1 1 Medicare Marketing Danielle R. Moon, J.D., M.P.A. Director, Medicare Drug & Health Plan Contract Administration Group National Association of Health Underwriters Capitol Conference, March 10, 2010

2 Marketing in the CMS Context Scope of the term marketing by Medicare health plans extends beyond the publics general concept of advertising materials. CMS authority for marketing oversight includes a range of: o Marketing materials o Marketing activities 4

3 3 Marketing Oversight Paramount goal: Protecting Medicare beneficiaries enrolled in Part C/D plans and promoting efficiency and sustainability of Medicare program Strategy: target resources to high-risk program areas or areas of known concern.

4 Recent Changes Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) made a number of statutory changes to: o Set limits on agent/broker compensation structures to ensure beneficiaries enroll in plans that best meet their health care needs. o Address allegations of agent/broker misconduct in the market o Eliminate inappropriate or unnecessary beneficiary plan-to-plan moves 2 2

5 Fair Market Value (FMV) of Compensation Plan agent/broker compensation amounts must be of FMV Based on compensation schedules submitted to CMS in late 2008 Compensation amounts must be adjusted annually by rate of change of plan payments in annual rate notice. 5

6 Public Display of 2010 Compensation CMS made available plans initial and renewal compensation amounts for 2010 Schedules or range of schedules for each contracts PBP are posted on 6

7 CMS Oversight of Compensation Compensation structures must be available upon CMS request, including for audits, investigations, and to resolve complaints Plans must keep detailed records demonstrating payment of compensation is consistent with all CMS guidance on agent and broker compensation CMS has, and will continue to, monitor and audit plan agent/broker compensation records to ensure compliance 7

8 Oversight of Marketing Sales Events Vulnerability in the marketing area was identified due to persistent complaints and evidence of agent and broker misconduct. Led to the development of a comprehensive surveillance strategy o Designed to detect, prevent, and respond to marketing violations 8

9 9 Surveillance Activities CY2010 Secret shopping of public sales event o Over 1300 events conducted to date Pilot for CY2010: Secret shopping of one-on-one appointments Special focus on non-renewals (NR) o Secret shopping in 55 markets with highest NR rates

10 Surveillance Philosophies Real-time observations and responses Resources allocated initially based on risk - then adjusted based on performance Industry provided the opportunity to research and respond to violations Compliance action taken only when deficiencies are confirmed and validated Severity of compliance action based on severity and recurrence of violations 10

11 Industry Performance Room for Improvement o Approximately 40% of public sales events had one or more violations o Lower incidence of egregious behavior / aggressive marketing tactics than prior years o Still problems in providing clear, complete, and accurate information around health plan and drug benefits 11

12 Industry Performance 12 Most Common Deficiencies at Public Sales Events o Failure to provide clear and accurate information related to drug coverage o Requiring beneficiaries to provide personal contact information o Inappropriate, unsubstantiated comparative marketing claims (e.g. the plan is the best, the most highly rated) o Agents that did not show up for scheduled marketing events

13 Industry Performance Positive Trends o Improvement in performance observed during the Open Enrollment Period o Significant reduction in violations observed for plans that received compliance notifications o Organizations are acting proactively to respond to violations and implement new strategies and best practices 13

14 Industry Best Practices Organizations have reported the following best practices: o Standardizing training packages o Implementing more effective controls to track agent/broker licensing information o Utilizing 3 rd party vendors to conduct internal secret shopping o Enrollment verification programs o Financial penalties written into agent/broker contracts for marketing violations 14

15 Strengthened Information Sharing Complaint/information exchanges with State Departments of Insurance (DOIs). o Information sharing based on MOU includes: Information related to specific agents/brokers Consumer complaints Information on CMS enforcement actions o Recent Partnership with Compliance and Enforcement (C&E) MEDIC o CMS establishing a State referral notification to provide status on pending MEDIC investigation of agents 15

16 QUESTIONS?