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Medicare Advantage Marketing Guidelines

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4.1 - Medicare Advantage Marketing Guidelines

The introduction of Medicare Advantage and Medicare Part D was complicated by a significant number of marketing problems. In this chapter, we will look at some of these problems and identify the events and processes that found their way to five congressional hearings in 2007. Many of these problems could have been avoided had MA companies been more diligent in training their sales producers and representatives in CMS marketing guidelines and requirements.

Upon conclusion of this chapter, you should be able to

  • understand the problems that occurred with the introduction of Medicare Part C and Part D and why these problems arose;
  • explain how the problems could have been avoided;
  • know what is required in marketing MA plans;
  • identify what is not allowed in the marketing of MA plans; and
  • understand the proper procedures for MA plan enrollments.

Most of the correctible problems had been addressed by the time of the hearings and have been prescribed by CMS and implemented by the MA companies. So, those errors should not continue. It is important that you understand the problems that occurred so as not to duplicate them in your sales efforts. You should also understand what is allowable and what is not allowable in marketing MA products and whether the products include Part D benefits—that issue is the emphasis of this chapter. In addition, understanding the correct enrollment timelines and procedures will help you to avoid mistakes in this area. Lastly, this chapter presents discussions of voluntary disenrollment and involuntary disenrollment.

 

 

4.2 - The Background to Problems that Surfaced Early

Unfortunately, in the rush to introduce both Medicare Part C and Medicare Part D as created by MMA 2003—a short timeframe of roughly two years—many marketing problems occurred. Not only did Medicare Advantage companies have to prepare for the introduction of their plans, but thousands of federal government employees, state government employees, Department of Health and Human Service employees, county employees, and social workers had to transfer 6 million Medicaid recipients into Medicare Part D. Insurance agents and their companies were doing the same thing: enrolling dual eligibles in their MA Part D plans and introducing their new programs to their regular customer base.

The timeframe was tight, but the Part D transitions and sales were accomplished amidst a background of confusion for consumers, federal and state employees, insurance companies, and insurance agents. Because the enrollment into an MA plan that included the new prescription drug Part D benefit was a relatively easy process, some of the thousands of producers and dozens of companies may have overlooked the most prudent marketing techniques. And those improper sales techniques surfaced. In fact, they surfaced to a media roar, which found its way to Congress early in 2007.

No fewer than five congressional committee hearings were held in the spring of 2007. The complaints were in two major categories. The first was that MA companies had been allowed to take advantage of an “unlevel playing field” promulgated by what some authorities regarded as much greater payment rates by Medicare—as much as 7 to 12 to 19 percent more than allowed as reasonable by Original Medicare’s fee-for-service payment rates. This problem prompted legislation in both the House and Senate, as lawmakers tried to devise ways to lower the payment rate to MA companies. Proponents of the legislation regarded the payment rates to Medicare Advantage as excessive, thereby creating a fiscal crisis for the Medicare program itself. Opponents of the legislation complained that payment cuts would result in a loss of up to 33 percent of MA enrollees—approximately 3 million of the 8.4 million MA enrollees, many of them at poverty level.

The second factor spurring congressional hearings was the improper marketing practices of Medicare Advantage sales people. Though this problem was legitimate and serious, its scope as measured against the number of Medicare-eligible people—and the percentage of these people who were affected by it—was small. Nonetheless, the issue of improper MA sales and marketing practices became a snowball. It followed a path not uncommon to any in which individuals are dissatisfied or unhappy with their purchase—perhaps because of a time crunch in which to make a decision or because of finances or an inappropriate sales presentation, or even because of an illegal sales presentation. This dissatisfaction can occur in any transaction, but in the case of an insurance transaction, an entire industry—and its sales force—are often broadbrushed as “high pressure.”

Complaints against insurance companies or insurance producers usually start with seeking help through state insurance departments. With the case of consumer complaints against MA plans, this did little good. Of the seven regulatory oversight functions that state insurance departments normally have with insurance companies and insurance producers, five had been restricted to CMS alone—MMA 2003 had purposely left these regulations outside of state insurance regulation and control. So, when individuals complained to state insurance departments, they were told that the state has little or no ability to oversee the marketing practices of any MA producers—the mantra became “call Medicare.” So, the next stop, if complainants wished to proceed, was to call Medicare and wait on a phone line endlessly to make their complaint.

