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Don’t Fall for the Hard Sell on Medicare Enrollment Plans

Some beneficiaries have been duped into buying Medicare Advantage plans

Annual enrollment for Medicare's medical and prescription drug plans begins next month—and officials are scrambling to stop deceptive and fraudulent tactics some salespeople have used to sell beneficiaries Medicare Advantage (MA) plans they don’t want or understand.

The Centers for Medicare & Medicaid Services (CMS), the federal agency that oversees the private insurers offering the plans, has issued new rules aimed at ensuring that salespeople give honest, accurate information so enrollees know what they're signing up for.

Many consumer advocates say, however, that while the rules will help reduce marketing abuse, they don't address underlying issues in the 2003 Medicare legislation that gave rise to it in the first place. An AARP Bulletin investigation, based on complaints from readers, bears out that conclusion. It also shows that many beneficiaries are baffled about the differences between the kinds of Medicare insurance and need a better grasp of how private Medicare Advantage plans work and how to avoid a hard sell. [see "How Do Medicare Plans Differ?"] and how to avoid a hard sell [see "Don't Get Tricked or Pressured"]

The scale of abuse came to light earlier this year when the insurance commissioners of 37 states reported that thousands of beneficiaries had fallen victim to illegal or unethical hard-sell tactics used to sign them up for Medicare Advantage plans, which cover everything the original Medicare plan covers and often cost less but have more restrictions on access to doctors and hospitals.

"In the most troubling of these cases, unscrupulous agents have enrolled beneficiaries with dementia into an inappropriate plan," Wisconsin insurance commissioner Sean Dilweg told Congress in May.

Some people said insurance agents told them original Medicare was "closing down," so they should join an MA plan to keep coverage. Others thought they were buying medigap supplementary insurance or a drug plan but found later they'd been enrolled in an MA plan covering all their medical care. That meant they were automatically moved out of original Medicare and, in some cases, lost their retiree health benefits.

About 7 million of Medicare's 43 million beneficiaries are in MA plans. Dilweg and other experts emphasize that most people are not tricked into buying such plans, and that enrollees pleased with their care need not be alarmed. But when abuse does occur, the consequences can be devastating.

Bobby Box, 76, a retired construction worker in Chickasha, Okla., was content with coverage from original Medicare and his veterans benefits. But last December a saleswoman sold him a plan for a Medicare HMO that he didn't want. "She said it was a supplementary insurance that paid what Medicare didn't," he says. "She lied to me."

Soon afterward, Box was rushed to the hospital in a coma, running up a $45,000 bill during a 10-day stay. Only when the plan refused to pay did Box realize he was in an HMO, which limits treatment to doctors and hospitals in its network. In fact, all MA plans are obliged to cover emergency care, and Box's plan eventually did so—but only after his state insurance office intervened.

In addition, while still believing he was in original Medicare and able to use any hospital, Box had begun radiation treatment for prostate cancer at a facility outside the HMO's network. "Now I'm still stuck with a $16,000 bill," he said in August, four months after disenrolling from the HMO.

Evan Edwards, of Ruby, Mich., has been dunned by a debt collection agency for over $800 in bills run up after being enrolled in an HMO by a saleswoman who told him it was a special MA plan for veterans that would cost him nothing. No such plan exists. The actual plan she enrolled him into had all the usual HMO charges.

CMS officials say that Box, Edwards and others who incur expenses after enrolling in an MA plan under false pretenses or because of confusion over its terms won't have to pay those bills. "They need to contact us and ask for a retroactive reenrollment into original Medicare," says Abby Block, director of CMS's Center for Beneficiary Choices. "Their bills will be paid by Medicare."

In July, in response to the crescendo of complaints, CMS also decreed that beneficiaries who believe they've been misled into joining an MA plan have the right to apply for a special enrollment period in which they can return to original Medicare (and their supplementary medigap policy if they had one) or switch to another MA plan.

Beneficiaries who are aware of this new policy could be saved from the hassles others have had in trying to disengage from an offending plan. Elinor Hogan, a retired nurse in Sarasota, Fla., knew she didn't want the HMO plan that the "pushy" saleswoman was trying to sell her. "But I was recently widowed, grieving and stressed in the aftermath of caring for my husband, who died of cancer," she says. "I signed just to get her out of the house."

