Medicare Advantage:

CMS Actions Regarding Plans' Health Reform Communications

GAO-10-953R: Published: Sep 20, 2010. Publicly Released: Oct 13, 2010.

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James C. Cosgrove
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In August and September 2009, Humana--a large private health insurer--sent a letter to the approximately 930,000 beneficiaries enrolled in its Medicare Advantage (MA) plans, advising that leading health reform proposals could adversely affect MA beneficiaries. Signed by Humana's Chief Medical Officer, the letter stated that if proposed funding cuts became law, "millions of seniors and disabled individuals could lose many of the important benefits and services that make MA health plans so valuable," and encouraged beneficiaries to contact their members of Congress and ask them to protect MA funding. Once the Centers for Medicare & Medicaid Services (CMS) learned about the mailing, the agency directed Humana on September 18, 2009, and all other MA organizations on September 21, 2009, to immediately stop all communications to beneficiaries about the potential impact of health reform legislation while CMS investigated whether such communications violated federal laws, regulations, or MA program guidance. CMS issued clarifying guidance to all MA organizations on October 16, 2009, and took compliance action against some organizations, closing its investigation. CMS is responsible for overseeing communications between MA organizations and beneficiaries enrolled in their plans. Because MA organizations are Medicare contractors, communications to beneficiaries must comply with various requirements, including marketing guidelines and restrictions on the use of beneficiary information obtained from CMS databases. CMS requires that MA organizations submit marketing materials--defined as materials targeted to beneficiaries that, among other things, provide information on plan benefits--to the agency for review and may impose penalties for distributing marketing material inappropriately. This report responds to your request that we review CMS's actions in response to MA plan communications to beneficiaries about pending health reform legislation. We examined: 1. how CMS learned that Humana sent a mailing to beneficiaries on the impact of pending health reform legislation in 2009; 2. the concerns CMS officials cited regarding the Humana material and the reasons they gave for suspending all MA plan communications about pending health reform legislation; 3. how CMS learned whether any other MA organizations had communicated with enrolled beneficiaries about pending health reform legislation; 4. what criteria CMS used to evaluate whether MA communications on pending health reform legislation violated any laws, regulations, or agency guidance; 5. what CMS found in its investigation into MA communications on pending health reform legislation; 6. what specific actions CMS took after it investigated MA communications; and 7. the extent to which CMS's actions were in accordance with agency policies and procedures, and consistent across MA organizations.

1. According to CMS, during the third week of September 2009, officials from its Office of Legislation were on a phone call with a number of Senate staff discussing unrelated Medicare Advantage issues. At the end of that call, staff indicated they had reports from beneficiaries who had received mailings from their MA plan urging them to contact their members of Congress. Staff asked whether it was permissible for an MA organization to lobby the beneficiaries enrolled in their plans or ask beneficiaries to lobby Congress on the plan's behalf. The Office of Legislation referred the question to CMS's Center for Drug and Health Plan Choice, which is now the Center for Medicare. Subsequently, the Office of Legislation received and forwarded a number of additional inquiries from other congressional offices. 2. On September 18, 2009, CMS instructed Humana to discontinue mailings containing its views on pending health reform legislation and to remove any related materials from its Web site while the agency investigated whether any federal laws, regulations, or MA program guidance had been violated. CMS's letter to Humana stated that (1) the information contained in the mailing could mislead and confuse beneficiaries; (2) the mailing represented information to beneficiaries as official communications about the MA program; and (3) the mailing potentially contravened federal laws, regulations, and guidance, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA). 3. To identify whether any other MA organizations communicated with beneficiaries on pending health reform legislation, CMS relied primarily on its regional offices. On September 21, 2009, CMS's central office provided the regional offices with information about the Humana mailing and told them to "be on the lookout" for similar communications from other MA organizations. Then, on September 24, 2009, CMS's central office directed the regional offices to examine plan marketing materials that had been submitted for CMS review in order to identify any health reform communication. 4. In responses to congressional correspondence following CMS's September 21, 2009, memorandum, the agency reported that it is required by law and conforming regulations to ensure that (1) MA beneficiary communications are accurate and not confusing or misleading, (2) MA organizations do not use beneficiary information for purposes other than those agreed to under CMS's data use agreement that all MA organizations sign, and (3) federal funds are not used for impermissible activities, such as lobbying. 5. CMS's investigation into MA communications found violations by 6 of the 189 MA organizations under contract with CMS in September 2009. These organizations used various means to communicate with about 3 million beneficiaries on pending health reform legislation. The agency concluded that four violated CMS's Medicare Marketing Guidelines, all six violated CMS's Data Use Agreement, and three violated the prohibition on using federal funds to lobby members of Congress on pending legislation. 6. After determining that some MA organizations violated federal law, regulations, or MA program guidance, CMS took several actions. In a memorandum issued October 16, 2009, CMS provided clarifying guidance to amplify previous MA guidance on allowable uses of Medicare beneficiary information obtained from CMS. In addition, the agency issued letters of noncompliance--their lowest level of compliance action that carries no penalty--to five MA organizations in October 2009 and a sixth MA organization in June 2010. Finally, CMS stated in correspondence to members of Congress that the agency had asked several MA organizations that inappropriately used federal funds to reimburse Medicare for those funds. 7. In general, CMS's handling of MA communications on pending health reform legislation appeared to adhere to the agency's policies and procedures.

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