WASHINGTON — Medicare proposed new rules Thursday to curb a rash of marketing abuses that have cropped up as the role of private insurance plans has grown in the giant health care program for the elderly and disabled.
Critics called the rules an improvement but questioned whether the federal government could enforce them. They said Medicare lacks the staff and local presence to oversee thousands of sales agents — a role traditionally carried out by state insurance commissioners but which the Bush administration has claimed for Washington, D.C.
The new rules would cover the Medicare prescription drug plans that began offering benefits in 2006, as well as private medical insurance plans that operate under the program’s umbrella. Enrollment in such plans has surged in recent years, with millions of seniors taking advantage of new benefits and broader types of coverage.
Proposal reins in sales tactics
But along with the increased use of private plans came an outpouring of complaints about sales tactics that left some seniors stuck with coverage they didn’t want or need. Such tactics included door-to-door sales, switching beneficiaries without their consent and misrepresentation by sales agents who left the impression they were from Medicare.
In many cases, such tactics would be illegal under state laws. But the 2003 law that created the Medicare prescription benefit — and also expanded the kinds of private medical plans available to seniors — severely limited the ability of state insurance regulators to police the plans.
The rules proposed Thursday would ban door-to-door peddling of plans and cold-calling beneficiaries. Meetings with a sales agent would have to be initiated by the Medicare recipient and could cover only the specific subject that particular person wanted to discuss.
Sales agents would be prohibited from using face-to-face meetings to sell another product, such as life insurance.
Insurance companies would be required to reform the way they pay commissions so as to diminish financial incentives for agents to sell particular plans that paid higher commissions. Companies also would be required to use state-licensed agents.
Force of law for new rules
Medicare administrator Kerry Weems said the new rules would help weed out unscrupulous sales agents.
Until now, Medicare has responded to problems by issuing directives to the insurance companies and threatening to kick some out of the program. Regulations, which carry the force of federal law, signal a growing sense of urgency.
But critics said Congress should intervene to restore the oversight role of state insurance commissioners.
“Even with all the positive changes proposed in this new rule, there is still a significant issue left unaddressed,” said Kansas Insurance Commissioner Sandy Praeger, president of the National Association of Insurance Commissioners. “There is no change to address the fundamental problem that states do not have sufficient regulatory authority to ensure proper enforcement in the marketing and sales of Medicare private plans.”