This process seldom satisfied anybody, so logically, the next stop was to call the newspapers. Most journalists know little, if anything, about insurance, but writing a news article about insurance companies and their agents appealed to reporters seeking an “exposé.” So, hundreds, if not thousands, of stories were presented in the various media about the corrupt practices of Medicare Advantage insurance producers and their companies.

Legislative bodies were next to be called to provide remedy. By the spring of 2007, Congress was investigating the matters, which, by the summer of 2008, found their way into the legislation of MIPPA 2008. Undoubtedly, over time, CMS will have to hand over some of the oversight to state insurance departments, because these state agencies are the first parties asked to look into any other insurance marketing practices.

 

 

4.3 - CMS Guidelines Attempted to Limit Problems at the Beginning

In fairness to CMS, many of the marketing practice complaints, which progressed from phone calls (either to CMS or to state insurance departments), to the media, to Congress, were already being addressed by the time they made their way to Congress. In fact, CMS had laid out the rules at the beginning of the MA process. These rules were specified in marketing practices issued to MA companies before MA sales began.

The publication, Medicare Marketing Guidelines For: Medicare Advantage Plans (MAs), Medicare Advantage Prescription Drug Plans (MAPDs), Prescription Drug Plans (PDSP), and 1876 Cost Plans, was originally published on August 15, 2005, and is continually revised. This document outlines required marketing guidelines and practices for MA companies. The problem was that CMS expected the guidelines to be passed down to producers through company channels that were sometimes less than efficient. As it turned out, many producers were sent into the field without having been given Medicare’s marketing guidelines.

In fact, before (and since) the marketing practice complaints surfaced, MA companies have had additional marketing advisories and guidance issued to them by CMS. One attempt to solve the marketing problem is the requirement that Medicare Advantage companies recertify their producers every year. Another practice is to terminate the contracts of producers who are found to have violated the marketing practices passed down from CMS to the companies. However, for most companies, marketing practice violations had already propagated, and so damage control was already in effect.

When MA companies first began marketing their plans, nearly any producer could be appointed with an MA company. All he or she had to do was take an internet training module and then answer a few questions regarding the product and some marketing rules. Unfortunately, these training modules taught little about Medicare background or the differences between Medicare, Medicare Advantage, and Medicare supplements. In other words, most broker appointments could be made without the broker having a real understanding of the issues, and only a basic knowledge of the particular company plan. The “recertifying” procedures of 2009 (for plan year 2010) rectified much of the problems just described, and independent MA/MAPD/and stand-alone PDP producers were held to far stricter standards, considering the history of MA marketing practices. As expected, the recertifying standards are now necessary each year.

On the other hand, MA company career agents were well-educated, having received two to four weeks of intense company training. These producers were trained in serious marketing practices and marketing practice violations. Brokers or noncaptive agents who did not receive such intense training—who were, in fact, rushed through the process—were not prepared to adequately or appropriately represent and sell MA plans. It was from this quarter that the raft of legitimate marketing and sales complaints arose, which brought about the strict recertifying standards, which require that any agent or producer who sells MA or PDP plans recertify each year.

4.4 - Problematic MA Sales Practices

Following are some, but by no means all, of the MA complaints presented to Congress. They are listed in no particular order. Note that the majority of MA producers were, and are, on the right track. Unfortunately, it was the ill-informed, undereducated, or less than honest producers (and the companies that did not stop their activity) who created havoc for the entire industry, as the following examples show.

