You may have seen a barrage of TV commercials urging viewers to sign up for Medicare Part C plans with so-called extra benefits and promises of no premiums. Maybe your mailbox has overflowed with similar come-ons. But those aggressive marketing campaigns for Medicare Advantage plans—private health insurers’ alternatives to traditional or original Medicare—may not be around much longer.
The huge rise in complaints about Medicare Advantage marketing has led the Biden administration to launch a crackdown. The Centers for Disease Control and Prevention reported more than 41,000 such complaints in 2021, double the number in 2020. Nevertheless, Medicare Advantage plans are hugely popular. More than 30 million Americans have them; roughly half of those eligible for Medicare.
“The Wild West” for Medicare Advantage marketing
“In a lot of ways, it's the Wild West when it comes to selling these products,” says David Lipschutz, associate director of the Center for Medicare Advocacy. “That leads to situations where people are enrolled [in Medicare Advantage plans] without their knowledge, without their consent, or without the adequate information that they should have been given.”
How do people get enrolled in Medicare Advantage plans without consent?
They speak, or meet, with a third-party broker selling the plans, are sold the idea that the Medicare Advantage plan they’re in is subpar, and wind up signing up for a different one. Or brokers obtain signatures through inappropriate or fraudulent means, says Lipschutz.
“Medicare Advantage plans are engaging in more competitive marketing to differentiate themselves in terms of what they're offering,” says Meredith Freed, senior policy analyst for the Program on Medicare Policy at the Kaiser Family Foundation. With nearly 4,000 Medicare Advantage plans available these days, she adds, “the pressure is increasing” to find new customers.
Incentives to switch and to sign up
Brokers earn commission when people buy, renew, or switch Medicare Advantage plans (maximum rates of up to $750 per member per year are set by the Centers for Medicare and Medicaid Services, or CMS). Selling incentives are highest for snagging first-timers; the top commission rates for Medicare Advantage switchers and renewals are 50% of those for first-time buyers.
A study by the Commonwealth Fund research group discovered that although Medicare Advantage premiums decreased from 2016 to 2020, agent compensation rose at a rate surpassing inflation.
And it’s not just brokers hawking Medicare Advantage plans that are earning a lot from seniors. Sen. Elizabeth Warren (D-Mass.) recently released an investigative report, Sales Before Seniors, which found that many Medicare supplement or “Medigap” plans—bought by people with original Medicare—offer “luxurious vacations and cash bonuses to agents and brokers, creating incentives for them to steer seniors to Medigap products that may not be the best fit for their financial and care needs” and that the incentives are not disclosed, pervasive, and minimally regulated.”
“These third-party groups have gotten very aggressive and creative,” says Ceci Connolly, president and CEO of the Alliance of Community Health Plans (ACHP), which represents mostly large, not-for-profit plans.
“During open enrollment this last season, Medicare Advantage plans seemed to depart from fact-based marketing, and some plans just made things up about what was covered and what was not,” says Philip Moeller, author of Get What’s Yours for Medicare and the “Get What’s Yours” columnist on Substack.
Lipschutz says his nonprofit has heard from savvy people who call the 800-number in a Medicare Advantage broker’s commercial, get enrolled, “and then find out they can no longer see the doctor they’ve been seeing for decades because that doctor does not contract with the plan’s network.” Unlike original Medicare, the Medicare Advantage plans have limited networks of doctors and hospitals.
An eye-opening Senate report
Last fall, Democratic staffers of the Senate Finance Committee released a scathing report, Deceptive Marketing Practices Flourish in Medicare Advantage, finding that Medicare beneficiaries were being “inundated with fraudulent and misleading communications across all modes of communication (in-person, television, telemarketer and robocalls).”
In some cases, the report said, people would get mailers appearing to be from the U.S. government but that were actually from Medicare Advantage plans or their agents or brokers. Others were called 20 times a day from the same agent to switch plans.
