Hard Sell to Medicare Insurance Buyers Would Get Softer Under New Rules

Hard Sell to Medicare Insurance Buyers Would Get Softer Under New Rules

The administration proposed to crack down on the aggressive marketing of private Medicare insurance plans by outlawing unsolicited visits and telephone calls to beneficiaries, regulating commissions paid to sales agents and increasing the fines that could be imposed on insurers. Medicare “should not be undermined by the actions of a limited number of unscrupulous sales agents,” said Kerry N. Weems, the acting administrator of the Centers for Medicare and Medicaid Services.

In the last two years, Medicare beneficiaries and state officials have often complained that high-pressure sales tactics led some people to sign up for unsuitable policies. After reviewing comments from the public, federal officials intend to issue final rules before the marketing of plans for 2009 begins this October. The administration’s view is that states do not have the authority to regulate the marketing of private Medicare plans.

The proposal would prohibit door-to-door marketing of private Medicare plans. Agents could not accost beneficiaries in the parking lot of a center for the elderly, a clinic or an apartment building. Agents could respond to telephone inquiries, but they could not make cold calls to beneficiaries. The rules would set a $15 limit on the value of gifts and promotional items offered to potential customers. Insurance companies could offer coffee, soft drinks, snacks, pill dispensers and water bottles worth less than $15. But insurers could not offer free meals, whatever their value. This proposal would end a common practice. Insurers like Humana have signed up many beneficiaries at family restaurants where the companies provide sales presentations and meals. “Have Lunch on Us!” said fliers and advertisements inviting Medicare beneficiaries to Humana events last fall.

The proposed rules would also prohibit agents from offering annuities, life insurance and other “non-health care related products” while selling private Medicare plans.

The administration also wants to regulate sales commissions, to discourage agents from switching people inappropriately from one Medicare plan to another. Under the proposal, the commission paid for the initial sale and first year of coverage could not exceed the commission paid for renewal of coverage in a subsequent year. Many carriers now pay higher commissions in the first year. Some pay only for the first year, with no commission in later years. This creates a “financial incentive for agents to encourage beneficiaries to change plans each year,” the administration said.

Of the 44 million Medicare beneficiaries, at least 25 million are in some type of private plan — either a Medicare Advantage plan, which provides a wide range of health services, or a free-standing prescription drug plan, which covers just medicines.

Source: New York Times