BENEFICIARIES REMAIN VULNERABLE TO SALES AGENTS’ MARKETING OF MEDICARE ADVANTAGE PLANS

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The Centers for Medicare & Medicaid Services (CMS) contracts with private companies, known as plan sponsors, to provide health insurance plans under MA. Plan sponsors may market their MA plans through independent sales agents, who may market on their own or through a field marketing organization (FMO), or by employing their own sales agents.

Between June 2007 and June 2008, Congress held three hearings examining sales agents’ marketing of MA plans. During these hearings, witnesses testified that sales agents had marketed without licenses, portrayed themselves as Medicare employees, and misled Medicare beneficiaries about plan benefits. These types of aggressive, deceptive, and fraudulent marketing practices could result in Medicare beneficiaries enrolling in plans that do not meet their health care needs. Several members of Congress raised concerns about sales agents’ marketing to Medicare beneficiaries to the Office of Inspector General (OIG); one specifically requested that OIG examine the marketing practices of MA plans.

In July 2008, Congress enacted the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), which prohibited or limited certain marketing activities by sales agents and plan sponsors. In September 2008, CMS published regulations implementing the MIPPA’s marketing provisions, including limiting sales agent compensation to independent sales agents. In addition, CMS regulations required that all sales agents be trained and tested annually and be State licensed. To examine selected MA plan sponsors’ compensation of sales agents and determine whether the selected plan sponsors ensured that their sales agents were qualified, we reviewed compensation, testing, and licensure data for a random sample of sales agents. We purposively selected the plan sponsors based on their size and the rate of marketing complaints they received. We also compared complaints regarding sales agent marketing reported to CMS from 2008 and 2009 to determine whether the number and topics of Medicare beneficiaries’ complaints changed after implementation of the sales agent marketing regulations.

FINDINGS
*All five plan sponsors using independent sales agents had compensation practices that resulted in inappropriate financial incentives.
*Five of the six selected plan sponsors did not ensure that all sales agents were qualified under CMS’s regulations.
*The number and topics of sales agent marketing complaints remained unchanged after implementation of sales agent marketing regulations. Read More/Download Report