Medicare Advantage:

CMS Assists Beneficiaries Affected by Inappropriate Marketing but Has Limited Data on Scope of Issue

GAO-10-36: Published: Dec 17, 2009. Publicly Released: Jan 19, 2010.

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James C. Cosgrove
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Members of Congress and state agencies have raised questions about complaints that some Medicare Advantage (MA) organizations and their agents inappropriately marketed their health plans to Medicare beneficiaries. Inappropriate marketing may include activities such as providing inaccurate information about covered benefits and conducting prohibited marketing practices. The Centers for Medicare & Medicaid Services (CMS) is responsible for oversight of MA organizations and their plans. The Government Accountability Office (GAO) was asked to examine (1) the extent to which CMS has taken compliance and enforcement actions, (2) how CMS has helped beneficiaries affected by inappropriate marketing and the problems beneficiaries have encountered, and (3) information CMS has about the extent of inappropriate marketing. To do this work, GAO reviewed relevant laws and policies; analyzed Medicare data on beneficiary complaints, compliance actions and enforcement actions; and interviewed officials from CMS and selected state departments of insurance, state health insurance assistance programs, and MA organizations.

CMS took compliance and enforcement actions for inappropriate marketing against at least 73 organizations that sponsored MA plans from January 2006 through February 2009. While the number of MA organizations varied during that time period, 192 MA organizations offered MA plans as of March 2009. Actions taken ranged from initial notices of noncompliance and warning letters to more punitive measures, such as civil money penalties and suspensions of marketing and enrollment. Nineteen of the 73 MA organizations had multiple types of actions taken against them. CMS helped beneficiaries who experienced inappropriate marketing by providing special election periods (SEP) through which beneficiaries could disenroll from their MA plan and enroll in new coverage without waiting for the twice yearly regular enrollment periods. However, some beneficiaries experienced financial or access-to-care problems as a result of inappropriate marketing that could not be addressed by a SEP. Financial hardships occurred, for example, when beneficiaries disenrolled from their MA plans and the withholding of premiums from Social Security for their former MA plan was not stopped promptly. In other cases, beneficiaries did not realize they had been enrolled in an MA plan until they tried to access services. Some of these beneficiaries experienced disruption of their access to providers and medications because their providers did not participate in the MA plan. CMS has limited information about the number of beneficiaries who experienced inappropriate marketing. Some beneficiaries who experienced inappropriate marketing may have exercised their option to disenroll from their MA plans during regular enrollment periods and might not have notified CMS of the marketing problems they encountered. For example, about 21 percent of beneficiaries disenrolled during the regular enrollment periods in 2007 from one type of MA plan that CMS officials acknowledged had a high incidence of inappropriate marketing. However, CMS discontinued a survey after 2005 that collected information on reasons for disenrollment and could have provided important information about the extent to which the disenrollments were the result of inappropriate marketing. CMS officials said that they plan to reinstitute a survey on disenrollment reasons in late summer 2010. CMS also has limited information about the number of beneficiaries who experienced inappropriate marketing because it did not directly track the number of SEP disenrollments. CMS did estimate the number of SEPs it provided for inappropriate marketing, but its estimates were based on data that were unreliable.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: 2014 Update: In August 2014, CMS responded that the agency has modified its Complaint Tracking Module (CTM) to systematically gather more information on all marketing cases that involve a request for an enrollment change. The agency now tracks requests for retroactive and prospective special enrollment periods (SEPs) on a monthly basis. In addition, the agency has begun to triage requests for retroactive enrollment changes to CMS case workers rather than Call Center representatives given the potential medical and financial implications associated with these requests. Finally, the agency is conducting a reasons for disenrollment survey. These changes should give CMS a better sense of the extent of inappropriate marketing and the types of problems beneficiaries experience as a result of this marketing. 2010 Update: In July 2010 CMS informed us that the agency does not intend to directly track retroactive or prospective special election periods (SEPs). CMS stated that it believes the Complaint Tracking Module (CTM) provides a reasonable proxy for tracking SEPs, and that in conjunction with other oversight activities, the agency has the information it needs to track inappropriate marketing. We reported that the CTM was not a reliable source of information on the number of beneficiaries who received a SEP and disagree that the agency has an adequate source of information on the extent of inappropriate marketing.

    Recommendation: To improve CMS's oversight of MA organizations and its ability to appropriately target interventions, the Administrator of CMS should gather more information on the extent of inappropriate marketing and the types of problems beneficiaries experienced as a result of inappropriate marketing. As part of this effort, CMS should directly track retroactive and prospective SEPs provided for inappropriate marketing.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services


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