There are also TV ads featuring celebrities claiming that older Americans were missing out on benefits, including higher Social Security payments, so viewers would call the broker hotlines.
The commercials sometimes play into FOMO, noting incredulously that there are people who have Medicare Parts A and B (traditional Medicare’s coverage for hospitals and doctor’s bills), but not Part C. In reality, if you choose traditional Medicare, that means you are getting Medicare Parts A and B. You would only buy Medicare Part C if you wanted a Medicare Advantage plan instead of traditional Medicare.
The commercials typically don’t expressly say who’s sponsoring them.
“Why do you want your old clunker?”
“Some of these abusive messages make it seem like no one in their right mind would ever want original Medicare—original Medicare is a loser. This is the Tesla of Medicare plans. Why do you want your old clunker?” says Moeller. “I happen to think traditional Medicare is a pretty good program, especially with a Medigap plan.“
The Alliance of Community Health Plans agrees with the Biden administration and the Senate Finance report that Medicare Advantage marketing needs reining in. “Too much of today's Medicare Advantage marketing is inappropriate, confusing, misleading, or inaccurate, misrepresenting the choices available,” the group’s website says.
Notes Connolly: “We say it because we have received so many examples from our members around the country. This is a problem that was probably been percolating on a back burner, but in the last 12 months or so, it has really escalated.”
The government crackdown on Medicare Advantage marketing
Last fall, the Biden administration put Medicare Advantage plans and brokers on notice saying it would conduct more oversight of marketing materials and run “secret shopper” studies during the 2023 annual enrollment period.
Then it began reviewing TV ads to ensure they met CMS rules. “The plans were specifically told by Medicare to dial down the misleading celebrity endorsements,” says Moeller. Lipschutz believes this change “is having somewhat of an effect.”
In January 2023, CMS proposed rules for a comprehensive crackdown, including strengthening oversight of third-party organizations to detect and prevent the use of deceptive marketing tactics; restricting the use of Medicare’s logo; and ending improper comparisons between Medicare Advantage and traditional Medicare.
“There had been one [ad], for example, that said people could save up to $9,000 on their prescription drugs” with Medicare Advantage, says Freed. “That was in comparison to people who don't have any prescription drug coverage. So it was making it seem like you're saving a lot more than you might.”
The goal of these marketing changes, Freed says, “is to strengthen beneficiary protections when they're choosing plans and provide them with transparent and accurate information around their Medicare choices to find coverage that meets their needs.”
Varying views of the proposals
The ACHP’s Connolly was “somewhat surprised and impressed” that CMS jumped on Medicare Advantage marketing problems as quickly as it did. Her group wants to see CMS restructure Medicare Advantage broker compensation and flag agents and brokers who have dis-enrolled many plan beneficiaries and reenrolled them in other plans.
But in a letter commenting on the government’s new proposals, the trade group for Medicare Advantage plans (AHIP) said some “could unduly inconvenience seniors and people with disabilities.” AHIP president and CEO Matthew Eyles said he believed these and earlier Biden administration changes to Medicare Advantage marketing “create more confusion and complexity for enrollees, family members, agent/brokers, and providers.”
American Hospital Association executive vice president Stacey Hughes, however, told CMS “we believe the proposed changes will go a long way in ensuring that Medicare beneficiaries have equal access to medically necessary care and consumer protections."
Moeller says large Medicare Advantage plan providers such as Humana, UnitedHealthcare, Cigna, and Aetna are not the most abusive marketers. “I wouldn't be surprised that when the dust clears on this, the big players are going to be even bigger. They know what the rules are, and from my experience, they really try to play within the rules.”
Lipschutz expects some version of the Biden administration’s proposed changes will take effect this spring and in the 2024 Medicare Advantage plan year.
“The administration deserves some credit for reversing the course of regulation over the last few years and starting to focus more on consumer protections,” he says. “And we're going to continue to urge them to go farther.”