  • The insurance department of the state of Georgia reported that it had received more than 300 written complaints charging misleading practices and fraud, as well as hundreds of phoned-in complaints. Two insurance agents were arrested in April of 2007 and charged with using deceased individuals’ information out of agency databases to write fraudulent MA policies. In addition, Georgia investigators found that some agents told beneficiaries that they needed to verify that the beneficiaries were covered under a stand-alone Medicare Part D plan. The agents had the prospective enrollee sign a form that they said would show that the enrollee’s choice of Medicare Part D had been verified, when, in fact, the form was a Medicare Advantage enrollment form.
  • Agents mislead senior and disabled citizens into switching from traditional Medicare and Medicaid coverage to private health plans under MA. This charge included signing up seniors for coverage they didn’t need, didn’t want, or couldn’t afford.
  • Agents, forging applications, told beneficiaries that Medicare would be discontinued.
  • Agents signed up deceased people.
  • Agents used high-pressure tactics and aggressive and frequently misleading advertising to enroll prospects in MA plans. MA insurance companies were accused of a lack of responsiveness, making it difficult for people to cancel their coverage or disenroll. MA companies were said to have told people they could not disenroll and that they were locked in, even though they were victims of marketing abuse.
  • Agents posed as Medicare employees and signed up people in nursing homes, group homes, and group settings after seminars.
  • People complained that (1) they were embarrassed into thinking they needed the coverage; (2) they were confused about what they had signed up for; and (3) they didn’t realize that they had been disenrolled from traditional Medicare and from their Medicare supplement plan. Obviously, these people were extremely angry with their MA agents after finding out what had happened.
  • People were generally uneasy and confused over the bewildering array of MA plans.
  • Agents signed up people with Alzheimer’s and psychiatric disorders.
  • Agents forged signatures.
  • Agents told clients that the MA plan they represented was a supplement, but actually the agents were replacing a Medicare supplement.
  • Agents told people that Medicare was being eliminated and that they must sign up for MA or lose their health coverage.
  • Agents used attendance logs at informational meetings to switch people to MA without their knowledge.
  • Agents refused to leave a client’s home until they had a check for an MA plan.
  • Agents were accused of “predatory” sales practices.
  • Agents went to low-income developments and started enrolling people.
  • Agents told people that they could keep their existing MA policies while buying another MA policy.
  • Agents failed to tell clients that some doctors might not accept the MA coverage.

All professional producers should look at this list and be careful to avoid any of these practices in their own MA sales. Ethical producers have no need to resort to any questionable tactics. The MA sale is easy enough, and the compensation rewarding enough, that professional producers need not take a chance on losing their appointments (or even their insurance licenses) or their livelihoods by using any questionable marketing tactics. The rules set down by CMS and each MA company are easy enough to follow, and the time will come when an inadequate education of Medicare, Medicare Advantage, Medicare Part D, and Medicare supplements will be no defense against the unscrupulous actions of the unethical producer. In view of these listed citations, the time for education should have been at the outset of MA sales. These problems clearly illustrate the need for continuing education in Medicare Advantage on an individual or group basis.

A valid criticism regarding MA marketing lies in the history of Medicare supplement sales. Many of the charges are the same ones that were solved in Medicare supplement marketing practices years ago. However, without state insurance departments being able to regulate and investigate MA problems, their hands are tied. And unfortunately, CMS does not have the funds, the manpower, or the will to investigate thousands of charges. CMS now requires that MA companies regulate themselves—in other words, CMS regards the actions of an individual producer as being the actions of the companies—and requires that companies assure CMS that their representatives are acting within the law.

 

 

4.5 - CMS Marketing Guidelines

Now that we know what the problems are, we can turn to the solutions. The answer to proper and appropriate MA sales and marketing practices lies within the guidelines originally set forth by CMS. These original guidelines have since been expanded and strengthened with additional directives issued every year.

In addition, provisions of MIPPA 2008 also addressed sales and marketing activities, effectively prohibiting certain practices in the sale and marketing of MA and Part D plans, thereby putting some “legal teeth” into CMS guidelines.

For openers, all Medicare Advantage companies and all MA producers must comply with the CMS document mentioned earlier: Medicare Marketing Guidelines For: Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug Plans, and 1876 Cost Plans.

The opening paragraph of this document reads, in part, as follows:

These marketing guidelines reflect CMS’ current interpretation of the marketing requirements and related provisions of the Medicare and Medicare Prescription Drug Benefit rules. . . . These guidelines were developed after careful evaluation by CMS of current industry marketing practices, recent advancements in communication technology, and how best to protect the interests of Medicare beneficiaries. The marketing guidance set forth in this document may be subject to change as communication technology and industry marketing practices continue to evolve, and as CMS gains more experience administering the Medicare Prescription Drug Benefit and Medicare Advantage programs.

