Federal health officials are proposing an extensive set of tougher rules governing private Medicare Advantage health plans, in response to wide-scale complaints that too many patients’ medical claims have been wrongly denied and that marketing of the plans is deceptive.
Medicare Advantage is the private-sector alternative to the federal program covering those 65 and over and the disabled. By next year, more than half of Medicare recipients are expected to be enrolled in private plans. These policies are often less expensive than traditional Medicare and sometimes offer attractive, additional benefits like dental care.
Despite their popularity, the plans have been the subject of considerable scrutiny and criticism lately. A recent report by the inspector general of the U.S. Department of Health and Human Services found that several plans might be inappropriately denying care to patients. And nearly every large insurance company in the program, including UnitedHealth Group, Elevance Health, Kaiser Permanente and Cigna, has been sued by the Justice Department for fraudulently overcharging the government.
The period leading up to this year’s enrollment deadline, Dec. 7, amplified widespread criticism about the deceptive tactics some brokers and insurers had used to entice people to switch plans. In November, Senate Democrats issued a scathing report detailing some of the worst practices, including ads that appeared to represent federal agencies and ubiquitous television commercials featuring celebrities.
Federal Medicare officials had said they would review television advertising before it aired, and the new rule targets some of the practices identified in the Senate report that caused some consumers to confuse the companies with the government Medicare program. A proposed regulation would ban the plans from using the Medicare logo and require that the company behind the ad be identified.
“It is certainly a shot across the bow for brokers and insurers in response to the rising number of complaints about misleading marketing activities,” said Tricia Neuman, the executive director of the center for Medicare policy at the Kaiser Family Foundation. Ms. Neuman and her team routinely review television ads from the plans.
The proposal would also allow beneficiaries to opt out of marketing calls for plans and would limit how many companies can contact a beneficiary after he or she fills out a form asking for information. The Senate report described patients who had received dozens of aggressive marketing calls they did not request.
David Lipschutz, an associate director at the Center for Medicare Advocacy, said that while the federally proposed rules did not include everything on his wish list, the goals were wide-reaching and significant.
“This is really a meaningful response,” he said. “And where we sit, we don’t get to say that that often.”
Mr. Lipschutz said that the changes would ultimately be judged by how effectively and aggressively Medicare enforced the standards. Much of the deceptive marketing is now conducted by brokers, agents and other third-party marketing firms who are paid commissions when they enroll people, not by the insurers themselves. The proposed rule would hold insurers accountable for the actions of the firms they hire.
“These proposals are an important step toward protecting seniors in Medicare from scammers and unscrupulous insurance companies and brokers,” Senator Ron Wyden, the Oregon Democrat who chairs the Senate Finance Committee, said in a statement.
The rules would also address the health plans’ use of techniques that require the company to approve certain care before it would be covered. Patients and their doctors complained to Medicare that the private plans were misusing prior authorization processes to deny needed care. The inspector general’s report estimated that tens of thousands of individuals had been denied necessary medical care that should be covered under the program.
The new proposal would require plans to disclose the medical basis for denials and rely more heavily on specialists familiar with a patient’s care to be involved in the decision-making. Medicare has also established tighter time limits for answers on authorizations; patients now often wait up to 14 days. The new rules would also require authorization to cover the full length of a treatment so patients don’t have to continually request identical approvals.
Dr. Meena Seshamani, the director of the Center for Medicare and a deputy administrator at the Centers for Medicare and Medicaid Services, said the changes had been influenced by thousands of public comments solicited by the agency and by lawmakers.
“The proposals in this rule we feel would really meaningfully improve people in Medicare’s timely access to the care they need,” she said.
The insurance industry has said it is generally supportive of regulators’ efforts to protect Medicare enrollees from deceptive marketing, and the Better Medicare Alliance, a group that advocates for Medicare Advantage, said it agreed with officials “that there must be no room in the system for those who would deceive seniors,” according to a statement from the group’s chief executive, Mary Beth Donahue.
Ms. Donahue added that her group was continuing to review the agency’s proposals on how patients have to seek prior authorization for treatment. She said the organization hoped to work with Medicare officials to improve the process.
Hospitals, which have been pushing for changes that would address their concerns that insurers were abusing prior authorization, applauded the proposals. But they emphasized that the Biden administration’s health officials would have to commit to enforcing the stricter oversight.
“The agency really needs to keep their eye on the ball,” said Molly Smith, the group vice president for public policy at the American Hospital Association, a trade organization.
The proposed regulations are not yet final. Health officials are soliciting comments from the public and may make changes.