United States: CMS And Senate Heighten Oversight Of Marketing Practices In Medicare Programs

The Medicare Advantage program continues to grow in popularity among seniors. In 2022, more than 28 million people - nearly half of all Medicare beneficiaries - are enrolled in a Medicare Advantage plan rather than Original Medicare.¹ Forty-nine million Medicare beneficiaries receive prescription drug coverage under Medicare Part D, with more than half of those individuals receiving their Part D coverage through a Medicare Advantage plan.² Despite the popularity of these plans, the Centers for Medicare and Medicaid Services ("CMS"), which administers Medicare, has seen an increase in complaints by Medicare beneficiaries and their caregivers about the marketing practices of Medicare Advantage organizations ("MAOs") and Part D sponsors and third parties that solicit leads and/or enrollments on behalf of MA and Part D plans. These complaints have also caught the attention of the Senate Finance Committee. As a result, the sales and marketing practices of MAOs and Part D sponsors, healthcare providers that participate in these plans, and third-party marketing organizations, are experiencing increased regulatory oversight.

On May 9, 2022, CMS issued the final rule on Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs (the "Final Rule").³ The Final Rule, among other changes, establishes new requirements for MAOs, Part D sponsors and third-party marketing organizations or

"TPMOs." CMS defines a TPMO as: "organizations and individuals, including independent agents and brokers, who are compensated to perform lead generation, marketing, sales, and enrollment related functions as a part of the chain of enrollment (the steps taken by a beneficiary from becoming aware of a [MA or Part D] plan or plans to making an enrollment decision). TPMOs may be a first tier, downstream or related entity (FDRs), as defined under § [422.2 or 423.4], but may also be entities that are not FDRs but provide services to [an MA plan or a Part D sponsor] or [an MA plan's or a Part D sponsor's] FDR."⁴

Under the Final Rule, MAOs and Part D sponsors must require their TPMOs to use a standardized disclaimer on their website and marketing materials, including all print materials and television advertising that meet the definition of marketing.⁵ Under § 422.2260, marketing means communications that meet certain standards for intent (draw a beneficiary's attention to a MA plan or plans; influence a beneficiary's decision-making process when making a MA plan selection; and influence a beneficiary's decision to stay enrolled in a plan), and also include or address the plan's benefits, benefits structure, premiums, or cost sharing, measuring or ranking standards, or rewards and incentives as defined under § 422.134(a). Thus, the Final Rule's TPMO disclaimer applies to a broad range of materials and activities.

Finally, CMS also requires MAOs and Part D sponsors to heighten oversight of TPMOs by ensuring that TPMOs make necessary disclosures, record all calls with beneficiaries, and report any staff violations.⁶

Also, in response to complaints about deceptive marketing practices related to Medicare plans, CMS has been conducting "secret shopping" by calling numbers associated with television advertisements, mailings, newspaper advertisements, and internet searches to monitor the beneficiary experience.⁷ Through this investigation, CMS found that some agents were not complying with current regulations. For more than 80% of the calls reviewed, agents failed to provide the beneficiaries with the necessary information or provided inaccurate information to make an informed choice. As a result of these findings, CMS released Frequently Asked Questions ("FAQs")⁸ and a memo ("Memo")⁹ on best practices for marketing activities during the 2023 Annual Election Period ("AEP") running from October 15, 2022 through December 7, 2022, focusing on TPMOs.

The FAQs discuss both requirements related to recording calls between beneficiaries and TPMOs and requirements related to the TPMO disclaimer. Of note, the FAQs confirm that all calls between a TPMO and a beneficiary must be recorded, with no exceptions. They also clarify that the TPMO disclaimer is required in all marketing materials, including social media posts, unless the materials were developed by the plan (such as a Summary of Benefits) and the agent is using them exactly as provided by the plan.

The Memo discusses 42 C.F.R. §§ 422.2261(b)(3) and 423.2261(b)(3), which provide that CMS may accept certain types of marketing materials through its File &Use framework rather than requiring CMS approval before use. Though CMS had previously designated television advertisements as a marketing material that qualifies for File & Use, the Memo states that no television advertisements will qualify for such flexibility beginning January 1, 2023. As a result, these ads must be approved by CMS before use. CMS will also review previously submitted advertisements to ensure compliance with CMS requirements.

The Memo also notes that CMS will enhance its review of select marketing materials submitted under File & Use criteria, review selected marketing materials previously submitted under File & Use criteria, review all marketing complaints received during AEP, target oversight and review of MAOs and Part D sponsors with higher rates of complaints during the AEP, review recordings of agent and broker calls with potential enrollees and continue secret shopping.