While not specifically addressing producers, the guidance is published for the MA companies or organizations selling the MA product. There are several references to MA company compliance regarding what is and is not allowed in marketing. That information and these requirements then automatically revert to any MA agent or producer. It is up to the MA company to educate and train its producers on the marketing of its product in accordance with the CMS marketing guidance. Thus, the MA company must “pass down” these guidelines and add its own company-specific marketing practices, objectives, and product training.

Private Fee-for-Service Plans Directive

In addition to the original rules, others had to be developed. Most of the complaints regarding MA plans resulted from the rush to introduce and enroll Medicare recipients in new private fee-for-service plans. Consequently, CMS had to develop further guidance and “corrective action” plans. Generally, PFFS plans were fined not for agent indiscretions but for failure to send timely information to beneficiaries.

Because of the need for corrective action, CMS issued a directive to Medicare Advantage PFFS plans on May 25, 2007, which addressed the problems of education and information. The problems (and solutions) were described as follows:

. . . CMS is providing additional model documents and requiring new outreach processes to ensure beneficiaries and providers are informed about the distinctive features of Medicare PFFS plans. MA organizations offering PFFS plans are strongly encouraged to implement these new elements and practices as quickly as possible. Several of these must be implemented immediately. . . . All PFFS organizations must have these processes in place prior to marketing [their] 2008 PFFS plans.

Note that this directive was submitted at approximately the same time that a moratorium on individual sales of PFFS plans for seven major companies was agreed upon. Obviously, the point of the May 25 directive was to correct the marketing problems immediately for PFFS companies to be able to resume sales.

Listed next are the major additional corrective marketing process procedures that the directive requested:

  • sales presentation schedules—Requires monthly reporting and listing in advance to CMS of planned PFFS marketing and sales events, including both employed and contracted sales representatives.
  • prohibition against implying that private fee-for-service plans function as Medicare supplements—Prohibits any materials or presentations that imply that PFFS plans function as Medicare supplement plans or use terms such as “Medicare supplement replacement.” MA organizations may not describe PFFS plans as plans that cover expenses that Original Medicare does not cover nor as plans that offer Medicare supplement benefits. It is permissible, however, for PFFS plans to clarify that the plan does not pay after Medicare pays its share, but rather it pays instead of Medicare, and the beneficiary pays any applicable cost sharing or co-payments.
  • PFFS marketing material disclaimer—MA organizations offering PFFS plans are required to prominently display the following disclaimer in all advertisements and enrollment-related materials:

A Medicare Advantage private fee-for-service plan works differently than a Medicare supplement plan. Your doctor or hospital must agree to accept the plan’s terms and conditions prior to providing health care services to you, with the exception of emergencies. If your doctor or hospital does not agree to accept our payment terms and conditions, they may not provide health care services to you, except in emergencies. Providers can find the plan’s terms and conditions on our Web site at: (insert link to PFFS term and conditions).

This language is also required in sales presentations in public venues and private meetings with beneficiaries. Any statement indicating that enrollees may see any provider must also include the phrase “who agrees to accept our terms and conditions of payment.”

  • beneficiary and provider leaflet—All MA organizations must provide enrollees with a complete description of plan rules, including detailed information on a provider’s choice of whether to accept plan terms and conditions of payment. The leaflet must be included in all enrollment kits that prospective enrollees receive.
  • outbound education and verification calls—All MA organizations offering PFFS plans are required to conduct outbound education and verification calls to ensure beneficiaries requesting enrollment understand the plan rules. It is important to obtain from the beneficiary the verification phone number and provide a description of the enrollment verification process to the beneficiary during the application process. The approved enrollment application form must accommodate this requirement. “Outbound calls” are calls made to the beneficiary after the sale has occurred; calls cannot be made at the point of sale. The verification calls made to beneficiaries who request enrollment through sales agents cannot be made directly by those sales agents. In addition, sales agents cannot be with the beneficiaries at the time of the verification calls.
  • PFFS enrollment processing—The special processes and marketing practices described in the directive are designed to ensure that new enrollees have all of the required information to understand the plan in which they are enrolling. Conducting this outreach and education does not change the requirements to which all MA organizations must adhere for processing MA enrollment requests.

