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Stop This Scam
February 1, 2007 • Volume 7, Issue 5The confusing array of private plan options for drug and medical coverage can make people with Medicare vulnerable to deception and bullying by unscrupulous insurance agents. Sales reps looking to maximize the commissions they receive from insurance companies often target frail older adults, people with cognitive disabilities and the poor and sick who are worried about paying their medical bills.
It is not enough, however, just to find the bad apples among the brokers and agents. If we follow the money trail, it becomes clear that the abuses are a direct result of marketing strategies and commission structure developed by the insurance companies, the lack of adequate oversight exercised by the federal government and the rulebook rigged up by Congress.
Insurance companies typically pay brokers about $500 for every person they enroll in a Medicare Advantage plan offering both medical and drug coverage, more than five times the commission they pay for signing someone up for a plan that just covers drugs and allows the individual to stay in Original Medicare. As a result, counselors across the country last year answered thousands of calls from individuals who found themselves in a Medicare Advantage plan when they thought they were signing up just for drug coverage. These individuals were often saddled with high medical bills when they discovered their doctors would not accept their new plan, or the plan imposed high cost sharing for major medical expenses.
Each Medicare Advantage enrollee generates thousands of dollars in additional taxpayer-funded subsidies for the insurance company offering the plan. The marketing abuses continue because the Centers for Medicare & Medicaid Services (CMS) allows the insurance companies to use higher commissions to steer people with Medicare to these plans, whether or not they are well suited to their financial or health care needs. Neither the insurance companies nor CMS ensures that brokers and agents adequately and honestly explain these plans to consumers.
Of all the Medicare Advantage plans, private fee-for-service plans are the ones most subject to aggressive and deceptive marketing. Typically, agents will tell prospective customers that “all doctors take this plan” or say it is just like Original Medicare. Neither claim is true. The reason insurance companies push private fee-for-service plans so hard is simple: they generate the largest subsidies from Medicare thanks to the payment plan devised by Congress.
In a backroom deal enacted late last year, Congress gave the insurance companies offering private fee-for-service plans another favor, allowing them to sign up any person with Medicare into these plans at any time during the year. That means millions more people with Medicare will be cajoled and hoodwinked into joining these plans, and taxpayers will shell out millions more in subsidies to these plans. The author of this provision was then-House Speaker Dennis Hastert, Republican of Illinois. He may have been repaying a favor. Aon Corporation, one of the largest purveyors of private fee-for-service plans, gave nearly $20,000 to his 2006 campaign.
It is time for the new Congress to do people with Medicare and taxpayers a favor. Congress should lift lock-in, which keeps people with Medicare stuck in a Medicare Advantage or drug plan for the whole year, even if it fails to meet their needs. It should stop overpayments to Medicare Advantage plans, and private fee-for-service plans in particular. Congress should take back the special favor it granted Aon Corporation and other companies pushing private-fee-for-service plans. Finally, Congress needs to hold hearings on these marketing abuses and enact legislation that holds both sales agents and insurance companies accountable and protects their constituents with Medicare.
Medical Record
“I am a social worker. In one week, I assisted three seniors who signed up for Medicare Advantage plans without understanding the implications. One person was sick at the doctor’s office when she was pressured to sign up. These seniors were confused as to why they could not see their regular doctors. This is a serious problem for seniors” (Story submitted to the Part D Monitoring Project, Medicare Rights Center, January 16, 2007).
“Enrollees switching from fee-for-service Medicare to managed care frequently must change providers and face different and sometimes greater cost-sharing structures often not adequately explained by an agent selling them one of these plans. Without safeguards in place to ensure that the difference in products is adequately explained to prospective enrollees, the linking of higher commissions to enrollments in MA products simply serves as a cover for allowing marketing agents to steer customers to products that generate higher-capitated payments for the company” (“After the Gold Rush: The Marketing of Medicare Advantage and Part D Plans,” California Health Advocates and Medicare Rights Center, January 2007).
Aon Corp. is listed sixth among the top donors to Representative Dennis Hastert’s 2006 election campaign, with a contribution of $19,700 (Center for Responsive Politics).
The government overpays Medicare Advantage plans compared with spending on Original Medicare: in 2006, Medicare payments to Medicare Advantage plans were an average of 111 percent of the payments to traditional fee-for-service Medicare (“Medicare Advantage Benchmarks and Payments Compared with Average Medicare Fee-for-Service Spending,” Medicare Payment Advisory Commission, June 2006).
***** The Medicare Rights Center (MRC) needs to hear about all the problems with the Medicare Part D benefit, whether they happen to you or someone in your community. With this information, we will be armed with the needed evidence to push for a Medicare-administered drug benefit.
Fast Relief: Part D Monitoring Project
Submit your story at www.medicarerights.org/partdstories.html
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The Louder Our Voice, the Stronger Our Message Asclepios — named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.
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