Senate Finance Committee Hears Testimony on Medicare Advantage Marketing Practices

On February 13, 2008, Kerry Weems, Acting Administrator for the Centers for Medicare & Medicaid Services (CMS), will testify before the Senate Finance Committee during a hearing on the need for accountability and oversight of the marketing and sales by Medicare private plans. 

This hearing will be the second hearing on the issue. During a February 7, 2008 hearing, the Senate Finance Committee heard testimony on the issue from a number of witnesses, including the Director of the Illinois Division of Insurance and a Vice President-Medicare Sales for Humana, Inc.

In brief, the Director of the Illinois Division of Insurance recommended expanding state insurance regulatory oversight over Medicare Advantage (MA) and Prescription Drug Plans.  In testimony before the Senate Finance Committee, Humana offered the following recommendations:

• Department of Health and Human Services (HHS) should require that:
  • MA plans adhere to state department of insurance agent appointment rules; and
  • total commission compensation paid to agents be limited to a fixed percentage of premium with level commission payments year-over-year (for renewal and replacement sales);
• HHS in conjunction with state regulators should establish a registry of agents (with civil immunity to companies reporting data) where companies can share and access information related to verified beneficiary allegations of sales practice violations and questionable sales tactics; and
• CMS should continue to work with state regulators to enhance data exchange and enforcement actions, especially in the areas that affect market conduct.

According to the testimony of Humana's Vice President-Medicare Sales, Humana also supports the adoption of more stringent Federal standards in areas related to:

• cold calling.
• cross-selling of non-health related products;
• consumer disclosures;
• agent training and certification; and
• other marketing practice related areas, including co-branding, standardization of certain benefit terms, clarity in plan type, and more easily understood plan/benefit comparisons.

As reflected in the Senate Finance Committee Chairman Max Baucus' hearing statement, there have been reports of questionable MA marketing and sales practices by some agents.  Through the hearings, the Senate Finance Committee apparently intends to gather information to determine whether CMS guidance and enforcement actions are adequate to protect beneficiaries from any abusive sales practices.