CMS PROPOSES NEW PROTECTIONS FOR MEDICARE BENEFICIARIES IN MEDICARE ADVANTAGE AND PRESCRIPTION DRUG PROGRAMS
MEDICARE TIGHTENS MARKETING STANDARDS AND PROTECTS BENEFICIARIES FROM INAPPROPRIATE COST SHARING

The Centers for Medicare & Medicaid Services (CMS) today proposed enhanced protections for beneficiaries who are enrolled in Medicare Advantage (MA) health plans and Medicare prescription drug plans.  CMS' actions today will strengthen marketing standards and extend additional protections to all beneficiaries including those receiving the low-income subsidy (LIS) and beneficiaries enrolled in special needs plans.

“These proposed changes will have a direct, positive impact on people with Medicare,” said Kerry Weems, Acting Administrator of CMS.  “The Medicare Advantage program is a valuable source of enhanced benefits and coordinated care for beneficiaries, and it should not be undermined by the actions of a limited number of unscrupulous sales agents.”

This proposed regulation is a continuation of CMS’ efforts to enhance compliance and oversight of the Medicare Advantage program over the past ten months.  Recent compliance and oversight actions include, posting the summaries of corrective actions taken against MA plans on the CMS Web site; establishing five-star ratings for plan performance; embarking on an extensive secret shopping program of plan marketing events that have led to compliance actions and more accurate sales presentations; and requiring private-fee-for-service plans to call new enrollees to verify their desire to join the plan.

The proposed rule would incorporate into regulation a number of requirements that CMS previously imposed through operational guidance.  It also would introduce several new MA and prescription drug plan requirements.  The new proposed prohibitions on door-to-door marketing and cold-calling as well as new proposed requirements pertaining to broker/agent commissions go beyond what the insurance industry recently endorsed as necessary regulatory changes to the program for improvement.

Specifically, the proposed plan marketing standards would:

• Prohibit cold-calling and expand the current prohibition on door-to-door solicitation to cover other unsolicited circumstances.  Any appointment with a beneficiary to market health care-related products would have to be limited to the scope that the beneficiary agreed to in advance.  Cross-selling of non-health care-related products to a prospective MA or Part D enrollee would also be prohibited.
• Prohibit sales activities at educational events such as health information fairs and community meetings or in areas such as waiting rooms where patients primarily intend to receive health care-related services, as well as limit the value and type of promotional items offered to potential enrollees.
• Require that MA organizations that use independent agents to market MA and Part D plans use State-licensed agents for such marketing, and require that MA organizations report to States, in a manner consistent with State appointment laws, that they are using those agents.
• Require MA organizations to establish commission structures for sales agents and brokers that are level across all years and across all MA plan product types (for example, HMOs, PPOs, and private fee-for-service plans). Commission structures for prescription drug plans would have to be level across the sponsors’ plans as well.  These requirements are designed to discourage “churning” of beneficiaries from plan to plan each year in a manner that earns agents and brokers the highest commissions and would ensure that beneficiaries are receiving the information and counseling necessary to select the best plan based on their needs.

Provisions to streamline eligibility determinations for extra help and limit beneficiary liability would:

• Codify earlier guidance to plan sponsors about using “best available evidence” (BAE) to determine an enrollee’s eligibility for extra help through the LIS program.  Recognizing that the monthly files from the States and the Social Security Administration that Medicare uses to establish LIS eligibility sometimes do not reflect an applicant’s current eligibility status, the regulation would require Part D sponsors to use the CMS-developed BAE process to establish the appropriate cost-sharing for low-income beneficiaries whose information in CMS systems is not correct or up to date.  This change would help protect low-income beneficiaries from unnecessary cost sharing charges at their pharmacy counters.
• Set other premium and cost sharing protections related to the Social Security premium withholding and point-of-sale drug prices.  For example, in cases when premiums are not deducted even though the beneficiary has chosen the withholding option, plans would not be permitted to disenroll the beneficiary for not paying premiums.

The rule also would clarify one approach to calculating fines, or civil monetary penalties, against Medicare Advantage or Part D plans that violate Medicare rules in ways that adversely affect beneficiaries. Under the proposal, CMS would have greater flexibility in determining penalty amounts and would have clear authority to levy a penalty of up to $25,000 for each enrollee affected, or likely to be affected, by the violation.

The rule also proposes new protections for beneficiaries enrolled in special needs plans (SNPs).  SNPs are a type of MA plan that provides coordinated care to individuals in certain institutions such as nursing homes, and those who are eligible for both the Medicare and Medicaid programs and/or have certain severe or disabling chronic conditions.  Provisions in the proposed rule would:

• Require that 90 percent of new enrollees in SNPs be special needs individuals, to ensure that SNPs focus on the population for which these MA plans are designed.
• More clearly establish and clarify delivery of care standards for SNPs.
• Protect beneficiaries from being billed for cost-sharing that is not their responsibility.  For SNPs that target beneficiaries who are eligible for both Medicare and Medicaid, the rule would establish standards designed to ensure that those beneficiaries are able to access essential services that are available through Medicaid in addition to those benefits available through the SNP.

The proposed regulation is available on the CMS website at: http://www.cms.hhs.gov/HealthPlansGenInfo/ .  Comments must be submitted by 5:00 p.m. Eastern time on July 15, 2008.

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