Several other items are directed to MA companies regarding best practices, but they are not particularly pertinent to producer instructions for enrollment procedures. So, let’s now review what producers must do to secure compliance with all MA ethical and legal requirements. These directives apply to all MA/MAPD producers.

MA Producer Qualifications

To properly (and legally) represent and sell an MA plan, a producer must

  • have a valid insurance license, either resident or nonresident, in any state in which he or she solicits business;
  • successfully complete the training courses of any MA company that he or she wishes to represent. This training may consist of electronic training or classroom-style training and will include exams relating to the company product, CMS guidelines, and compliance;
  • be certified by the company being represented by submitting company appointment papers and possibly proof of errors and omissions insurance, passing the certification course exams, and paying appointment fees, if any. Company appointment papers may include a section on “Specific Regulatory Obligations of Medicare Participation.” (These regulatory obligations can also be found under a “Termination for Cause” clause.) The regulatory obligations regarding sales practices include:
    • compliance with laws
    • business integrity
    • maintenance of records, audits
    • delegation
    • suspension, revocation, or termination of sales agreement
    • monitoring
    • compliance with the company’s obligations
    • federal policies; flow-down provisions
    • nondiscrimination rules; and
  • recertify each year by completing updated training requirements as directed by the MA company. Recertification may include, among others, the following:
  • confirmation of state licensure
  • extensive criminal background screening
  • mandatory training and testing on product benefits and marketing guidelines and a score of at least 85 or 90 percent, depending on the test
  • mandatory contract terms, incorporating a sales agent code of conduct
  • onsite monitoring of agents by field sales management
  • post-enrollment outreach calls to 100 percent of new members
  • mandatory retraining and retesting to refresh knowledge of plan terms and marketing guidelines
  • rapid resolution of any identified compliance issues
  • zero tolerance for verified infractions
Scope of Appointment Form and Requirements

MIPPA 2008 specifically states: “A MA or Part D plan may not market any health care-related product during a marketing appointment beyond the scope agreed upon by the beneficiary and documented by the plan, prior to the appointment.” In other words, the scope and purpose of the meeting (appointment) must be understood and agreed to by a consumer before the scheduling of any sales meeting.

In compliance with that law, CMS has developed strict pre-enrollment procedures that must be completed before a producer actually takes an application for enrollment in an MA/MAPD or PDP plan. The basic rule requires a Scope of Appointment (SOA) form, which the prospect must complete and which both the prospect and the producer must sign before any sales meeting occurs or before any MA or Part D program can be discussed. The purpose of the SOA is to define the scope of the meeting that will occur between a producer and a prospect, including the specific plan that will be discussed.

The form has seen variations from CMS, and some companies have enhanced their own forms, but a generic form was established so that a producer could represent more than one company at a particular appointment. The Scope of Sales Appointment Confirmation Form presented at the end of this chapter was CMS approved in September 2009. Before we visit the actual form itself, the procedural use of the form as outlined by CMS is presented below. The following rules are from a letter from CMS, dated February 11, 2009, to Medicare Advantage organizations.

Instructions for Scope of Appointment Documentation

When is the Scope of Appointment form required?

The scope of appointment form is required under the following circumstances:

  • in-home sales appointments or personal/individual appointments with an existing member/client in an office, coffee shop, or other similar location;
  • appointments with new members/clients (not existing members/clients); and/or
  • when a plan or agent/broker sells more than one type of product.

If a beneficiary requested to discuss another product during their appointment (e.g., MA during a PDP appointment), is the agent/broker required to complete a new Scope of Appointment documentation form?

A new Scope of Appointment form is required if the beneficiary has asked to discuss another product type during the appointment. However, a new appointment is not required. The additional product can be discussed as soon as the beneficiary request is documented.

Should the Scope of Appointment form be completed prior to the appointment?

The Scope of Appointment form should be completed by the beneficiary and returned prior to the appointment. If it is not feasible for the Scope of Appointment form to be executed prior to the appointment, an agent may have the beneficiary sign the form at the beginning of the marketing appointment.

How should the Scope of Appointment form be documented?

  • CMS-approved Scope of Appointment form (either model or nonmodel)
  • CMS-approved oral/recording Script of the Sales Appointment Confirmation
  • CMS-approved business reply card

Organizations are allowed to use various means for appropriate documentation (e.g., fax, email, etc.)

