Medicare lets some private fee-for-service plans resume marketing

Washington -- Three out of the seven major insurers offering a controversial type of Medicare private health plan received the green light from federal officials to start marketing their products again -- more than a month ahead of schedule.

Coventry Health Care Inc., Universal American Financial Corp. and WellCare Health Plans Inc. received approvals in August from the Centers for Medicare & Medicaid Services. The go-aheads came well in advance of a self-imposed Oct. 1 deadline to address alleged marketing abuses. The three insurance firms were part of the group of seven that in June voluntarily agreed to stop promoting their Medicare private fee-for-service plans after complaints of abusive and potentially illegal behavior by their agents.

Medicare beneficiaries had complained that agents signed them up for private fee-for-service products against their will or without telling them that their physicians might not accept the coverage. The companies agreed to work during the marketing moratorium to meet several CMS requirements, including the addition of disclaimer language on marketing materials, follow-up verification calls to beneficiaries and outreach programs to educate physicians.

The three insurers said they were eager to get back to letting seniors know about what the companies view as attractive plan options. The other four insurers that agreed to the marketing break are BlueCross BlueShield of Tennessee, Humana, Sterling Life Insurance Co. and UnitedHealth Group. Together, the seven companies handle about 90% of Medicare fee-for-service enrollment.

Private fee for service is a type of Medicare Advantage product that attempts to appeal to beneficiaries by mimicking traditional Medicare more closely than the program's 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.

Mixed reviews

Some beneficiaries are very happy with the plans, said Willard A. Snyder Jr., MD, a family physician in Brunswick, Ga. He has several patients who enrolled in Humana's Gold Choice private fee-for-service plan. The plan pays according to the Medicare fee schedule and doesn't require Dr. Snyder to sign a contract with Humana.

"Patients love them because the plans throw in extra benefits, and it's all in one package," he said. These plans often cover prescription drugs, for instance, while regular Medicare covers the medications under a separate benefit.

But the jury is still out on whether insurers really have cleaned up their acts in terms of letting beneficiaries and physicians know exactly what they're getting into when they sign onto the private fee-for-service model, said Marcus C. Roberts, MD, a family physician in Tifton, Ga., who refuses to accept the plans' terms and conditions. He has had to refer longtime Medicare patients to other doctors.

Dr. Roberts said the voluntary moratorium amounted to a slap on the wrist for the insurers, whom he continues to distrust.

"It is great that some of the companies are trying to clean up their act. I just don't understand how they are getting away with fraud and abuse of the Medicare population," he said.

CMS officials said any private fee-for-service insurer found to be in violation of the guidelines after Oct. 1 would be subject to a range of possible penalties, including suspension of new enrollments and termination from Medicare.

The American Medical Association had welcomed the marketing moratorium, stating that beneficiary choice is an important aspect of Medicare that requires providing accurate information to patients.

The Association is pushing for Congress to reduce federal subsidies to Medicare private health plans, which, on average, are paid 112% of what the program spends per beneficiary through traditional fee for service. Private fee-for-service plans specifically receive 119% on average of what the traditional program pays per capita. The trade group America's Health Insurance Plans, many Republican lawmakers and President Bush warn that reducing the payments would hurt access for seniors who rely on the private Medicare plans' additional benefits.