9 Simple Ways to Avoid Medicare Marketing Scams

Medicare sales and marketing abuses are a recurring problem and one that many of California’s Medicare beneficiaries continue to report to the Health Insurance Counseling & Advocacy Programs (HICAP) throughout the state. Since the Medicare Advantage Open Enrollment Period (OEP) started on January 1, some agents selling Medicare Advantage (MA) and Part D plans may be applying more aggressive sales pitches and marketing tactics. We encourage beneficiaries to be alert for such improper sales pitches and outright scams.

Medicare Improvements for Patients and Providers Act (MIPPA), the federal legislation that passed last July, contains several new marketing regulations for agents and companies selling MA and Part D plans. Below is a quick review, based on MIPPA, of some of the marketing practices Medicare beneficiaries should no longer encounter or, if they do, should not tolerate. Those who encounter such practices should report them to our Senior Medicare Patrol (SMP) project through your local Health Insurance Counseling & Advocacy Program (HICAP) at 1-800-434-0222.

As discussed in our previous articles and recent recommendations from the National Association of Insurance Commissioners (NAIC), here is a simple list of 9 marketing do's and don'ts that beneficiaries need to know. Anyone who represents himself or herself as selling a Medicare health plan (Part C) or prescription drug plan (Part D):

1. Must be licensed by the state. Check with the California Department of Insurance to make sure the salesperson is a licensed agent.
2. May not make unsolicited contacts with prospective beneficiaries, such as door-to-door sales, cold calls, or approach you in a parking lot.
3. Must have an appointment in advance before coming to your home.
4. Must arrange with you in advance the type of products that will be discussed during a scheduled sales appointment. At the appointment, the salesperson may not try to sell you other types of insurance coverage than the type(s) agreed upon in advance.
5. May not try to sell you products that are not related to healthcare (like a life insurance policy or an annuity) during a sales or marketing presentation of a Medicare prescription drug or Medicare Advantage plan.
6. May not use certain healthcare settings, such as a doctor's office or a pharmacy, to attempt to sell you a plan.
7. May not use an educational event to attempt to sell you a plan.
8. May not offer you free meals at promotional or sales events.
9. May not offer you gifts or other promotional items whose value exceeds $15.

For a more detailed discussion on MIPPA marketing regulations, see our previous article Medicare Issues New Rules to Enforce MIPPA Marketing Requirements.

Advocates argue that many abuses stem from federal rules for Medicare Advantage programs that make them more profitable for insurers than other types of Medicare coverage, including providing richer commissions to insurance agents selling the policies. These very concerns spurred MIPPA’s passage in July and the adoption of new marketing rules, but problems still persist, as noted in our recent issue brief, The Price is Right: the Selling of Medicare (PDF), and comments to the Centers for Medicare and Medicaid Services (CMS). The issue brief points out several significant loopholes in the rules listed above; the comments respond to CMS' proposed rules on new compensation limits for agents selling Medicare Part C & D plans and reveal how the proposed compensation rules actually encourage agents to focus enrollment efforts on people new to Medicare, or those in Original fee-for-service Medicare.

One of the most important protections for seniors and younger people on Medicare due to a disability is to be informed and to know and understand their Medicare program and health care options. Last year, many beneficiaries unwittingly enrolled in a Medicare Advantage plan because the agent did not inform them that it was a Medicare Advantage plan or how the plan worked, particularly the various restrictions that come with being in an MA plan. For instance, enrollees in a health maintenance organization (HMO) must only see doctors in the HMO’s network, and enrollees in a private-fee-for-service (PFFS) plan must make sure that their doctors accept the terms of the plan’s payment. With such a maze of options, Medicare beneficiaries need information that is unbiased and easy-to-understand.

Some important resources for California Medicare beneficiaries and their families:

• HICAP (Health Insurance Counseling & Advocacy Program) – offers free, individual and objective counseling on Medicare, Medicare health plan options, and beneficiary’s rights and benefits. HICAP equips beneficiaries with unbiased information to help them make an informed decision for their individual health care needs. Find your local office to schedule an individual appointment with a counselor or a group presentation on Medicare. Funded by state and federal grants.
  
• Medicare Fact Sheets – downloadable fact sheets on a variety of Medicare topics and other health insurance related issues, including Medi-Cal (California’s Medicaid program), other low-income assistance programs, long-term care insurance. 10 fact sheets are also available in Spanish, Chinese, Korean, Russian, and Vietnamese.
  
• CaHealthAdvocates.org – has easy-to-navigate information on Medicare, Medigap, Medi-Cal, low-income help programs, and other health insurance options. We also have podcasts available in English and Spanish.
  
• Support tools on choosing Part D plan – offers strategies and programs to help beneficiaries choose their Part D plan and save on their prescription drug costs.
  To conclude is a quote from Patricia Barry, a senior editor at AARP and author of Medicare Prescription Drug Coverage for Dummies:
  
  "Medicare is very confusing here because there are so many plans," says Patricia Barry, a native of Britain who is struck that it took her 360 pages in her book to describe the U.S. drug program for seniors. "In my own country, I could do it in six words: 'Seniors pay nothing for prescription drugs.'"

This article was edited in part from a U.S. News & World Report article, December 17, 2008.