Medicare offers rules to prevent marketing abuse

Medicare proposed new rules Thursday to curb marketing abuses that have cropped up as the role of private insurance plans has grown in the giant healthcare program for the elderly and disabled.

Critics called the rules an improvement, but questioned whether the federal government could adequately enforce them. They said Medicare lacked the staff and local presence to oversee thousands of sales agents -- a role that had been carried out by state insurance commissioners, but that the Bush administration has claimed for Washington.

“At first glance, the proposed rule offers an improvement over the status quo,” said Rep. Pete Stark (D-Fremont). “However, in order for it to be effective, the rule must be accompanied by a commitment to aggressive enforcement.”

The rules would cover the Medicare prescription drug plans that began offering benefits in 2006, as well as private medical plans that operate under the program’s umbrella. Enrollment in such plans has surged in recent years.

But along with the increased use of private plans came complaints about sales tactics that left some seniors stuck with coverage they didn’t want or need. Such tactics included door-to-door sales, switching beneficiaries without their consent, and misrepresentation by sales agents who left the impression they were from Medicare.

In many cases, such tactics would be illegal under state laws. And in the past, state insurance commissioners would have pursued the complaints. But the 2003 law that created the Medicare prescription benefit -- and expanded the kinds of private medical plans available to seniors -- tightly limited the ability of state insurance regulators to police the plans. Backers argued that a national program should be overseen at the federal level.

The rules proposed Thursday would ban door-to-door peddling of plans and cold-calling beneficiaries on the telephone. Meetings with a sales agent would have to be initiated by the Medicare recipient and could only cover the specific subject the recipient wanted to discuss. Sales agents would be prohibited from using face-to-face meetings to sell another product, such as life insurance.

Insurance companies would be required to change the way they pay commissions to diminish financial incentives for agents to sell plans that paid higher commissions. Companies would also be required to use state-licensed agents.

Kerry Weems, acting administrator of the Centers for Medicare and Medicaid Services, said the new rules would help weed out unscrupulous sales agents and provide greater peace of mind for seniors.

Until now, Medicare has responded to problems by issuing directives to the insurance companies, and threatening to kick some out of the program. Regulations, which carry the force of federal law, signal a growing sense of urgency. They would take effect after a period for public comment.

But critics said Congress should intervene to restore the oversight role of state insurance commissioners.

“Even with all the positive changes proposed in this new rule, there is still a significant issue left unaddressed,” said the president of the National Assn. of Insurance Commissioners, Kansas Commissioner Sandy Praeger. “There is no change to address the fundamental problem that states do not have sufficient regulatory authority to ensure proper enforcement in the marketing and sales of Medicare private plans.”

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ricardo.alonso-zaldivar @latimes.com