Which Medicare Plans Broke Rules?

Six Medicare Advantage plans that have been in trouble in the past are still breaking marketing rules in ways that place beneficiaries at risk, according to a report by the Inspector General of the U.S. Department of Health and Human Services.

The companies found in violation have 12 percent of the enrollees in Medicare Advantage plans nationally, according to HHS.  Those selected for the investigation were among those who had drawn the most complaints in the past for such matters as tricking beneficiaries into signing up for the wrong plan, and sometimes even enrolling them without their knowledge.

In many cases the actions were by independent sales agents trying to boost their sales commissions, but under the plans’ contracts with the Centers for Medicare and Medicaid Services (CMS), they were responsible for monitoring them. (CMS is part of Health and Human Services).

But HHS will not say which six plans it checked — Health News Florida‘s Freedom of Information Act request has been pending since March 3 – and it’s only a week until the end of annual enrollment for Medicare plans.

Donald White, spokesman for the Inspector General’s office, apologized for the delay, saying there were “several very large requests that came in before yours.”

The delay didn’t seem right to Joe Baker, president of the Medicare Rights Center, who said: “Consumers have the right to know when Medicare private health plans are in serious violation of Medicare’s standards, particularly those rules governing marketing practices.”

Open enrollment season ends March 31; after that, beneficiaries are “locked in” to the plan they’ve selected until Jan. 1, 2011.

But CMS spokesman Peter Ashkenaz said the agency can open a “special enrollment period” for beneficiaries who have been tricked into signing up for the wrong plan through unfair marketing practices.

What the report says

After three years of scandals in the marketing of Medicare Advantage plans, the federal government came out with strict new rules in November 2008 on agents’ qualifications, behavior and pay.

But they haven’t worked at all, according to the report, “Beneficiaries Remain Vulnerable to Sales Agents’ Marketing of Medicare Advantage Plans.” All six Medicare Advantage plans reviewed by the inspector general during 2009 enrollment season were violating the rules, the report says. The federal office used “secret shoppers” to check up on the plans at public information sessions and also took part in one-on-one marketing sessions. The report didn’t say how the investigators pulled that off, but apparently they posed as beneficiaries interested in a plan.

The surveillance showed:

–All five plans that used independent sales agents were found to have problems in their pay incentives, either from the plan itself or through the field organization that managed the agents. The pay incentives placed beneficiaries at risk of being steered to the wrong plans, the report said.

– Five of the six plans used unqualified sales agents who had either not passed the marketing test or were not licensed at the time they took Medicare beneficiaries’ enrollment applications

– About 13,000 complaints to CMS about sales agents were reported to CMS in the 2009 annual enrollment period – about the same number as the sales season before the rules were put into effect.

Between January 2008 and September 2009, enrollment in MA plans increased from 9.2 million Medicare beneficiaries to over 11.2 million, or nearly a quarter of the more than 45 million Medicare beneficiaries.

Complaints about marketing for MA plans – particularly a loose type of plan that had no network, called “private fee-for-service” – grew so great that Congress held three hearings over a year starting June 2007.

Witnesses testified that sales agents who were enrolling beneficiaries sometimes had no license, pretended to be from Medicare itself, and misled beneficiaries about the plan’s benefits. One memorable scam involved enrolling the dead.

In July 2008, Congress enacted the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), which barred sales agents and plans from certain marketing activities. Rules specifying activities that were prohibited were first issued in September but were contested and finally emerged after sales season began in November that year.

The guidelines required that all sales agents be state-licensed, trained by the plan and tested annually.
They also barred payment arrangements for agents that gave them an incentive to switch members of one plan to another to collect the extra commission – a practice called “churn” that had generated many of the complaints.