the complexity of the Medicare program, and noted that “[c]onsumers are less likely to wind up on the wrong plan when the incentives of their advisors are not stacked against them” and “no consumer should enroll in a suboptimal Medicare plan simply because a broker recommends or contracts with a limited number of plans.”
Ms. Hogland, CEO of Security Health Plan, a not-for-profit Medicare Advantage plan in Wisconsin, urged “Congress and the Centers for Medicare and Medicaid Services (CMS) to protect enrollees and taxpayers with reasonable limits on total [agent/broker] compensation and stop misleading and aggressive enrollment practices.” With respect to the national growth in MA enrollment across the country, she asserted that “in recent years, enrollment growth has not been evenly distributed across the MA market. For example, in the most recent Medicare open enrollment period, two-thirds of the nation’s enrollment went to just two national companies. More than 80 percent of total MA enrollment went to for-profit companies.” Noting that “the single most influential perspective in choosing a MA plan remains advice from a broker” she described how the lure of “add-on payments” available to agents and brokers can negatively impact enrollment in small, regional health plans:
The explosion of large field marketing organizations in recent years has created a compensation structure that makes it more difficult for smaller, regional plans and their local independent agent partners to compete. Many of these field marketing organizations receive “add-on” or incentive payments that go above and beyond the CMS-approved broker commission caps. Instead of collecting the maximum commission of $611 for a new enrollee, many brokers are collecting $1,300 or more. This additional compensation is marked as marketing or administrative dollars and can also include incentives for members completing a health risk assessment or vague application of referral bonuses.
During the question-and-answer period of the hearing, highlights included:
- Senator Stabenow raised the point that MA plans are paid at a higher rate than traditional Medicare spends on a given beneficiary, making it even more concerning to see taxpayer funds being used for marketing; she also raised concerns when people seek additional benefits through MA plans but find that they don’t have access to the care they need.
- Senator Lankford raised concerns about how MA plan “gift cards” factor into a plan’s medical loss ratio (MLR); he mentioned that his constituents are “furious” about receiving daily marketing calls for MA plans; he also noted that rural hospitals in his state are getting more and more frustrated by MA plan denials and prior authorization – “in my state some hospitals won’t take Medicare Advantage at all.”
- Senator Grassley raised the Medicare Advantage Open Enrollment Period (MA-OEP) from January to February of each year that gives people with MA plans an additional opportunity to make changes to their coverage, but noted that such opportunities are not available for Part D plans; he asked Ms. Reeg whether there should be an additional enrollment period for Part D and she answered in the affirmative.
- Senator Menendez raised the issue of whether providing more resources to SHIP programs might help.
- Senator Bennet noted that he was hearing from hospitals across Colorado about MA denials and delays, including one hospital that had every claim from one MA plan denied; he also asked whether access to information about plan denial rates would help with beneficiary decision-making. (Ms. Reeg responded that such information is not currently available but would indeed help.) He also commented that Colorado seniors often don’t realize that their MA plans don’t cover all of their doctors;
- Senator Casey mentioned his BENES 2.0 Act which would require advance notice to people approaching Medicare eligibility; he noted that SHIPs might not have the resources they need.
- Senator Warren closed out the hearing by putting MA marketing misconduct in a broader context of the current MA risk-adjusted payment system which has led to plans making their enrollees appear as sick as possible (“upcoding”), leading to hundreds of billions of dollars in wasteful overpayments due to insurance companies gaming the system. She expressed how MA plans that game the system lure in people with extra benefits made available through these overpayments, but once enrolled, often fail to deliver care that is promised.
The Center for Medicare Advocacy applauds the Senate Finance Committee for holding a hearing focusing on Medicare Advantage marketing misconduct. We agree with the need for greater oversight of “marketing middlemen” including lead generation businesses, which are behind much of the misconduct. As we noted in response to the Committee’s report on MA marketing misconduct in our CMA Alert (Nov. 10, 2022), however, we urge more attention to some of the larger, more systemic factors driving these bad actors to do these bad things. As we stated in our CMA Alert, similar to points raised by Senator Warren at the Committee hearing:
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? [Emphasis in original.]
Medicare Advantage overpayments are receiving more attention – including at the Senate Finance hearing by Senators Warren and Stabenow. 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 a CMA Alert (Oct 5, 2023), Physicians for a National Health Program released a report stating that MA plans are overpaid by as much as $140 billion a year. Clearly, it is time for Congress to act.
Some of the financial incentives for agents and brokers that, in turn, drive the sale of certain MA products over others was also discussed at the hearing. An article published by Bloomberg Law, entitled “Congress Eyeing Broker Payments Behind Booming Medicare Sales” by John Tozzi (Oct 18, 2023) highlighted an issue raised by the Alliance of Community Health Plans (ACHP), an association of non-profit insurers, of which Security Health – whose CEO testified during the hearing – is a member. AHCP has called for more regulation of payments that MA plans make to brokers, including “add-on payments” discussed by Security Health’s CEO during the hearing which, according to the article which references statements by ACHP’s director, are “extra payments that aren’t explicitly called commissions but can look like them. These payments can sometimes double brokers’ compensation and influence them to push plans that pay the most […].”
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, here and here. What was not discussed at the hearing, 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 titled “The Challenges of Choosing Medicare Coverage: Views from Insurance Brokers and Agents”, agents and brokers report being paid more to enroll people in MA than in traditional Medicare, by some reports three times as much. 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.
Also absent from the hearing, as discussed in a recent CMA Alert (Oct 5, 2023), was any discussion of the need for a counterweight to industry advertising which inevitably paints Medicare Advantage in a light most favorable, highlights all of the plans’ new bells and whistles, and ignores most of the crucial considerations that prospective enrollees must weigh, including restricted networks, prior authorization for services, and other trade-offs of enrolling in an MA plan. Further, the committee did not hear from the regulator – the Centers for Medicare & Medicaid Services (CMS) – about what steps it is taking to combat marketing misconduct.
We are grateful that the Senate Finance Committee followed up on their report on MA marketing abuses last year with this hearing. We were also encouraged by Chairman Wyden’s statement that the committee’s investigators are launching an additional inquiry into marketing misconduct. In addition, there were a number of issues raised during the question and answer period that address some of the broader problems with Medicare Advantage and barriers to equal access to coverage options and informed decision making, including: MA overpayments; MA prior authorization; limited MA provider networks (including hospitals that are no longer contracting with MA plans); the need for more data (including MA plan denials); the need for more funding for the SHIP program; the need to further strengthen the new – and welcome – marketing rules in effect this Fall; and the need to explore creating an enrollment period for stand-alone Part D plans to balance the MA-OEP. Meaningfully addressing these issues would go a long way toward rebalancing traditional Medicare with Medicare Advantage, but much more is needed. We hope the Senate Finance Committee’s hearing will be the first in many oversight hearings leading to such meaningful change.
October 19, 2023 – D. Lipschutz