Medicare Advantage marketing practices draw ire from senators

Seniors are forced to navigate a convoluted Medicare Advantage (MA) landscape for healthcare coverage, often only to be denied care, experts told legislators during a Senate Finance Committee hearing Wednesday.

Enrollment in MA plans exceeded 31 million in February, as the program accounts for about half of all Medicare beneficiaries. While these plans can offer crucial services not offered under traditional Medicare, consumers must wade through hundreds of plans and numerous layers of complexity just to be hit with unexpected complications and aggressive marketing approaches.

“Every fall, Medicare eligible consumers are bombarded with mailers, TV ads and phone calls rife with misleading and pernicious content,” said Cobi Blumenfeld-Gantz, co-founder and CEO of Chapter, a Medicare advisory firm, during his oral testimony. “The bad actors are typically not local brokers who live in each community; rather, they’re lead generators operating as marketing middlemen who traffic in scare tactics, imitate government agencies and inaccurately advertise plan benefits.”

These practices are stressed by middlemen during the annual enrollment period, he said.

Tools exist to help these customers, such as the Centers for Medicare & Medicaid Services’ (CMS') Medicare plan finder and published data files. But Christina Reeg, Ohio senior health insurance information program director for the Ohio Department of Insurance, said the tool doesn’t include a plan’s network and only links to a plan’s website.

“In many of the counties that we counsel in, there are more than 100 health plan options for us to review,” said Reeg during her oral testimony. “Most Medicare beneficiaries won't review or change plans, because the task of comparing is too daunting to help narrow the field.”

In his opening statement during Wednesday’s hearing, Committee Chairman Ron Wyden, D-Oregon, said insurers’ marketing expenses cost taxpayers $6 billion. Wyden released a report last November outlining issues people face in obtaining MA plans due to deceptive marketing tactics.

CMS, to its credit, has tried implementing measures punishing plans for its poor business practices. The agency rejected 300 MA television ads due to misleading messages, reported Politico yesterday. In April, CMS prohibited ads from mentioning a specific plan name and for ads to use words and imagery that may confuse beneficiaries that are misleading or misrepresent the plan.

Wyden, not for the first time, also called out ghost networks that list providers under a certain network but don’t offer coverage or care because the policy they bought has no health care services attached. Blumenfeld-Gantz said ghost networks fail consumers in several respects.

“I think there are gradients of how this plays out in practice,” he said. “On the one hand … there are networks that just don't exist. They're straight fraudulent. That is not legal today. It's an enforcement issue, not a policy issue, because that is not allowed based on the rules. But there's a there's a really complicated gray area in the middle, where you have networks that do exist, but there are no open opportunities for patients to schedule appointments for a host of reasons either because the providers are over overbooked and understaffed or because the tooling isn't sufficient.”

These practices don’t just affect consumers, but also smaller regional health plans that must play by a different set of rules than industry leaders, said Krista Hoglund, CEO of Security Health Plan.

“In recent years, enrollment growth has not been evenly distributed among plans, and in the most recent open enrollment period, two-thirds of national enrollment went to just two large national for-profit companies,” she explained. “When choosing a Medicare Advantage plan, the single most influential perspective does remain brokers.”

While Blumenfeld-Gantz stressed that brokers are usually under no obligation to look for the best deal for customers, Hoglund said marketing organizations receive incentive payments that exceed CMS-approved broker commission rates. Many brokers collect $1,300 or more for a new enrollee, despite CMS setting the maximum amount to $611. These extra, unnecessary fees target unsuspecting seniors and the Medicare system at large.

Sen. Elizabeth Warren, D-Massachusetts, focused her remarks on upcoding, a practice where insurance companies will assign an inaccurate billing code to a beneficiary’s sticker price, which increases the sum the government will pay insurance companies. If those companies then deny healthcare to the patients as they promised, those companies can use a percentage of its profits on the marketing budget, furthering the cycle of predatory practices.

Earlier this month, Cigna paid $172 million to settle allegations that it submitted false and inaccurate MA diagnostic codes to boost reimbursement.

Sen. Maggie Hassan, D-New Hampshire, recounted stories she heard in her own state. She said patients often get incorrect information for prescription medication coverage. One constituent, who takes two prescription drugs, was notified several months after signing up for a plan that it would no longer cover her medications for her autoimmune disease. Another constituent has a 26-year-old son with a developmental disability who was contacted by a MA marketing agent to change his health plan in just a single five-minute phone call. Hassan noted these are just a couple ways that vulnerable populations are targeted daily.

Federation of American Hospitals President and CEO Chip Kahn supported the committee’s decision to tackle MA plans’ marketing schemes.

“Open enrollment season should not be open season on seniors, where health plans mislead the public on Medicare Advantage by overpromising and underdelivering,” said Kahn in a statement to Fierce Healthcare. “Abuse of prior authorization by plans results in vital, doctor-prescribed care being delayed or even denied. With open enrollment going strong, it is timely for the Senate Finance Committee to examine the marketing practices of the insurers offering Medicare Advantage plans.”

Senators on the committee asked the expert witnesses for how they would fix the problems they outlined as well as punish the middlemen that exploit the system.

Reeg said Medicare beneficiaries need additional oversight on their side, as well as an annual Notice of Change to help them understand their plan’s changes each year. Additionally, she favors a block on enrollments for people with cognitive impairments that could minimize improper sales to vulnerable beneficiaries.

Blumenfeld-Gantz agreed with senators Wyden and Mike Crapo, R-Idaho, that deceptive marketing practices need to end. He said that can be accomplished through better data and prioritizing consumers’ interests. Tools like the Medicare plan finder should have more information such as which plans allow a patient to keep their doctor.

CMS proposed regulations to prohibit the transfer of consumers’ personal information from one marketing middleman to another, but they were excluded from CMS’ final rule. Wyden said his committee and the federal agency plan on addressing that in the future.

Hoglund said CMS needs to better enforce the $611 maximum fee paid to be brokers. She said it would even make sense to create incentive bonuses for enrolling beneficiaries into high quality or value-based plans, as long as payments are transparent.