Is the Scope of Appointment form required at sales events?

  • Sales events do not require documentation of the beneficiary agreement because they are not personal/individual appointments.
  • The scope of products that will be discussed during a sales event must be indicated on all event advertising materials.
  • Beneficiaries are not required to complete and sign the Scope of Appointment form prior to participating at a sales event.
  • Beneficiaries may sign a Scope of Appointment form at a sales presentation to a group of beneficiaries for a follow-up appointment. (The follow-up appointment does not need to be held 48 hours later; it may be held at the venue immediately following the sales presentation.)

Can brokers or agents selling for more than one plan use the model Scope of Appointment form for all their contracted plan sponsors?

Because there are no organization-specific details in the model Scope of Appointment form, the model form can be used by agents for multiple organizations.

In addition, there are other guidelines that must be followed and that are helpful to the producer:

  1. Scope of Appointment procedures may be followed by “inbound” calls to the producer or a company from a prospect, which must be recorded.
  2. Beneficiaries consent in advance to the product information to be discussed during a sales call; therefore, the SOA process must be completed prior to conducting the sales appointment, no matter where the sales meeting will be held (client’s home or agent’s office).
  3. SOA is not required if an agent is meeting beneficiaries at an educational seminar.
  4. Direct sales leads are not regarded as satisfying SOA requirements, or in lieu of a completed SOA.
  5. The SOA paper form must be sent to the prospect via mail, fax, or e-mail. The form may not be dropped off at a prospect’s home.
  6. The paper form must be signed and dated by the prospect and returned to the agent before an appointment can begin. In addition, the form must be signed and dated by the agent before the appointment can begin.
  7. The paper form must be submitted to the company along with enrollment papers.
  8. The form must be retained in the agent’s records for ten years.
  9. The SOA can be completed at point-of-service just prior to a sales meeting in the agent’s office. In these cases, the agent must write “Beneficiary Walk-In” on the application.
  10. If the prospect wants to discuss other products, such as life insurance, annuities, long-term care, etc., the agent must set up another meeting after a 48-hour period beyond the end of the original meeting.
  11. The boxes on the SOA form are for the client’s initials, not “Xs.”
  12. Agents cannot call a potential client unless they have permission through a lead card or other form of response that the person wants more information.
  13. Agents cannot call a referral or ask for a referral’s phone number. The referral must initiate the call, so a customer who offers a referral must notify the referee of this information.
Enrollment Procedure Guidelines

Once the requirements for the Scope of Appointment have been met, the agent can schedule an appointment meeting with the client. Several steps are involved in what a producer must do during the course of an MA sale. The first of these is following the guidelines that define how an individual enrolls in an MA plan. These enrollment guidelines must be conducted in accordance with company and CMS regulations:

  1. The producer must thoroughly explain the product to eligible Medicare beneficiaries. The producer should make certain that the prospect comprehends the product and is competent to make his or her own decisions.
  2. The producer must ensure proper and total completion of the enrollment form in accordance with training manual instructions, including answering all questions correctly. The producer must not alter or omit the prospect’s responses on the application. Applications must be completed accurately and clearly—in other words, cleansheeting (not accurately recording the prospect’s answers to questions) is prohibited. Prospective members’ signatures or their authorized representatives’ signatures must appear on all applications.
  3. In addition to the normal enrollment questions, the producer must ask the following specific enrollment questions and take these actions:
    • Are you currently on Medicaid? (The producer should indicate the Medicaid number if the prospect answers “Yes.”)
    • Mark the correct choice of plan.
    • Do you have end-stage renal disease? (Medicare beneficiaries cannot be denied membership in a Medicare Advantage plan because of poor health, a disability, or a pre-existing condition, with the exception of end-stage renal disease.)
    • Are you currently in a nursing home or long-term care facility?
    • Mark any special election period (SEP) statements.
    • Stop and read aloud to the enrollee the following statement:

       

      If you currently have health coverage from an employer or union, joining this plan could affect your employer or union health care benefits. If you have health coverage from an employer or union, joining this program may change how your current coverage works. Read the communications your employer or union sends you. If you have questions, visit their Web site, or contact your benefits administrator or the office that answers questions about your current coverage.