A few days later, after finding that none of her doctors or the local hospital accepted the plan, Hogan withdrew her enrollment, as the agent told her she could, thinking that was the end of it. It wasn't. It took six months of phone calls to finally disenroll and get back onto original Medicare.

"I should never have had to go through this nightmare," Hogan says, "all because of that insensitive, fraudulent agent." The vast majority of complaints about marketing abuses, according to CMS and state insurance commissioners, are directed at a new Medicare Advantage product, private fee-for-service (PFFS) plans, which now have 1.5 million enrollees. The main sales pitch for these plans is that enrollees can go to any doctor or hospital they choose, anywhere in the country. But in practice, many people have found that the providers they want won't accept PFFS plans.

The plans "are now required to have a disclaimer in all of their marketing materials saying that not all providers will accept a PFFS plan," says Block of CMS, and that enrollees will be covered only if the providers agree to the plan's terms and conditions.

Physician groups and consumer advocates say, however, that this requirement will not change a fundamental problem: that by law PFFS plans (unlike MA managed care plans) do not have to contract with any providers before policies are sold. Instead, a doctor or hospital that treats an enrollee is automatically "deemed" to have agreed to the plan's terms and payment conditions—without any negotiation between the provider and the plan having taken place.

Consequently, says Elizabeth McNeil, vice president of the California Medical Association, many doctors will have nothing to do with PFFS plans. "It isn’t a good arrangement," she says. "PFFS plans must have to adhere to the rules that other [MA] plans must adhere to or they should be eliminated."

It can be difficult if not impossible for beneficiaries to know in advance whether a doctor or hospital will accept a PFFS plan. Moreover, the law allows providers to decide if they will accept the plan each time the patient seeks treatment. People enrolled in a PFFS plan sponsored by employers or unions may be stuck with it, like an 80-year-old former teacher near Phoenix (who doesn't want her name used). A breast cancer survivor who needs an annual mammogram and has an ailing husband who can't be left alone, she was horrified to find that the nearest hospital that would accept her PFFS plan was 70 miles away.

Her retirement system switched its enrollees from supplementary insurance to a PFFS plan this year. "They've put me in a position where I'm paying my monthly dues for health insurance and I'm unable to use it," she says. Her only option, she adds, is to cancel the benefits she worked for and paid into for 35 years.

Only about 15 percent, or 225,000, of PFFS enrollees are in employer-sponsored plans, but this is a new market that could rapidly expand. The plans' sales pitch that enrollees can see any provider is attractive to employers or unions with retirees scattered all over the country.

Block of CMS acknowledges a lack of providers in some areas. But she says that educating providers and PFFS plans to become "more comfortable" with each other will change that. "If providers better understand the [PFFS] product and the payment mechanisms and get appropriate assurances that this is something they can work with…we will see very different attitudes in the provider community," she says. "So I think the situation will get a lot better."

David Lipschutz, staff attorney for California Health Advocates, who has studied PFFS plans, disagrees. "Unless there's a fundamental sea change in providers' attitudes toward these plans and the way the plans operate," he says, "they will continue to cause problems for people."

As for marketing abuses, the American Health Insurance Plans trade group has "zero tolerance" toward them, says spokesman Mohit Ghose. Earlier this year the major insurers that sell PFFS plans—BlueCross BlueShield of Tennessee, Coventry, Humana, Sterling, United HealthCare, Universal American Financial Corp. and Wellcare—voluntarily agreed to suspend marketing while drawing up a new code of conduct to curb abuse. CMS has since made these practices the rule.

But this doesn't satisfy state insurance commissioners who complain that federal law doesn't allow them to pursue Medicare Advantage plans for fraud or head off some abuses in advance, as they can in other insurance markets. "Our hands are tied," says commissioner Dilweg, who has 22 companies offering 92 Medicare plans in his state and received more than 700 complaints about them in a single year.

Nor does the insurers' new code of conduct change the fact that agents are paid much higher commissions for selling MA plans (especially PFFS plans) than for drug plans or medigap insurance—a practice that critics say only encourages hard-sell sign-ups.

By way of full disclosure, AARP is making available in 2008 a Medicare Advantage managed care plan underwritten by United HealthCare.

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