CMS Issues Rules That Restrict Insurance Agents' Marketing Of Medicare Advantage, Prescription Drug Plans

Main Category: Medicare / Medicaid / SCHIP
Article Date: 17 Sep 2008 - 12:00 PST

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CMS on Monday issued new rules governing insurance companies, agents and brokers regarding the marketing of Medicare prescription drug plans and Medicare Advantage plans, the AP/San Francisco Chronicle reports (Freking, AP/San Francisco Chronicle, 9/15). The new rules -- some of which were mandated by Medicare legislation passed earlier this year -- will take effect Oct. 1, the first day marketing efforts for the Medicare open enrollment period that begins Nov. 15 are allowed.

The rules will prohibit unsolicited sales pitches, including telemarketing and door-to-door sales; meals at sales presentations; promoting products not related to health care at sales presentations; conducting sales presentations at physicians' offices or other locations where health care services are provided; and attempting to sell plans at events billed as educational (Young, The Hill, 9/15).

In addition, commission for sales agents will be required to conform to a structure used in other parts of the insurance industry. First-year commission for a new customer cannot exceed 200% of the commission for the next five years, in order to remove the incentive for agents to "churn" beneficiaries between different plans each year (Armstrong, CQ HealthBeat, 9/15).

The rules also include stricter requirements for CMS reviews of marketing materials. CMS will perform about 900 "secret shopper" reviews of sales presentations. CMS also will monitor print and broadcast advertisements, listen to recorded calls between plans and customers and verify that plans are reporting agents and brokers in violation of the rules to federal and state authorities (The Hill, 9/15). Penalties for violations will include fines of up to $25,000 per beneficiary affected or potentially affected (CQ HealthBeat, 9/15).

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CMS Acting Administrator Kerry Weems said, "These regulations give insurers bright-line guidance on what types of marketing activities are acceptable and what types are not acceptable," adding, "Medicare beneficiaries can be assured that we will monitor marketing activities and move aggressively with enforcement measures or actions if these rules are violated." According to The Hill, the Bush administration with the rules was seeking to "allay insistent criticism for congressional overseers and advocates for senior citizens" regarding sales practices.

Senate Finance Committee Chair Max Baucus (D-Mont.), who sponsored the bill, said, "CMS is moving in the right direction by following the new Medicare law's call to draw clear lines that will weed out unscrupulous marketing agents who prey on seniors for profit. Now, CMS must follow up and follow through for seniors in Medicare." He added that the Finance Committee "will watch CMS to make sure the effort to protect seniors doesn't stop here" (The Hill, 9/15).

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