  4. The producer must submit the enrollment form in a timely manner to the MA company via fax or mail, in accordance with training manual instructions.
  5. Enrollment forms must be complete—missing information may delay processing and the effective date of the application.
  6. Applicants, however, have 30 days after being contacted by the company in which to submit missing information.
  7. If additional documentation is not received within 45 days, the company will send a “Denial of Enrollment” letter.
  8. The enrollee must be familiar with the terms lock-in or lock-in period. Lock-inmeans that if an MA enrollee elects and enrolls in a plan during the annual enrollment period (October 15 through December 7), he or she is essentially “locked in” to that plan until the next annual enrollment period. During the annual enrollment period, an enrollee can change from one plan to another, but the plan in which he or she is enrolled as of December 7 becomes the final choice. However, keep in mind that the enrollee can disenroll from a plan during the annual disenrollment period. And if circumstances permit, the enrollee might be able to use rights under the special enrollment period.
  9. The enrollee must be notified of reasons for possible disenrollment:
  10. The member fails to pay the monthly premium on a timely basis, if a premium is involved.
  11. The member is disruptive for reasons unrelated to use or application of medical services, and the behavior prevents treatment to him- or herself or to other members of the plan. (CMS must first approve disenrollment for this reason.)
  12. The member commits fraud.
  13. The member knowingly permits misuse of his or her membership card.
  14. The member permanently moves out of the service area.
  15. The member temporarily moves out of the service area for an uninterrupted absence of more than six months.
  16. The member loses entitlement to Part A or Part B Medicare benefits.
  17. The member dies.
  18. The member was found to have inappropriately used an incorrectly appointed power of attorney to represent him or her during the enrollment.
  19. A member must be disenrolled for the following reasons:

Producers of PFFS plans must indicate that these plans are not Medicare supplements and are not Medicare supplement replacements. In sales presentations in public venues and private meetings with beneficiaries, the producer must state that an MA PFFS plan works differently than a Medicare supplement plan. Any statement indicating that enrollees may see any provider must also include the phrase “who agrees to accept our terms and conditions of payment.”

Prospecting Guidelines

Prospecting guidelines are important from a compliance standpoint. CMS and MA company guidelines must be followed. Failure to follow these guidelines constitutes cause for the producer’s termination.

First, a list of acceptable actions in prospecting explains what the agent can do to remain within the guidelines for prospecting.

Allowable Prospecting Activities

The agent may

  • ask members or prospective customers if they are members of a group, organization, or club;
  • look through the Yellow Pages of the service area to identify groups and organizations that may cater to the agent’s market;
  • introduce him- or herself to local government offices;
  • ask for referrals, but may not contact the referral—the referral must contact the agent;
  • network and build community relations;
  • leave business cards;
  • build a reputation as a trusted and knowledgeable resource;
  • attend and distribute materials at health fairs and senior expos;
  • visit with area providers—physicians and hospitals;
  • hold special events for members and ask them to bring friends; and
  • visit senior centers and church groups as a speaker.
What an Agent Must Not Do When Writing Medicare Advantage

What an agent must not do is as important as what he or she must do when writing or marketing a Medicare Advantage plan. The issues associated with the “what not to do” when marketing MA plans can be categorized into ethics and compliance. We’ll examine each.

The Ethics of MA Marketing

Ethics is a strange topic. In the past few years, insurance departments have emphasized ethics in preparatory courses for obtaining an insurance license, have asked insurance continuing education vendors to introduce more ethics courses, and have also asked them to include ethics in more of the content they offer within other courses.

While an admirable quest, not even dozens of study hours on ethics and ethical practices affect those who don’t care about ethics. Either a person is ethical, or he or she is not. Furthermore, several interpretations and definitions of what is ethical exist. We won’t delve too deeply into this highly contentious topic. Instead, let’s simply acknowledge that two primary factors played a role in degrading ethical practices in marketing MA plans: compensation and time. Because of the time crunch of producing applications (“. . . this has to be done now, the money is here to be made now, and the whole thing may not last very long”), some producers took short-cuts to enhance their application count and their compensation. Those two factors—greed and time—played a major part in unacceptable marketing practices.

