Analysis: Medicare HMOs fend off oversight

WASHINGTON, May 16 (UPI) -- Facing down the threat of greater regulation, health insurers unveiled a plan to curb shady marketing practices to seniors at a congressional hearing Wednesday, but their efforts may come too late.

"Get on top of this and get on top of it fast," said Sen. Gordon Smith, R-Ore., at a Senate Special Committee on Aging investigation of unscrupulous sales tactics being used by insurers in the Medicare Advantage program.

At the hearing, senior advocates, state insurance commissioners and several members of Congress called for the elimination of limits on state oversight of the plans.

In 2005, Congress passed the Medicare Modernization Act, which allowed for a large-scale expansion of private managed care plans in the Medicare program, called Medicare Advantage plans. The plans are available as an alternative to traditional Medicare, and offer additional benefits and case management in exchange for some of the limits generally imposed in managed care.

Because enrollment in the private plans is limited to a brief period, insurers needed to be able to temporarily surge their sales workforce. To do that, most companies contracted with independent salespeople to recruit seniors for the program for a few weeks each year.

But soon after, disturbing reports began surfacing.

Medicare and state insurance commissioners offices were flooded with complaints from seniors who said agents showed up unsolicited, lied to them about the costs or benefits of plans or even signed seniors up without their knowledge. Some seniors even claimed they were told Medicare was going out of business and they had to switch to a private plan to keep their coverage.

In the non-Medicare health insurance market, those complaints would be investigated by state insurance commissioners, whose job it is to protect consumers. But the law creating Medicare Advantage places participating insurers outside state jurisdiction.

At the hearing, several state commissioners said they want that rule changed.

"Medicare Advantage is one of the most complicated products we've seen," said Wisconsin Insurance Commissioner Sean Dilweg, and "we have found a common theme ... tactics that are high pressure at best or fraudulent at worst.

And when it comes to investigating the tactics, he said "we are simply pre-empted. We don't have the authority over plans."

In Oklahoma, seniors are faced with "virtual lawlessness," said state insurance commissioner Kim Holland. "Please let me do my job," she told lawmakers.

Insurance industry representatives at the hearing unveiled a list of self-imposed requirements they said will eliminate the need for formal state oversight. Under the new rules, plans would be required to stringently prepare and test all salespeople and track their sales for evidence of unscrupulous behavior.

Every senior who enrolled would receive a phone call from the insurance company to verify the beneficiary understands the plan and was not subjected to high-pressure sales tactics, and plans would employ "secret shoppers" to catch salespeople in the act.

Insurers are happy to work with states and Medicare to clamp down on bad salespeople, said Mohit Ghose, a spokesman for America's Health Insurance Plans, a trade group representing the health insurance industry.

"We don't want people selling products in a nefarious way," he told United Press International. "That doesn't help us."

But the industry wants to make sure they are not subject to 50 different sets of state regulation, he said.

The Centers for Medicare and Medicaid Services, the federal agency in charge of Medicare, also said that current law should be enough to protect seniors.

"It is a federal program. ... I think the federal government rightfully has supervisory authority," testified Abby Block, director of the Center for Beneficiary Choices at the Centers for Medicare and Medicaid Services.

But advocates of greater oversight did not seem appeased by the insurance industry proposal or Medicare's assurances.

"People with Medicare are being locked into costly and ineffective health and drug plans with no oversight from the Bush Administration, while at the same time states are barred from protecting them," said Robert Hayes, president of the Medicare Rights Center, a New York City based beneficiary assistance group.

Committee Chairman Herb Kohl, D-Wis., criticized insurance industry representatives for failing to keep their sales workforce under control. He then promised to keep working with state insurance commissioners, and keep the pressure on health plans.

Sen. Ron Wyden, D-Ore., was even more explicit.

"We're going to drain this swamp," Wyden said.

The industry's proposals seem useful, Wyden told UPI, but are suspect because they are so discordant with the authority insurance commissioners say they need.