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US Health Insurance Firms Suspend Sales, Promise to End Fraudulent Practices

Seven key health insurance firms in US have agreed to stop selling a type of government-funded plan for the elderly in response to complaints that sales agents forged signatures and also adopted aggressive tactics, the Centers for Medicare and Medicaid Services said Wednesday.

The seven companies are working on new marketing guidelines with the U.S. Medicare health insurance program for the elderly and disabled.

Widespread reports of high-pressure and fraudulent sales techniques used by some independent salespeople hawking Medicare managed-care plans is leading to greater scrutiny of private companies that sell these products as an alternative to traditional Medicare.

The Senate Special Committee on Aging held a hearing in May to address complaints about what's known as private fee-for-service plans, the fastest- growing type of private Medicare managed-care plan.

These policies offer fewer restrictions on doctors and hospitals and often come with benefits that standard Medicare doesn't cover, such as dental or vision services. They differ from basic Medicare in that the entire benefit is managed by a private company.

Medicare Advantage plans sometimes carry lower monthly premiums than regular Medicare, although benefits may not be the same as those offered by the government insurance program.

Medicare has 43 million beneficiaries, of whom 7.5 million are in Medicare Advantage plans. Private fee-for-service plans are the fastest-growing part, with enrollment rising 72 percent to 1.3 members in February 2007 from July 2006.

The government spends 19% more on private fee-for-service Medicare Advantage plans than traditional Medicare and spends 12% more on all Medicare Advantage plans, according to the Medicare Payment Advisory Commission.

The senate panel heard testimony that health- insurance agents tricked elderly customers into buying Medicare Ad vantage policies that they couldn't afford, cutting off access to their doctors. Agents also forged signatures, signed up the dead and enrolled mentally disabled people without consulting their guardians, state insurance official said.

``The marketing practices of Medicare Advantage carriers have led to virtual lawlessness in Oklahoma,'' Kim Holland, Oklahoma's insurance commissioner, told the Senate panel last month. ``I currently have greater authority to address a consumer's problem with pet insurance.''

U.S. officials did little to stop the abusive sales practices, according to state insurance agencies.

Senator Herb Kohl, a Wisconsin Democrat and chairman of the committee, said at the hearing that he would work with the National Association of Insurance Commissioners to pass a law expanding state authority over insurance sellers.

He regretted, "There's a lamentable lack of oversight when it comes to the sales practices being used to sell Medicare Advantage plans to our seniors." Kohl added, "Our goal is that these plans must be represented in a transparent, honest and fair way."

Medicare received 2,700 complaints about Medicare Advantage from beneficiaries in the five months ending in April, most of them regarding the fee-for-service plans, said Abby Block, director of the Center for Beneficiary Choices, part of Medicare.

Insurance companies agreed to adopt new marketing guidelines, including making information about the health plans readily available to medical providers and contacting beneficiaries to ensure they understand the program's rules. They have until October 1 to meet the requirements, the Medicare statement said.

Under the new agreement, the suspension on marketing will be lifted when a company meets certain guidelines. Sales materials will have to remind beneficiaries that not all providers may accept the plan. Insurers must make information ea sily available to medical providers, and beneficiaries interested in enrolling must be contacted to make sure they understand the plan's rules.

The changes don't solve fundamental problems with Medicare Advantage and are a ``pathetic attempt'' to protect the plans, said Representative Pete Stark, a California Democrat and chairman of the House Ways and Means Health Subcommittee, which is reviewing U.S. payments to the providers.

``Independent and nonpartisan experts agree that private plans are massively overpaid relative to Medicare,'' Stark said in a statement. ``The excessive payments also provide an incentive for marketing abuses that will continue as long as they are in effect.''

Congress is considering cutting payments for Medicare Advantage, which costs about 12 percent more than government- administered Medicare benefits.

In addition to Humana of Louisville, Kentucky, and UnitedHealth of Minnetonka, Minnesota, insurers agreeing to suspend marketing were Wellcare Health Plans Inc. of Tampa, Florida; Universal American Financial Corp. of Rye Brook, New York; Coventry Health Care Inc. of Bethesda, Maryland; Blue Cross/Blue Shield of Tennessee; and Sterling Life Insurance, a subsidiary of Aon Corp. of Chicago, according to a statement by the Medicare program.

But then the halt in sales will have little effect on the companies' revenue because most sales are made during the regular enrollment period that runs from mid-November through December.

``It's a positive development in that they are doing something, but it's somewhat hollow,'' said Robert Laszewski, head of Health Policy and Strategy Associates in Alexandria, Virginia, in a telephone interview. ``Someone came up with a fantastic public relations marketing, failing to tell people that 99 percent of all sales occur during the open enrollment.''

The companies have figured out a way to turn around a ``pu blic relations debacle'' without harming their bottom line, Laszewski said.


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