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Part 1: Is CMS’s Latest Effort Enough to Hold Medicare Advantage Companies Accountable?

This is part one of a two-part series. The first part describes the recent rule to “strengthen Medicare Advantage (MA) and hold health insurance companies to higher standards for America’s seniors and people with disabilities by cracking down on misleading marketing schemes by MA plans.” 

Part 2 will describe how MA insurance companies have been using artificial intelligence (AI) algorithmic tools — rather than doctors or other medically trained people — to determine whether patients who are enrolled in their Medicare Advantage programs are worthy of care!

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There are currently 64 million Americans enrolled in Medicare. Many of these folks (anyone who watches TV or gets mail) are inundated with ads for Medicare Advantage plans, star-powered by the likes of William Shatner, all promising great care with low- or zero-cost premiums.

The pitches are nonstop, and they work: In 2022, nearly half of those eligible for Medicare were enrolled in Advantage plans, up from about a third in 2016, according to the Kaiser Family Foundation (KFF), a nonprofit and nonpartisan organization focusing on health policy analysis and factual health journalism (please note that KFF is not affiliated in any way with Kaiser Permanente, which is a health care provider that offers managed care plans such as HMOs and Medicare Advantage plans).

Original Medicare, sometimes called Traditional Medicare, consists of Medicare Part A (which covers hospitalization and has no monthly premium so long as you worked for at least 10 years paying payroll taxes), Medicare Part B (which covers doctor visits and does have a monthly premium, which varies based on your income), and Medicare Part D (prescription drug coverage, which also has a monthly premium). Original Medicare is the federal government insurance program that you first sign up for at age 65, or earlier if you’re disabled. Together, Part A and B cover about 80 percent of the typical healthscare costs seniors face. Because Original Medicare does not cover 100 percent of medical and prescription drug costs, almost everyone who stays enrolled in Original Medicare also purchases a Medicare supplement policy (sometimes called a Medigap plan) through a private insurance company. 

The advertised appeal of Medicare Advantage plans is understandable. Most Medicare Advantage plans (also called Medicare Part C) promise to provide all the benefits of Parts A, B, and D, along with all of the benefits of a Medicare Supplement plan, all rolled into one private insurance plan that usually has a much lower premium and much lower copays. Some Medicare Advantage plans also offer benefits not in Original Medicare, such as fitness classes or some vision and dental care. This all may sound good, but similar to most things, don’t believe everything you read or see on TV. Medicare Advantage plans can carry hidden risks and inflated costs, especially for people with major health issues.

According to Tricia Neuman, Senior Vice President and Director for the Medicare Policy Project at the Kaiser Family Foundation, “(s)ome people in Medicare Advantage end up paying unexpectedly high costs when they become ill or find their network lacks the providers they need.” 

For an in-depth description of some of the misleading marketing tactics for Medicare Advantage plans, please read my recent article on the subject, “Customers Are Being Misled by Marketers into Signing Up for Certain Private Medicare Advantage Plans.”

What Is Being Done to Fix the Problems with Medicare Advantage Plans?

Last Wednesday, April 5, the Centers for Medicare & Medicaid Services (CMS) put a rule in place in an effort to “strengthen Medicare Advantage” and “hold health insurance companies to higher standards for America’s seniors and people with disabilities.” The latter would be accomplished by cracking down on misleading marketing schemes by Medicare Advantage plans and Part D plans, among other things. 

The new rule is part of a series of actions that involve Medicare Advantage (MA) plans and greater accountability for quality coverage and care. In February 2023, CMS finalized a rule to start recovering improper payments made to Medicare Advantage plans through audits, for the first time since 2007. Recovering these improper payments and returning this money to the Medicare Trust Funds will protect the fiscal sustainability of Medicare and allow the program to better serve seniors and people with disabilities, today and in the future. You can read more about the previous rule in my article, “What the New Enhanced Auditing of Medicare Advantage Means for You,” on the subject. 

What the New Rule Prohibits when It Comes to Misleading Marketing

On MA plan marketing, CMS issued more than a dozen new requirements in the new rule so that beneficiaries are not misled into signing up for a plan that doesn’t meet their needs or whose rules they don’t understand. The new rule prohibits the following:

  • Advertising benefits to beneficiaries in a service area where those benefits are unavailable.
  • Using superlatives like “best” or “most” in sales pitches unless the marketing material includes documentation to support the statement based on data from the current or prior year.
  • Using Medicare images, logos, or replications of a Medicare card in marketing materials or ads because of concerns that “an increasing number of beneficiaries are being misled into believing the entity they are contacting is Medicare or the Federal Government.”
  • Touting a plan’s potential savings based on a comparison with typical expenses that would be borne by an uninsured or a dually eligible beneficiary, which that individual would not be required to pay.
  • Holding a marketing event from occurring within 12 hours of a Medicare educational event at the same location.
  • Additionally, MA and Part D plans or third-party marketing organizations that sell them must:
    • List all of the MA plans or Part D sponsors that they represent in their marketing materials.
    • Explain the effect of an enrollee’s choice on their current coverage.
    • List medical benefits in a specific order at the top of a plan’s summary benefits to simplify plan comparisons.
    • Include a disclaimer that the beneficiary may want to consult with the federally-funded SHIP (State Health Insurance Assistance Program) agencies, a national network of trained objective counselors, to obtain extra help. SHIP programs in some states are called HICAPs, Health Insurance Counseling and Advocacy Program.

The new rule requires MA or Part D plans to have an oversight plan to monitor agent/broker activity and report noncompliance to CMS. In its final rule, CMS said it was declining to proceed with prohibiting marketing companies from distributing beneficiary contact information, but “may address it in a future rule.”

