Customers Are Being Misled by Marketers into Signing Up for Certain Private Medicare Advantage Plans

Medicare Advantage plans now enroll nearly half of all Medicare beneficiaries, but some consumers are being misled because of the aggressive marketing campaigns by certain Medicare Advantage plans, and because of the fact that the federal government calls these types of plans “advantage plans,” leading consumers to believe that they provide some kind of advantage, which is often the opposite of the truth. Open enrollment period, a time when seniors can enroll or make changes to their Original Medicare by enrolling in a new or different Medicare drug plan and Medicare supplement plan, is ongoing now until December 7, 2022. Before explaining how some Medicare Advantage plans are misleading consumers, let’s do a quick review of the benefits of Original Medicare versus Medicare Advantage plans.

Original Medicare

Original Medicare consists of:

  • Part A, which covers hospital bills and is free for most people who are over age 65 or disabled.
  • Part B, which covers 80 percent of the cost for most medical bills from doctors and other non-hospital medical bills, and has a monthly base premium of $170.10 for 2022 (going down to $164.90 in 2023) for most people, but can be higher depending on your income. With Medicare Part B, you can either pay the remaining 20 percent of costs, with no yearly limit on what you pay out-of-pocket, or you can (and should) purchase a Medicare Supplement (Medigap) insurance policy to help pay your share of costs.
  • Part D, which provides a separate prescription Drug plan.

It is very important to note that with Original Medicare, you can use any doctor or hospital that takes Medicare, anywhere in the U.S. This is not the case with Medicare Advantage plans, which almost always have severely limited coverage areas.

Medicare Advantage: Not an Advantage

So-called Medicare Advantage plans are required to offer similar benefits to Original Medicare, and many include extras such as dental benefits and gym memberships, and sometimes offer lower premiums than Medicare part B combined with a Medicare Supplement plan. But “Advantage” plans typically do not offer any advantages other than occasional lower premiums, as they come with limited benefits and limited provider networks, which means that switching plans could mean losing access to doctors or coverage for certain prescriptions and other issues, as discussed in my recent articles on the subject. If you travel, or have a second home or a vacation property, then a Medicare Advantage plan will most likely be useless for you if you get sick outside of the plan’s coverage area.

Another issue that has recently been brought to light is that for some seniors, during open enrollment period, widespread misbehavior by Medicare Advantage plans and their marketing firms have caused individuals to be inappropriately switched from Original Medicare to a Medicare Advantage plan, or from one Medicare Advantage plan to another. The U.S. Senate released a report on this subject, titled “Deceptive Marketing Practices Flourish in Medicare Advantage – A Report by the Majority Staff of the U.S. Senate Committee on Finance,” and is taking action. The Senate Report found “that the number of Medicare beneficiary complaints about private sector marketing for Medicare Advantage (MA) plans more than doubled from 2020 to 2021.” The Senate launched an inquiry in August 2022, collected information on marketing complaints from 14 states, and found evidence that beneficiaries are being “inundated with aggressive marketing tactics as well as false and misleading information.”

Senate Report Cites Examples of Unscrupulous Marketing and Fraudulent Practices

According to the Senate report, an Oregon man recently enrolled in a Medicare Advantage plan after hearing that switching would increase his Social Security check by $135 a month. It turned out that his new plan did not cover prescription drugs, and his Social Security income was unchanged because Medicaid already paid his Medicare premiums. He was astonished and very stressed out when he went to the pharmacy, according to the complaint cited in the Senate report. He says he was never told that and would never have enrolled in a plan without drug coverage.

An Oregon woman was switched from traditional Medicare and a Medicare supplemental policy to a Medicare Advantage plan by an agent who came to her house. The new plan did not include her mental health provider as part of its network. Her claims, previously covered, were denied.

In yet another example, a 94-year-old woman with dementia in Missouri was sold a plan that did not include the hospital or doctors she saw in her rural area. She was forced to travel significantly farther for her medical care.

Similar to the situations described above, companies selling private Medicare Advantage plans to seniors have posed as the Internal Revenue Service and other government agencies, misled customers about the size of their networks, and preyed on vulnerable people with dementia and cognitive impairment, according to the recent Senate report:

  • Unscrupulous Medicare Advantage plans and their marketing companies are using “bait and switch” schemes, “aggressive” and “sneaky tactics,” and “predatory actions,” such as agents approaching seniors in grocery stores and giving out “false and misleading information,” or distributing materials that falsely imply they’re from Medicare or another federal agency rather than a private company.
  • Widespread Medicare Advantage marketing scams and deception is resulting in beneficiaries getting switched — sometimes without their knowledge and without informed consent — to plans that don’t meet their needs and aren’t accepted by their medical providers.
  • Insurance agents selling Medicare Advantage plans often tell seniors that their doctors are covered by the new plans. Seniors who switch plans then find out months later that their doctor is actually out-of-network, and they have to pay out-of-pocket to visit their doctor.
  • Seniors receive mailers that look like official business from a federal agency, yet the mailer is a marketing ploy from a Medicare Advantage plan or its agent or broker. The mailings are designed to generate leads for insurance brokers.
    • Federal rules prevent cold-calling of Medicare beneficiaries. But once respondents call, click, or mail back the form, the companies are allowed to, and do, call them repeatedly.
    • The investigation found similar forms from several states that looked like tax documents, using the font and layouts of an IRS. form. For example, one Utah mailing declared: “IMPORTANT-COMPLETE & RETURN POSTAGE-PAID CARD WITHIN 5 DAYS.”
  • Widespread television advertisements with celebrities claim that seniors are missing out on benefits, including higher Social Security payments, in order to prompt seniors to call MA plan agent or broker hotlines.
    • The report said that a frequent refrain in television commercials and mailings was the idea that switching to Medicare Advantage would increase beneficiaries’ Social Security benefits (no insurance plan will ever increase your Social Security benefits, though a lower premium plan may result in a higher net Social Security payment appearing in your account after the deduction of the reduced premium);
    • Some plans do charge lower premiums than traditional Medicare, but not most. Only 7 percent of Medicare Advantage enrollees this year were enrolled in a plan that offered a premium lower than Original Medicare, according to research from the Medicare Payment Advisory Committee.

