On Friday, June 15, 2007 the DEPARTMENT OF HEALTH & HUMAN SERVICES, Centers for Medicare & Medicaid Services (CMS), Public Affairs Office issued the following Press release:
Plans Suspend PFFS Marketing;
Plans adopt strict guidelines in response to deceptive marketing practices
"The Centers for Medicare and Medicaid Services (CMS) announced today that in response to concerns about marketing practices, seven health care sponsors have signed an agreement to suspend voluntarily the marketing of Private-Fee-For-Service (PFFS) plans. This suspension for a given plan will be lifted only when CMS certifies that the plan has the systems and management controls in place to meet all of the conditions specified in the 2008 Call Letter and the May 25, 2007 guidance issued by CMS. The signatories include: United Healthcare, Humana, Wellcare, Universal American Financial Corporation (Pyramid), Coventry, Sterling, and Blue Cross/Blue Shield of Tennessee
'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 that need to be removed from the system for good,” said Leslie V. Norwalk, Esq., Acting Administrator of CMS. “This voluntary agreement demonstrates that CMS and the plans are stepping up to ensure that deceptive marketing practices end immediately, and that beneficiaries understand what they are purchasing.'
'Through a variety of methods, including our ‘secret shopper’ program that uses trained individuals to attend marketing events and report back on the insurance agents’ activities, and the eyes and ears of our thousands of partners throughout the nation, CMS is proactive in protecting beneficiaries from rogue agents. Although the 2700 agent complaints we logged from December 2006 to April 2007 represent less than one half of one percent of the 1.3 million members enrolled in individual PFFS plans, we can always do better,' added Norwalk.
The agreement is effective five business days from today and will continue to apply to individual plans until they have demonstrated to CMS that they have the systems and management controls in place to ensure that they can meet all the CMS requirements. CMS review will begin as soon as plans indicate they are ready. Plans signing the agreement will be actively monitored to ensure they do not engage in marketing while the voluntary suspension is in place. Violations will be subject to a full range of available penalties, which can include suspension of enrollment, suspension of payment for new enrollees, civil-monetary penalties, and termination of the plan’s involvement in the Medicare program. The full range of updated conditions will be in effect for all sponsors of PFFS plans beginning October 1, 2007, and violations of those conditions will be subject to the same types of penalties.
Primary provisions that the plans signing the agreement must meet to have the suspension lifted (and that all PFFS must meet beginning October 1, 2007) are summarized below:
- All materials, including but not limited to advertisements, enrollment materials, and materials used at sales presentations by employees or contracted representatives of a health insurance company will include the model disclaimer language provided by CMS in its May 25, 2007 guidance.
- All representatives selling the product to beneficiaries on behalf of the plan sponsor will pass a written test that demonstrates their thorough familiarity with both the Medicare program and the product they are selling.
- A provider outreach and education program will be in place to ensure that providers have reasonable access to the plan terms and conditions of payment, and that provider relations staff are readily accessible to assist providers with questions concerning the plan.
- Outbound education and verification calls will be made to all beneficiaries requesting enrollment to ensure that they understand the plan rules.
- Lists of planned marketing and sales events provided to CMS will include events sponsored by delegated brokers and agents as well as those sponsored by the plan.
- When asked by CMS, plan sponsors will provide a complete list of all representatives marketing a PFFS product and authorize CMS to make that list available to State Insurance Departments on request.
'We want to underscore that Corrective Action Plans already in place will remain in effect until full compliance is attained and investigations underway involving fraud or criminal activity will continue to their appropriate conclusion,” added Norwalk. “In addition, once marketing resumes, CMS will actively monitor performance. Any violations of the requirements set forth in CMS guidance will be subject to immediate remedial action in accordance with standard procedures.' "
Contact: CMS Office of Media Affairs (202) 690-6145
The reaction to the CMS news release was mixed - as reported by the San Francisco Chronicle(Colliver, https://www.sfgate.com/business/article/Insurers-agree-to-back-off-on-Medicare-plans-2586667.php 6/16), noting that:
"[h]ealth advocates said the action is a good start but fails to address what they say is the root cause of the abuse -- the fact the federal government reimburses private insurers for fee-for-services policies at a higher rate than other types of Medicare
plans. Sales agents, in turn, receive higher commissions.
'Money is a driving force for both the plans and agents, and that is driving a lot of the marketing misconduct we're seeing,' said David Lipschutz, staff attorney for California Health Advocates.
Lipschutz said changes to reimbursement levels would require congressional authority.
'This will do virtually nothing to protect Medicare
beneficiaries and is a pathetic attempt to preempt Congressional action,' Rep. Pete Stark, D-Fremont, a longtime critic of Medicare
fee-for-service plans, said in a statement."
Among the individual major insurance providers issuing their own press releases, Coventry Health Care added to to the CMS press release with its own statement also dated June 15, 2007, where the company noted in part:
"Coventry is working cooperatively with the Centers for Medicare & Medicaid Services (CMS) to expedite the early implementation of the new CMS 2008 marketing guidelines. The company is not under investigation or the subject of any corrective action plans or sanctions.
These actions are part of ongoing efforts to strengthen marketing practices with independent brokers and agents. The company has a 10-year record in delivering excellent service to thousands of Medicare recipients across the country. Coventry’s zero tolerance policy for inappropriate marketing practices by brokers and agents continues to be employed in this temporary period."