Additional Provisions

The 724-page rule includes additional provisions, as follows. The final rule:

  • Removes “barriers to care created by complex coverage criteria and utilization management,” and will “expand access to behavioral health care” for MA enrollees;
  • Maintains approval of a service “for as long as medically necessary to avoid disruptions”;
  • Uses prior authorization policies “only to confirm the presence of diagnoses or other medical criteria and/or ensure that an item or service is medically necessary based on standards specified in this rule”;
  • Provides a minimum 90-day transition period while an enrollee who is switching to a different plan is undergoing an active course of treatment;
  • Creates utilization management committees to review prior authorization policies annually to make sure they are consistent with Medicare policies;
  • States that provider directories must include each clinician’s cultural and linguistic capabilities;
  • Expects MA plans to develop digital health education programs for enrollees with low digital health literacy to help them access telehealth services;
  • Requires MA plans to include distance and minimum number requirements for two provider categories — clinical psychologists and licensed clinical social workers — in order for their provider networks to be deemed adequate;
  • Adds seven populations that MA organizations must serve in a culturally competent manner. The new groups are groups with: limited English proficiency or reading skills; considered ethnic, cultural, racial, or religious minorities; living with disabilities; who identify as lesbian, gay, bisexual, or other diverse sexual orientations; who identify as transgender, nonbinary, and other diverse gender identities, or people who were born intersex; who live in rural areas and other high levels of deprivation and who are otherwise adversely affected by persistent poverty or inequality; and
  • Includes an Inflation Reduction Act provision that will lower drug costs for about 300,000 beneficiaries with incomes up to 150 percent of the federal poverty level who meet other eligibility criteria. The new provisions take effect June 5 and will apply to the 2024 coverage year, except for the new marketing regulations, which will take effect Sept. 30, prior to the open enrollment period when TV ads and other media attempt to attract beneficiaries.

“This final rule will strengthen Medicare Advantage and hold health insurance companies to higher standards for America’s seniors and people with disabilities by cracking down on misleading marketing schemes by Medicare Advantage plans (also called Part C), Part D plans and their downstream entities,” CMS said in a press release. Initial industry response was favorable, especially on the new prior authorization requirements.

Even with the Final Rule, Medicare Advantage Plans Fall Short

If you have chronic conditions or significant health needs, you should still think twice about MA plans. With Original Medicare, you can see any medical provider that accepts Medicare, which is almost all of them. But Medicare Advantage plans typically require that you get care from a limited network of providers, and you may need pre-authorization to see specialists. This can be risky, and it can also end up being more expensive. In fact, a recent KFF study found that about half of all Medicare Advantage enrollees would end up paying more than those in traditional Medicare for a seven-day hospital stay. Another major problem we see with Medicare Advantage plans is that each plan is “in network” with only a few nursing homes and rehabilitation facilities, forcing people to choose a rehabilitation facility and/or nursing home that may not fully meet their needs.

Medicare Advantage plans may also be problematic for people in rural areas. The network of providers in rural areas is especially narrow, making it harder for people to make appointments and get care. Lastly, it is well documented that MA plans are overpaid, and such overpayments drive up programmatic spending among other issues, as described in my article, “Now This Is SCARY! Medicare Advantage Is Submitting Inflated Bills to Make More Money, Totaling in the BILLIONS!” Read the entire study here.

Review Your Medicare Coverage Every Year, and if You Have Medicare Advantage, Consider Switching Back to Original Medicare While You Are Still Healthy

The good news is that you can switch from a Medicare Advantage plan back to Original Medicare during the annual open enrollment period which runs from October 15 to December 7 each year. The reason we say switch “back to Original Medicare” is because when you first enroll in Medicare, you are always enrolled initially into Original Medicare, and you are then given the option to switch to a Medicare Advantage plan.

If you do switch back to Original Medicare from a Medicare Advantage plan, your coverage under Original Medicare will begin January 1 of the following year. You can also make this change during the Medicare Advantage Open Enrollment period, which runs from January 1 through March 31. If you make this change, be sure to sign up for a Medicare Part D stand-alone prescription drug plan (PDP), unless you have creditable drug coverage from another source. If you do not, and you decide to sign up for Part D PDP coverage later on, you may face a penalty for late enrollment.

Also, if you switch back to Original Medicare, you should of course always try to purchase a Medicare Supplement insurance policy. But be careful before switching back to Original Medicare, because you must be healthy enough to qualify for a Medicare Supplement policy if you are switching back to Original Medicare from a Medicare Advantage plan. The best time to buy a Medicare Supplement policy is during your initial six-month Medigap Open Enrollment Period. You generally will get better prices and more choices among policies. During that time you can buy any Medigap policy sold in your state, even if you have health problems. This period automatically starts the first month you have Medicare Part B and you’re 65 or older. It can’t be changed or repeated. After this initial enrollment period, you may not be healthy enough to purchase a Medicare Supplement policy at all or, if you’re able to buy one, it may cost much more due to past or present health problems. 

Therefore, you should contact a few Medicare Supplement insurers directly to ensure you’ll be able to purchase a Medicare Supplement policy if you’re thinking of switching back to Original Medicare. Or, to make your life much easier, work with an experienced Medicare health insurance agent who can help you shop for a Medicare Supplement policy, and help you get the best possible policy at the least possible cost.

At the Farr Law Firm, we work with Retirement & Medicare Together to serve the Medicare needs of our clients. If you are turning 65 and getting ready to enroll in Medicare, click here to schedule your no-cost Medicare consultation today.

Northern Virginia Medicare Planning: 703-691-1888 
Fredericksburg, Medicare Planning: 540-479-1435 
Rockville, MD Medicare Planning: 301-519-8041 
Annapolis, MD Medicare Planning: 410-216-0703 
Washington, DC Medicare Planning: 202-587-2797

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.

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