CMS Receives Complaints of ‘Aggressive’ Medicare Drug Benefit Marketing

CMS has received more than 100 complaints of "aggressive" marketing tactics used by some insurance companies and agents to enroll Medicare beneficiaries in the new prescription drug benefit, though such tactics are prohibited under federal rules, according to a CMS official, the New York Times reports.

Medicare guidelines state that "[p]rescription drug plans shall not conduct door-to-door solicitation or marketing prior to receiving an invitation" to a beneficiary's home. Guidelines also prohibit "cash inducements" and cash gifts to beneficiaries for enrolling in a plan.

Christopher Eisenberg, director of health plan accountability at CMS, said such solicitation "is developing into a major compliance concern" that "appears to be growing."

The complaints involve door-to-door solicitation and misrepresentation of insurance products, the Times reports. Federal and state officials also have received complaints that some insurance agents say they are working for the Social Security Administration or CMS, and some agents have asked beneficiaries for personal information, such as Social Security numbers and credit card or bank account numbers.

CMS officials also said they are investigating several cases in which beneficiaries were offered cash incentives to enroll in a particular drug plan.

David Evans, senior vice president of the Independent Insurance Agents and Brokers of America, said most agents promoting Medicare drug plans comply with the law and can help beneficiaries understand the drug benefit and serve as advocates.

Part of the problem is that the "division of labor is not always clear," as the federal government and states share responsibility for regulating the sale and marketing of Medicare drug plans, the Times reports. Typically, insurance agents are regulated by states.

Federal officials said they will take disciplinary action against insurance companies and agents who violate the rules, including imposing a corrective action plan or freezing enrollment. States also can impose fines on insurers or suspend or revoke their licenses.

Eisenberg also said the government would work with states to draft a list of "best practices" for insurance companies and agents. For example, insurance companies could "conduct on-the-job training for new agents by riding along with them to monitor their presentations to Medicare beneficiaries," he said.

In addition, the National Association of Insurance Commissioners last week released a bulletin reminding companies and agents that "high-pressure sales tactics" are prohibited by state law (Pear, New York Times, 11/27).

Several newspapers recently published articles related to the Medicare drug benefit. Summaries appear below.

• Boston Globe: Massachusetts defense contractor Raytheon plans to shift its retiree prescription drug coverage to Medicare, a move that will save the company $170 million and cut retirees' monthly premiums by about 50%, the Globe reports. The company will provide supplemental coverage to fill gaps in the Medicare benefit, but the company's shift in prescription drug coverage "has caused some Massachusetts officials to question the 2003 legislation that created the drug benefit," the Globe reports (Krasner, Boston Globe, 11/28).
  
  
• CQ HealthBeat: Medicare Rights Center President Robert Hayes said CMS' Medicare telephone line was referring about 600 callers per day to MRC to answer "basic questions," adding, "Clearly the operators [at CMS] are unable to help most people." CMS spokesperson Gary Karr said that MRC and other State Health Insurance Assistance Programs had agreed to accept additional federal funding in exchange for assisting beneficiaries. Karr said that he has received positive accounts of the toll-free phone line -- 1-800-MEDICARE -- and added that he knew of no agreement to limit referrals to only complex cases (CQ HealthBeat, 11/23).
  
  
• Cox News/Richmond Times-Dispatch: The National Council on Aging and the Access to Benefits Coalition are sending 37 vans equipped with laptop computers and hundreds of paid counselors to community organizations in 27 states to assist people enrolling in the Medicare drug benefit. The My Medicare Matters campaign -- funded by a $10 million grant from AstraZeneca -- on Thursday will post the list of communities scheduled for visits at Mymedicarematters.org (Lipman, Cox News/Richmond Times-Dispatch, 11/28).
  
  
• Dallas Morning News: The Long Term Care Pharmacy Alliance recently asked CMS to repeal a rule that prohibits nursing home staff and pharmacists from recommending Medicare drug plans to nursing home residents, the Morning News reports. CMS officials say the rule is intended to prevent long-term care pharmacists, who may have contractual agreements with drug companies, from being biased in their recommendations. However, Paul Baldwin, executive director of LTCPA, said many nursing home residents "suffer from cognitive impairments that make considering the drug plans difficult, if not impossible" (Moos, Dallas Morning News, 11/26).
  
  
• Los Angeles Times: The Times on Sunday examined the Medicare Prescription Drug Plan Finder, an online tool that provides comparisons of drug plans. To use the system, beneficiaries must enter personal information, such as what medications they take, to receive a personalized list of plans available to them. The Times reports that the system "is designed for people who have no problem getting onto the Internet via computer -- something fewer than one-third of all elderly Americans have ever done" (Alonso-Zaldivar, Los Angeles Times, 11/27).
  
  
• Los Angeles Times: Private insurers, who are trying to keep the five million seniors who are enrolled in Medicare supplemental plans, have been holding town hall meetings and workshops throughout California urging their customers to stick with their current plans. The Times reports that, "[a]lthough the 'don't do anything' message might make sense for some people, consumer advocates caution that others could lose out financially, and even medically, if they follow that advice" (Saillant, Los Angeles Times, 11/28).
  
  
• Sacramento Bee: The Sacramento Bee on Friday examined California Medicare beneficiaries' experiences selecting a Medicare drug plan. According to the Bee, 4.3 million Medicare beneficiaries can choose from 47 stand-alone drug plans and additional managed care options available on a county-by-county basis (Weaver Teichert, Sacramento Bee, 11/25).

C-SPAN's "Q&A" on Sunday included an interview with Congressional Budget Office Director Douglas Holtz-Eakin about several issues, including the Bush administration's estimate that the benefit will cost more than $720 billion over the first 10 years (Lamb, "Q&A," C-SPAN, 11/27). The complete transcript and video of the segment in RealPlayer are available online. In addition, APM's "Marketplace" on Thursday reported how the new benefit is prompting some large pharmaceutical companies to discontinue their discount drug programs. The segment includes comments from Hayes and Medicare beneficiaries (Palmer, "Marketplace," APM, 11/24). The complete segment is available online in RealPlayer.

Additional information about the Medicare drug benefit also is available online.