Senator Kohl Gives States More Power to Regulate Sales & Marketing of Medicare Advantage Plans

Chairman of Aging Committee Delivers on Promise to “Hold Feet to the Fire”

WASHINGTON, D.C. – U.S. Senator Herb Kohl (D-WI), Chairman of the Senate Special Committee on Aging, was joined today by Senators Byron Dorgan (D-ND) and Ron Wyden (D-OR) in introducing the Accountability and Transparency in Medicare Marketing Act of 2007. The bill would give state insurance commissioners the ability to develop standardized marketing and sales regulations of Medicare Advantage (MA) and Medicare prescription drug plans, and regulate both agents and companies in the marketing and sales of MA and prescription drug plans. If passed, the legislation would enable state insurance commissioners to adequately serve and protect Medicare beneficiaries in conjunction with the Centers for Medicare and Medicaid Services (CMS). Currently, states are largely pre-empted from regulating the marketing of MA and Medicare Part D plans. The marketing guidelines for these plans were established by CMS and have proven to be inadequate. Instead of regulating these abusive marketing practices themselves, state authorities must refer complaints to CMS where it appears little has been done to quickly resolve the issues and prevent future problems.

“The Committee’s investigation into the sales and marketing of Medicare Advantage plans has uncovered questionable practices that border on outright fraud,” said Chairman Kohl. “It is clear that a major disconnect in oversight exists, and it is simply unacceptable to leave our seniors unprotected.”

“Since the Administration is not stepping up to protect seniors from abusive marking practices, it makes sense to authorize state governments to do so,” Senator Dorgan said. “Many state governments have let us know they are very concerned about this problem. They want to act where the Administration has failed to act. I am pleased to co-sponsor legislation that would allow them to protect seniors.”

“A decade ago I helped write a law that put an end to Medicare supplement insurance scams, but today some of the same deceptive practices have resurfaced in the marketing of Medicare Advantage,” said Senator Wyden. “It is time to act to ensure that the promise of health care is no longer used to prey on those who need health care the most.”

The bill is being introduced in response to the Aging Committee’s ongoing investigation of the marketing practices of private Medicare plans and providers, which 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 a May 16 Aging Committee hearing on the topic, 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.

Also in reaction to the Aging Committee hearing, seven insurance companies—which together account for 90 percent of the private fee-for-service (PFFS) Medicare Advantage market—voluntarily agreed to temporarily terminate the marketing and sales of their Medicare private fee-for-service plans to individuals. Abby Block, Director of the Center for Beneficiary Choices at the Centers for Medicare for Medicaid Services (CMS), announced the voluntary moratorium on June 15, saying it will last until such time that the insurers are able to fully comply with the six provisions released earlier this year by CMS as part of new guidelines for 2008.

Specifically, the Accountability and Transparency in Medicare Marketing Act of 2007 would direct the National Association of Insurance Commissioners to establish regulations, set standards for agent conduct, and define prohibited activities with respect to the sales and marketing of MA plans. CMS and the states would then adopt these regulations, allowing both federal and state governments to enforce them. The legislation is comparable to a provision that has been included in the U.S. House of Representatives’ SCHIP package.

Thus far, the bill has received a letter of support from the Medicare Rights Center.
Ashley GlacelPress SecretarySpecial Committee on AgingSenator Herb Kohl, ChairPh: (202) 224-5364 Cell: (202) 340-3299 http://www.aging.senate.gov/