Original Source
AARP Bulletin
October 2007
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Don't Fall for the Hard Sell
Some beneficiaries have been duped into buying Medicare Advantage plans
By Patricia Barry
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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.
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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.
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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"]
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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.
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"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.
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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.
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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.
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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."
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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.
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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.
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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.
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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."
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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.
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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."
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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.
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"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.
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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.
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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.
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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."
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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.
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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.
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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.
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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."
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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."
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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.
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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.
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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.
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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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