Press Release - Especial Committee on Aging

PRESS RELEASE June 18, 2007 Contact: Ashley Glacel Phone: (202) 224-5364

AHIP, PRIVATE MEDICARE PLAN PROVIDERS INSTITUTE MORATORIUM ON SALES IN RESPONSE
TO RECENT AGING COMMITTEE HEARING HIGHLIGHTING DECEPTIVE SALES PRACTICES

Sales to Resume When Providers Demonstrate Compliance with New CMS Standards

WASHINGTON – Seven insurance companies, which together account for 90 percent of the private fee-for-service (PFFS) Medicare Advantage market, have voluntarily agreed to temporarily terminate the marketing and sales of their Medicare private fee-for-service plans to individuals in response to a May 16 hearing held by the U.S. Senate Special Committee on Aging on the deceptive and confusing sales tactics of private Medicare plans. Abby Block, Director of the Center for Beneficiary Choices at the Centers for Medicare for Medicaid Services (CMS), announced the voluntary moratorium on Friday afternoon, saying it will last until such time that the insurers are able to fully comply with six provisions set forth by CMS in new guidelines set for 2008.

The Aging Committee’s ongoing investigation of private Medicare plans and providers has uncovered such questionable sales practices as removing seniors from traditional Medicare without their knowledge, signing seniors up for plans they cannot afford, and misleading seniors regarding which physicians and hospitals accept the plan. At the May 16 hearing, officials representing the state insurance commissions from Wisconsin, Oklahoma, and Georgia described a nationwide pattern of aggressive, and at times deceptive, marketing practices employed by Medicare Advantage sales agents. Executives from three of the companies participating in the voluntary moratorium (Humana Inc., UnitedHealth Group, and WellCare) testified at the hearing that efforts would be made to reform their marketing and sales practice guidelines.

In conjunction with the CMS announcement, America’s Health Insurance Plans (AHIP), which represents approximately 1,300 health insurance plans, made a pledge on Friday to protect consumers by implementing the CMS guidelines immediately. Karen Ignagni, President and CEO of AHIP, mentioned the Aging Committee’s hearing and referred specifically to the state insurance commissioners’ testimony as an impetus for these actions. Ignagni further noted that AHIP had consulted with the National Association of Insurance Commissioners (NAIC) to resolve the continuing marketing problems identified at the hearing. Also at the May 16 hearing, Ignagni announced a new AHIP initiative to strengthen training for its members’ agents and brokers.

During his opening statement at last month’s hearing, Chairman Kohl insisted that the Aging Committee’s oversight of this issue was just beginning. “If more hearings are necessary to hold feet to the fire, we will hold them,” said Chairman Kohl. “Cleaning up these marketing and sales practices is a priority of mine. Let me be clear, this issue will not go away after this hearing.”