Complaints force suspension of marketing for some Medicare plans

Washington -- Bowing to widespread outrage at recent allegations of abuses and illegal behavior, insurers sponsoring Medicare private fee-for-service plans have agreed to stop marketing them temporarily. Insurers say they'll use the time to work on making their sales agents compliant with federal rules and explaining the products more thoroughly to patients and doctors.

Some physicians and patient advocates are worried that the action does not go far enough.

BlueCross BlueShield of Tennessee, Coventry Health Care Inc., Humana Inc., Sterling Life Insurance Co., UnitedHealth Group, Universal American Financial Corp. and WellCare Health Plans Inc. independently have agreed to the voluntary suspension. Together, these companies have handled about 90% of the enrollments in Medicare private fee for service.

Officials at the Centers for Medicare & Medicaid Services, which coordinated the marketing hold, said the insurers' move would give firms the chance to get all agents completely in line when selling this alternative to traditional Medicare. Agents have been accused of such abuses as signing up seniors without their permission and misleading beneficiaries and physicians about how plans operate.

The suspension will continue for each insurer until it can demonstrate to the Medicare agency that it is meeting six federal requirements on plan marketing and sales. The firms must meet the requirements no later than Oct. 1, in advance of the November open enrollment period for established Medicare patients.

The American Medical Association welcomed the private fee-for-service marketing timeout and CMS' call for better compliance. "The AMA is pleased the administration is working to correct health plan marketing abuses that confuse seniors signing up for Medicare Advantage plans," said outgoing AMA Board of Trustees Chair Cecil B. Wilson, MD. "Choice is an important element of a market-driven health care system, but patients must have accurate information if they are to make decisions that best meet their health care needs."

Physicians remain wary

Some physicians and other experts said the marketing moratorium is a meager response to a major problem.

Private fee for service is a type of Medicare Advantage product that attempts to appeal to beneficiaries by mimicking traditional Medicare more closely than managed care offerings. Rather than constructing physician networks and negotiating contracts with participating doctors, the plans establish a set fee schedule for medical services and allow enrollees to visit any doctor who will accept the fees. Enrollment in the plans jumped from roughly 850,000 in December 2006 to nearly 1.6 million in June.

Many problems have arisen when beneficiaries signed up for the plans only to find out that their longtime doctors decided not to accept Medicare private fee-for-service plans due to the varied and unpredictable fee structures, said Marcus C. Roberts, MD, a family physician in Tifton, Ga.

Practicing in an area with aggressive private fee-for-service activity, Dr. Roberts said that sometimes several Medicare patients a week tell him that they signed up for a new health plan and are shocked to find out he does not accept Medicare Advantage.

Doctors in situations like this face the heartbreak of seeing longtime patients leave the practice to find doctors who will take the new insurance, Dr. Roberts said. Many patients are angry when they find themselves without a medical home and say plan agents misled them into thinking they could take the coverage to any physician. They are usually unable to switch back to traditional Medicare for the rest of the year.

"I'm sympathetic with them, but at the same time, I've got to run a business," Dr. Roberts said.

Physicians also are affected when they do not fully understand how the plans work, said David Lipschutz, an attorney with California Health Advocates, a patient advocacy group that has investigated private fee-for-service abuses.

Doctors who simply file a single claim with the new insurer are automatically "deemed" by the plan to accept all of its terms and fees. In a recent AMA Member Connect survey of more than 2,200 physicians, more than half of the doctors who accepted private fee for service said they did not know how the deeming process worked. Nearly half of them reported that they discovered after the fact that the private plans paid less than traditional Medicare or failed to offer typically covered services.

America's Health Insurance Plans, which represents managed care companies, said the marketing hold would give insurers time to continue developing better plan education for physicians and beneficiaries. The plans still face criticism for offering financial incentives to sales agents.

But Lipschutz and Dr. Roberts said the moratorium is a distraction that attempts to mask major flaws with Medicare private fee-for-service products. While the move could shine more sunlight on the most serious abuses, greater CMS regulation of the plans -- not just their agents -- will be needed before real progress can be made, they said.

Lipschutz said freezing marketing activities until October likely would not significantly affect the profits of insurers, who typically wait until close to the November open-enrollment period to ramp up efforts to secure new enrollees. Meanwhile, plans can enroll seniors who seek them out as an alternative to traditional Medicare.

"There's a lot of smoke but not much fire in this announcement," Lipschutz said. House Ways and Means health subcommittee Chair Pete Stark (D, Calif.) described the moratorium as a "pathetic attempt to preempt congressional action."

Some physicians said not even a call for greater regulation goes far enough to protect beneficiaries and physicians. The California Medical Assn. is calling for an outright ban on private fee-for-service products.