Stiff policies applied to Part D marketing

WASHINGTON, D.C. - Many of the brochures and ads issued by health plans to promote Medicare drug benefits to seniors fail to meet standards, and the Centers for Medicare and Medicaid Services (CMS) has fallen short in monitoring the program, say federal investigators.

A separate government audit also criticizes CMS and insurers for lax efforts in preventing Medicare fraud. CMS seeks to stem the criticism by tightening up the rules governing marketing of Medicare Advantage plans and stand-alone prescription drug plans (PDPs) as insurers head into the 2009 open enrollment season. Evidence of continued sales abuses will provide added ammunition for those members of Congress who would like CMS to take over the Part D drug benefit and to reduce the role of private plans in providing healthcare to seniors.

The marketing regulations published by CMS September 15 aim to protect Medicare beneficiaries from "deceptive or high-pressure marketing tactics" by insurance companies and their agents, according to CMS Acting Administrator Kerry Weems. Sales reps can't offer free meals during sales pitches or make unsolicited sales calls to seniors, for example.

CMS's final rule is no surprise to Medicare plan sponsors, as most of the specifics were proposed last May and then included in the Medicare reform bill approved by Congress in July. Legislators and regulators will be keeping a close watch on how well insurers adhere to the stiffer sales policies, particularly in light of a recent report from the HHS Office of the Inspector General (OIG) which found that nearly 85% of marketing materials issued by prescription drug plans (PDPs) in 2007 did not fully meet CMS guidelines. The OIG also pointed the finger at CMS for providing poor models for insurers' marketing materials and then failing to monitor resulting documents in a timely fashion.

Senate Finance Committee Chairman Max Baucus (D-Mont.) blasted this "near-total failure by CMS" to regulate how insurers market plans to seniors as "unconscionable" and promised to monitor how CMS was correcting these problems. CMS officials pointed out that many of the cited problems characterized the program's initial years and that the agency already was implementing many of the OIG's recommendations for improving the oversight process.

At the same time, Congress' Government Accountability Office (GAO) issued a report criticizing a lack of auditing by CMS to ensure that PDPs are doing all they should to prevent fraud. Medicare plans are supposed to establish training programs to inform employees of correct procedures for preventing and detecting fraud. While insurers generally have developed written policies and standards of conduct and have appointed requisite compliance officers, employee training and internal monitoring is less widespread. GAO further notes that CMS is not conducting regular on-site audits of PDP anti-fraud efforts, admittedly because of budget cuts on auditing programs.

These reports support Congress and state officials who would like to see greater state involvement in overseeing PDP marketing and other activities. State insurance regulators monitor sales agents and representatives involved in Medicare plan marketing and have taken enforcement actions.

Last month, Humana agreed to pay $750,000 to Wisconsin insurance officials to settle allegations about violations by company agents selling MA plans and PDPs. Current law limits state oversight of Medicare plan sponsors and states' ability to address beneficiary complaints.

The July Medicare legislation stopped short of enhancing state regulators' involvement in Medicare marketing, but Congress plans to revisit it. Continued complaints will provide reason for revising the MA and PDP programs.