Consequently, CMS recommended that MAOs and Part D sponsors implement the following requirements and best practices during the AEP:

• Ensure beneficiaries know how to file a marketing complaint with 1-800-MEDICARE or the plan, as well as highlight for beneficiaries that it is important to provide an agent or broker name, if possible. Plans must clearly display this information on plan websites and include this information in all mailings.
• Immediately review all allegations raised by any source against an agent or broker.
• Take all necessary and appropriate action to address inappropriate agent behavior.
• Track complaints against each agent or broker, looking for any outliers with respect to rapid disenrollments.
• Ensure agents and brokers obtain Scope of Appointment (SOA) forms. Plans should remind agents and brokers that they may only discuss with potential enrollees those products that have been agreed to in advance on the SOA. CMS retains the right to request copies of SOAs.
• Review "upstream" entities associated with agents who are outliers with respect to complaint numbers and determine potential patterns or connections to potentially inappropriate Field Marketing Organization activities.
• Ensure all agents and plan marketing materials clearly state when certain benefits may not be available to all enrollees. CMS may determine that the agent's activity or marketing is misleading if the benefits being marketed are only available to a subset of plan members.
• Ensure all agents and brokers review the required Pre-Enrollment Checklist with a beneficiary prior to enrollment. The items in this checklist must be covered in full and the agent must confirm that the beneficiary understands all items addressed.
• Provide translation services for beneficiaries with limited English proficiency. For those beneficiaries who have requested documents in a language other than English, the plan must continue to provide required documents in that language until the beneficiary has changed his or her request.
• Provide agents with a list of required questions or topics that they must cover in their sales presentations particularly basic topics or questions, such as use of provider specialists, whether the beneficiary is looking for a lower premiums and copays, may need DME, or whether the beneficiary has questions about the costs associated with the plan.¹⁰

In addition to the FAQs and Memo, Ron Wyden, the Chairman of the United States Senate Committee on Finance, sent a letter in August 2022 to 15 state insurance commissioners and state health insurance assistance programs requesting information about deceptive marketing practices being conducted by MA plans and Part D sponsors, agents and brokers, and others.¹¹ Wyden asked for information about the types of complaints that states are receiving regarding Medicare Advantage and Part D marketing, the responsibilities of agents and brokers to protect consumers from false or misleading marketing, and whether certain types of organizations account for disproportionate shares of complaints. He also asked whether there are certain benefits that are associated with more complaints, and whether enrollment in certain products results in a greater number of prescriptions being filled by a particular pharmacy or pharmacy chain.

In November 2022, the Committee released a report entitled "Deceptive Marketing Practices Flourish in Medicare Advantage" ("the Report").¹² The Report found that there was an increase in complaints concerning mail advertisements, television advertisements, telemarketers, and robo-calls related to Medicare plans. States also reported marketing of plans to beneficiaries with dementia, beneficiaries being enrolled in a new plan without their consent, and examples of beneficiaries being switched to plans that did not cover their providers--all of which led to substantial disenrollment. In addition, ten states reported instances of provider network confusion, where the beneficiary was switched into a new plan and was unaware that their current doctors were not covered under their new plan's network until they began to use the new plan. Similarly, the Report also highlighted a complaint where a beneficiary was not told that his new Part D plan did not cover his medications, which he realized only after he went to the pharmacy to fill his prescriptions.

Footnotes

1 Meredith Freed, Jeanine Fuglesten Biniek, Anthony Damico, and Tricia Neuman, Medicare Advantage in 2022: Enrollment Update and Key Trends, KFF (Aug. 25, 2022), https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2022-enrollment-update-and-key- trends/#:~:text=Medicare%20 Advantage%20in%202022%3A%20Enrollment%20Update%20and%20Key,employer s%20and%20unions%20in%202022%20...%20More%20items.

2 Juliette Cubanski and Anthony Damico, Medicare Part D: A First Look at Medicare Drug Plans in 2023, KFF (Nov. 10, 2022), https://www.kff.org/medicare/ issue-brief/medicare-part-d-a-first-look-at-medicare-drug-plans-in- 2023/.

3 Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs, 87 FR 27704 (May 9, 2022).

4 42 CFR § 422.2260 and 423.2260 (2022).

5 42 CFR § 422.2267(e) and 423.2267(e) (2022).

6 42 CFR § 422.2274 and 423.2274 (2022).

7 Medicare Drug & Health Plan Contract Administration Group, CMS Monitoring Activities and Best Practices During the Annual Election Period (Oct.19, 2022).

8 Centers for Medicare and Medicaid Services, Contract Year 2023 Medicare Advantage Marketing Policies – Frequently Asked Questions (Oct.19, 2022).

9 Medicare Drug & Health Plan Contract Administration Group, CMS Monitoring Activities and Best Practices During the Annual Election Period (Oct.19, 2022).

10 Medicare Drug & Health Plan Contract Administration Group, CMS Monitoring Activities and Best Practices During the Annual Election Period (Oct.19, 2022).

11 See U.S. Senate Committee on Finance, Letter to Oregon State Insurance Commissioner Stolfi and Interim Director Delikat (Aug. 18, 2022), https://www. finance.senate.gov/imo/media/doc/Wyden%20letter%20to%20Oregon%20State%20Insurance%20Commissioner%20and%20SHIP%20Director%20 (MA%20Marketing%20Practices).pdf.

12 U.S. Senate Committee on Finance, Deceptive Marketing Practices Flourish in Medicare Advantage (Nov. 3,2022), https://www.finance.senate.gov/imo/ media/doc/Deceptive%20Marketing%20Practices%20Flourish%20in%20Medicare%20Advantage.pdf.

13 Reed Abelson and Margot Sanger-Katz, Private Medicare Plans Misled Customers Into Signing Up, Senate Report Says, NEW YORK TIMES (Nov. 3, 2022), https://www.nytimes.com/2022/11/03/upshot/private-medicare-misleading-marketing.html.

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