Providers of some Medicare health maintenance organization plans are changing the way they market to seniors amid concerns among regulators and lawmakers about possible abuses.
UnitedHealth Group Inc., parent of Cypress-based PacifiCare Health Systems Inc., is among seven health plan operators that voluntarily signed a deal with federal regulators to stop selling a certain Medicare Advantage plan.
The move came after reports of plan salespeople taking advantage of seniors.
“While we note that most health insurance agents are helpful and responsible in describing and explaining choices to beneficiaries, there are a few bad actors (who) need to be removed from the system for good,” said Leslie Norwalk, acting administrator of the Centers for Medicare and Medicaid Services, in a statement.
UnitedHealth and the others will resume selling the insurance, known as “private fee-for-service” plans that are offered to people who are 65 or older, after they meet regulatory guidelines to market them.
Documented training of marketing agents and brokers as well as a clear disclaimer statement are among the rules that all companies must have in place in order to sell the plans starting Oct. 1.
“Even before we signed the pledge, we were (working) to address some of the concerns,” said Peter Ashkenaz, a UnitedHealth spokesman.
The company has dropped some insurance agents who were not selling the plans correctly, Ashkenaz said. UnitedHealth also is planning to improve training and certification for its brokers and will call customers after they buy the plans to check their experiences, he said.
Other health insurers that signed the deal: Humana Inc., Sterling Health Plans, a division of Aon Corp., Tampa, Fla.-based WellCare Health Plans Inc., BlueCross Blue Shield of Tennessee and Universal American Financial Corp. of Rye Brook, N.Y.
Louisville, Ky.-based Humana sells Medicare Advantage plans locally. But the number of people affected was “insignificant, not even a tenth,” according to a spokeswoman.
Humana has 15,150 Medicare members overall in OC.
UnitedHealth has some 45,000 Medicare members in OC.
Fewer than 500 OC residents belong in the affected plans, according to figures from the Centers for Medicare and Medicaid Services. Nationwide, about 1.3 million senior citizens are enrolled in them.
Seniors can buy the Medicare Advantage plans to replace traditional Medicare or Medicare supplement insurance, also known as Medigap insurance.
Medicare Advantage is basically a privately run version of traditional Medicare. The plans offer additional benefits that the standard government plan doesn’t offer, and co-payments are different. The plans’ premium rates may be substantially higher than those in traditional Medicare, according to the Centers for Medicaid and Medicaid Services.
The issue heated up a few months ago when accounts of deceptive sales of the plans gained attention of advocacy groups, state insurance departments and members of Congress.
There were 2,700 complaints against insurance agents who sold the plans from December to April, according to the Centers for Medicare and Medicaid Services. The agency said it started a “secret shopper” program that used trained people to attend marketing events and report back on agents’ activities.
After holding hearings regarding the issue, Congress has gotten involved.
Several U.S. senators, including Herb Kohl, D-Wis., introduced a bill that would give state insurance commissioners the ability to develop standardized marketing and sales regulations of Medicare Advantage as well as Medicare prescription drug plans. It would also regulate both brokers and companies in the marketing and sales of Medicare Advantage and drug plans.
Once such regulations were written, the Centers for Medicare and Medicaid Services and the state would adopt them, allowing both federal and state governments to enforce them.
That bill’s already being opposed by America’s Health Insurance Plans, a Washington, D.C., trade group that represents insurers that cover 8 million Medicare Advantage members and millions more members of Medicare prescription drug plans.
“This is a federal program where we do not want to see 50 different types of regulatory initiatives on the same issue,” said Mohit Ghose, an association spokesman, in published reports.
California Health Advocates and the Medicare Rights Center, a pair of advocacy groups, blasted the Bush administration, saying that the administration was unwilling to hold Medicare Advantage plans accountable for their sales representatives’ marketing practices or take steps to stop what it called the plans’ “widespread marketing abuse.”
California Health Advocates would like to see state insurance commissioners get more regulatory authority over marketing issues, said David Lipschutz, the group’s lawyer based in Los Angeles.
States once had a bit more authority prior to 2003, Lipschutz said, “but the Medicare Modernization Act made it more strict.”
