New Medicare marketing guidelines raise the specter of past predatory sales tactics

In 2007, insurers, state regulators and federal officials gathered before a Senate committee to answer what had become a nagging question within a growing Medicare Advantage (MA) market: Who was benefiting from the marketing of the increasingly profitable plans?

The answer, it appeared, was insurers.

Former Wisconsin Senator Herb Kohl, a Democrat who chaired the Senate's Special Committee on Aging, cited (PDF) "widespread confusion" as well as "outright misrepresentation and even fraud" associated with the sale of MA plans.

Sherry Mowell, who worked for the Office of the Commissioner of Insurance in Georgia, explained in detail how sales agents manipulated, misled, and misrepresented potential consumers. Some were so shameless, they forged seniors’ signatures. 

The Oklahoma Insurance Department similarly found “chronic and blatant disregard for State regulation and for senior policyholders,” according to testimony from then-commissioner Kim Holland.

Two more hearings followed over the course of the next year, laying the groundwork for new regulations. In July 2008, Congress passed the Medicare Improvements for Patients and Providers Act, which prohibited certain marketing tactics by health plans. The Centers for Medicare & Medicaid Services (CMS) began regulating MA marketing two months later, just in time for 2009 enrollment. 

A decade later, CMS quietly loosened (PDF) some of those restrictions just in time for 2019 open enrollment.

Seniors still report being scammed and deceived by some insurance agents, according to state regulators. The Ohio Department of Insurance recently identified (PDF) "predatory sales practices" in Medicare plans, including instances in which agents "used aggressive sales tactics" to enroll beneficiaries without their consent or misled beneficiaries to believe their provider accepts their plan.

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Nevertheless, insurers and their agents have a lot more wiggle room under the new guidelines. At the same time, MA plans have become highly popular among consumers and immensely profitable for insurers. CMS expects MA enrollees to make up 36% of Medicare plans next year.

The most existential of this year's changes reduced which materials count as “marketing,” moving many into the broader, less-regulated category of “communications.” By definition, marketing materials intend to draw beneficiaries to plans and influence their decision-making process, the new guidelines say.

They must also contain information about benefits, premiums or cost sharing, star ratings, rankings and measurements, or how one plan compares to others. If none of that content is present, the promotion doesn’t count as marketing.

"[It] fundamentally changes the way plans can now promote themselves,” Kelli Back, a private practice attorney, said in a presentation at AHIP’s National Conference on Medicare this year.

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And as Back pointed out, doctors' offices are now a key battleground to get the attention of patients. Providers still can't offer marketing materials in the healthcare setting, but they can offer "communications," and doctors can discuss the merits of plans with patients. Marketing information will likely become a more common sight in waiting rooms, too: CMS no longer counts waiting rooms and lobbies as "the healthcare setting." 

One of the consequences of redefining “marketing” is that some of this content, written and verbal, would have qualified as marketing before now, according to Michael Kolber, J.D., an attorney with Manatt, Phelps & Phillips.

“On the other hand, providers may have useful advice,” he said. 

New opportunities at "educational events"

Plans can also promote themselves at so-called educational events. These events, hosted by the plans themselves, must be informative and held in a public setting, such as a school. While they aren't allowed to take place during open enrollment, plans can—and do—host them often throughout the rest of the year in locations across the country. 

Insurers may not enroll attendees at educational events; they may not even host separate enrollment events immediately after educational events. But the latest policy "really expands scope of what can happen at educational events," Back said. 

Until now, plans were not permitted to steer potential enrollees toward a specific plan or set of plans. The new guidelines also give plans permission to collect attendees’ contact information through business reply cards and sign-up sheets, and allow agents to arrange sales calls with beneficiaries.

“There’s now this broad range of activities that are not subject to CMS approval or time and place restrictions,” Back said.

This change is likely to raise eyebrows among consumer advocates, but insurers say appropriate guardrails are still in plans, and consumers will still be able to pick a plan that works best for them. 

“As a plan, I’m evaluated by the government on dozens of parameters; a number of those are about what members of the plans need, … [such as] good access to care and prescription medications,” Chris Abbott, CEO of Medicare and Retirement at UnitedHealthcare’s Texas and Oklahoma division, told FierceHealthcare.

UnitedHealthcare, the nation’s largest insurer, holds Medicare educational events year-round; one of its largest is National Medicare Education Week (NMEW) in September, which it hosts with Walgreens, AARP, Caregiver Action Network, and the National Association of Area Agencies on Aging. UnitedHealth declined to specify how much it spends on the educational week.

If attendees at NMEW (or UnitedHealthcare’s other events) ultimately choose another company’s plan, “I’m OK with that,” Abbott said.

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Whether they would, however, is another question: Consumers don’t always think critically about the information they receive.

“It’s hard to. Healthcare is confusing,” Kolber said, recommending that beneficiaries seek information from independent experts and advocacy groups to help them sort through their options.

This season's open enrollment concludes on Dec. 7, so it remains to be seen whether the revised regulations impact enrollment patterns. However, the two largest MA insurers expect notable increases in MA enrollment in 2019. UnitedHealth plans to add as many as 450,000 new members to the 4.9 million it already serves, and Humana expects to add 400,000.

But Kolber was skeptical that the changes around MA marketing will have a huge impact.

“There was a lot of Medicare marketing before these rules; there will continue to be a lot of Medicare marketing,” he said.