CMS fines Clover Health for 'misleading' marketing tactics


Technology-focused health insurer Clover Health, which recently raised $160 million from private investors, is now facing a fine for what the federal government says are marketing practices that misled and confused customers.

Clover Health was founded in 2012 with the mission of using claims data analytics to coordinate care for Medicare Advantage customers. It has since touted an open-access PPO plan that Chief Technology Officer Kris Gale told FierceHealthPayer allows members to visit any physician in the country who accepts Medicare.

The Centers for Medicare & Medicaid Services, however, says in a letter sent to Clover last week that it "received a high volume of complaints" during the Medicare annual election period in January and February 2016 from new enrollees who were denied services by out-of-network providers after being told by Clover that they could see any provider they wished.

The letter says CMS first notified Clover in November 2015 that its marketing and advertising materials inaccurately claimed out-of-network providers and facilities that accept Medicare are obligated to accept Clover enrollees. Clover indicated it had resolved the issues, but during a "secret shopper" operation at a December insurance event, Clover agents repeated the same inaccurate claim, the CMS letter says. Upon review of Clover's website, CMS says it found other "misleading references," as well as issues such as a failure to display a CMS star rating of the health plan.

Ultimately, CMS says Clover "did not resolve the deficiencies" until Dec. 18, 10 days after the close of the Medicare annual election period. Based on Clover's violations, the agency will impose a civil monetary penalty of $106,095 on the insurer--though Clover has until July 26 to request a hearing to appeal the determination. In addition, CMS required Clover to inform all of its enrollees that out-of-network providers are not obligated to accept its Medicare Advantage plans.

"In our efforts to explain our equal cost-sharing benefit with members, we were not as clear as we could and should have been," the company said in a statement emailed to FierceHealthPayer. "We take any corrective requests from CMS very seriously and remediation of this issue was completed as soon as it was brought to our attention. Beneficiary protection and compliance remain our primary goals at Clover. Our Chief Compliance Officer, Wendy Richey, has extensive experience in this area and will help guide Clover for many years to come."

CMS has been increasingly willing to levy financial penalties against Medicare Advantage and Part D plans that violate its regulations, fining insurers in 2015 more than twice what it did in 2014 through its audit program.

To learn more:
- here's the CMS letter