The report notes that most of the behavior documented came from insurance brokers or third-party marketing firms hired by the companies, not the insurers themselves.

The Senate Report Covers Complaints from 14 States

The report contains complaints from 14 states, and examples of marketing materials generated by the insurers and the companies they hire to help sell the private plans, as described above.

  • Five states said they were aware of brokers that had targeted people with cognitive impairment.
  • Six states indicated people were signed up for a Medicare Advantage plan without even knowing it.
  • Ten of the 14 states said people were confused about whether their doctors or the drugs they were being prescribed were covered under a plan.

“It is unacceptable for this magnitude of fraudsters and scam artists to be running amok in Medicare, and I will be working closely with CMS to ensure this dramatic increase in marketing complaints is addressed,” said Ron Wyden, a Democratic senator from Oregon and the committee’s chairman.

What CMS Plans to Do About the Issue

CMS, the federal government agency that oversees Medicare, has promised to increase its oversight this year and next. Medicare has told plans it will begin policing marketing materials more closely. Starting next open enrollment, CMS will review and approve television advertisements before they air to make sure celebrities accurately describe the plans’ benefits. (One heavily shown ad that featured Joe Namath, the former star football quarterback, was changed to comply with regulations, according to the report.)

The report recommended additional actions to be taken by CMS to stop deceptive practices, such as:

  • Reinstating requirements, such as reinforcing prohibitions against educational events and marketing events happening on the same day in the same place.
  • Monitoring dis-enrollment patterns and using CMS’s enforcement authority to hold “bad actors” accountable.
  • Requiring agents and brokers to review their clients’ prescription drugs and regularly visit health providers to ensure that the plan meets beneficiaries’ needs, considered “best practices.”
  • Enhancing its strict oversight of the industry’s marketing, including new rules that will require brokers to record their calls with potential customers and offer greater supervision of the third-party marketing groups enrolling new customers.
  • Implementing robust rules around Medicare Advantage marketing materials and close regulatory loopholes that allow cold-calling. The report recommends that CMS should prohibit Medicare Advantage plans from contracting with marketing organizations, agents, or brokers who design materials that include the use of Medicare in the business name, or suggest they are from Medicare. The agency should also prohibit Medicare Advantage plans from contracting with agents and brokers who purchase lists of leads, especially from online “bait and switch” ads. CMS should review its agent/broker compensation model “to ensure that agent/broker incentives align with a beneficiary’s interests and do not distort the incentives for choosing” one plan over another.
  • Supporting unbiased sources of information for beneficiaries, including sufficient resources for the SHIP and the Senior Medicare Patrol program, described as “valuable partners in … identifying local and national actors who are misleading or deceiving beneficiaries.”

“CMS remains committed to the shared goal of protecting people with Medicare from confusing and potentially misleading marketing while also ensuring they have the accurate and necessary information to make the coverage choices that best fit their needs,” said Chiquita Brooks-LaSure, the CMS administrator, in a statement thanking the committee for the report.

How to Avoid Medicare Scams

During the next couple of weeks before Medicare Open Enrollment comes to a close, be on the alert for anyone who claims to be a Medicare sales representative, because that job does not exist. Medicare officials don’t go to door-to-door and will only correspond with recipients via phone or email, if prompted to first. Official insurance communication is always mailed.

Also remember the easiest step to avoid a Medicare scam: never reveal your card number or other personal health and financial information to anyone who’s not a bona fide member of your health care team.

Ignore the scammers by hanging up on suspicious phone calls and by disregarding door-to-door visits. A “No Soliciting” sign for your door might be a good deterrent for door-to-door fraudsters and people trying to sell you goods and services.

In the end, seniors who believe that they are being targeted by con artists in connection with Medicare should call 1-800-MEDICARE to report the activity.

Review Your Medicare Health Plan Every Year, and if You Have Medicare Advantage, Consider Switching Back to Original Medicare

As mentioned, Medicare Open Enrollment goes until December 7, 2022. Besides the issues discussed in this and my other recent articles, 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. The good news is that you can switch from a Medicare Advantage plan back to Original Medicare during the annual open enrollment period; however, if you are already suffering from a significant medical issue, it may be very expensive or impossible to purchase a Medicare supplement plan. Please click here for more details and this and other important information about Medicare Advantage.

At the Farr Law Firm, we work with Retirement & Medicare Together to serve the Medicare needs of our clients. Now is a perfect time to review your plan and start thinking about making any necessary changes. Click here to schedule your no-cost Medicare review today!

Medicare Planning Fairfax: 703-691-1888
Medicare Planning Fredericksburg: 540-479-1435
Medicare Planning Rockville: 301-519-8041
Medicare Planning DC: 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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