Snowe Questions CMS Commitment to Oversight of Medicare Advantage Plans

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Snowe Questions CMS Commitment to Oversight of Medicare Advantage Plans

During today's hearing of the Senate Finance Committee to address the marketing of Medicare Advantage plans to seniors, U.S. Senator Olympia J. Snowe (R-ME) questioned Kerry Weems - Acting Administrator of the Centers for Medicare and Medicaid Services (CMS) - regarding lax oversight of private Medicare Advantage plans. Snowe observed that while an estimated $50 billion in federal subsidies are directed to Medicare Advantage plans, Weems was unable to cite a budget for plan oversight. Snowe noted that enforcement had actually gone through a period of decline,

"It is troubling that audits are so limited…and we're talking about a $50 billion subsidy over 5 years. Yet the rate of plan audits has declined by almost half."

While in 2001, CMS audited 24 percent of plans, that rate fell to 14 percent in 2004. Snowe observed that while oversight was declining, plans were actually being extended payment rates averaging 12 percent more than is paid to providers under traditional "fee-for-service" Medicare. Such subsidies helped drive rapid growth so that today one in five beneficiaries is enrolled in a Medicare Advantage (MA) plan. Snowe cited testimony of a Humana representative in which the executive cited rapid MA plan growth as a reason for the use of unlicensed agents by the firm. Senator Snowe also noted that at the same time that marketing abuses were occurring, data could not be obtained on the performance of MA plans in improving health and outcomes, citing the recent statement of Congressional Budget Office Director Peter Orszag that he was "continuing to beg" for data to determine how such plans were performing.

In an earlier hearing of the Committee on this subject, Senators heard of sales commission and incentive systems in which commissions of $500 and more were paid to switch a beneficiary to private coverage. Witnesses described deceptive advertising, salespersons misrepresenting themselves as Medicare officials, and even forging of applications in the enrollment of new plan members. Snowe observed that while some have proposed a study on how to coordinate federal-state oversight of plan marketing, several immediate measures would not only address marketing problems, but would make private plans far more responsive to the needs of Medicare beneficiaries.

"Given the complexities of this program, and the material one must navigate - such as a 110 page Medicare guide - and all the marketing materials seniors are receiving," Snowe stated, "we must see prompt action to address the problems of these plans. One key aspect is the system must become more user-friendly. It is extremely confusing today, and that simply makes beneficiaries more vulnerable to unethical marketing."

Snowe suggested several simple means to reduce confusion and protect seniors from marketing abuses, including providing a post-enrollment "cooling off" period so that seniors will not find themselves locked into coverage they do not want while they pursue a long appeals process,

"I know the difficulties seniors have to make in choosing their plans from year to year," Senator Snowe said. "It shouldn't be that complicated - if a beneficiary finds out their coverage isn't exactly what they wanted, then they should have the opportunity to cancel."

Snowe suggested that as the states work to partner with the federal government to address marketing abuses, "A good starting point in reforming the marketing of private Medicare plans would be to look at my state of Maine's efforts to prohibit cold calling and cross marketing of other insurance products with Medicare plans," she said.

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