It is questionable whether ethics instruction will play a greater role than in the past. Those who are unethical simply must be eliminated from the business, and hopefully, those who are left are guided by ethics and “doing the right thing.” Ethical acts can be described as “an act that you would do, whether or not you knew that anybody else was watching or would find out about it.”

The Compliance of MA Marketing

Compliance is another very important facet of ethics in MA marketing, because it deals with the rules, legalities, illegalities, and obligations of MA companies and producers in relation to the guidelines found in both CMS and company guidance literature. In addition, the Medicare Improvements for Patients and Providers Act of 2008 also addressed MA marketing, thereby elevating some CMS guidelines into laws. The provisions of MIPPA took effect for plan years 2009 and later.

With respect to the marketing of MA plans, a producer may not

  • change any of the sales brochures, applications, rates, literature, or any other paper or advertising of the company. The materials have been approved by CMS and the company, and any alterations of these items are illegal and grounds for termination. Crossing out, blacking out, or whiting out is illegal.
  • cold call, solicit door-to-door, or make any unsolicited visits;
  • represent him- or herself as a representative of CMS, Social Security, Medicare, or the state insurance department, or any other government office. To do so is illegal. Such remarks as “Oh, we work with (any of the above) all the time,” or references to such, are also illegal.
  • advise prospects or members that they must purchase plans as directed by Medicare;
  • sell and/or enroll anyone where health care services are dispensed, except in common areas. Common areas where marketing activities are allowed include hospital or nursing home cafeterias, community recreation rooms, and conference rooms. If a pharmacy counter area is located within a retail store, common areas would include space set far off from the pharmacy itself, away from any spot where patients wait for services or interact with pharmacy providers and obtain medications. Locating a desk or kiosk near the pharmacy itself is illegal.
  • conduct telephone solicitation to Medicare members or hire a marketing firm to conduct telephone solicitations;
  • cross-sell related or unrelated insurance products, such as life insurance or annuities, which would violate the Scope of Appointment rule. A separate appointment will have to be scheduled at least 48 hours after the original appointment.
  • discuss a Medicare Advantage or combined MA/Part D plan at the same meeting, if the Scope of Appointment is for a Medicare Part D plan only. The reason behind this rule is that some consumers indicated they wanted Part D only and found they had been enrolled in a Medicare Advantage plan.
  • send unsolicited e-mails to prospects;
  • back-date any enrollment forms;
  • conduct discriminatory practices, such as pursuing business in affluent neighborhoods or poor neighborhoods, asking health questions for the purpose of selling the product, or conducting business in facilities not accessible to disabled individuals. Also, product marketing must be done in accordance with Title VI of the Civil Rights Act of 1964 without regard to race, color, religion, creed, age, national origin, or health status (except for prospects with end-stage renal disease) as provided by CMS guidelines.
  • offer prizes, gifts, or incentives with an individual or collective retail value of more than $15;
  • provide meals at promotional or sales events (though light snacks and beverages are allowed);
  • use “sign in” sheets at marketing events as Scope of Appointment forms and use these forms to follow up with the attendees to discuss any MA or Part D plan. Attendees may be given and may sign an SOA at a marketing event.
  • use materials other than those created by the MA company and approved by CMS;
  • ask a prospect health-screening questions, with the exception of the end-stage renal disease question;
  • approach consumers in parking lots, lobbies, or any other areas, because unsolicited contact of any kind is prohibited;
  • employ any high-pressure sales tactics, or any of the following:
    • deception
    • coercion
    • scare tactics
    • dishonesty
    • intimidation
    • harassment;
  • use false or exaggerated statements when conducting a sale;
  • fail to ensure that all benefit details are thoroughly explained;
  • claim that the plan is recommended or endorsed by any governmental organization (which is considered false representation under CMS marketing guidelines);
  • sell MA or Part D products outside of the designated election (enrollment) periods of MA and Part D products, unless representing and selling a CMS-approved five-star plan;
  • assist a prospect in obtaining or implementing a power of attorney or any other such behaviors that might be construed as unethical sales practices;
  • accept any financial gifts, incentives, or other compensation from prospective members; or
  • imply that a PFFS plan functions as a Medicare supplement or use such terms as “Medicare supplement replacement.”

Two more cautions dealing with compliance in MA marketing address the importance of enrollment periods and advertising:

  1. The agent must be familiar with the proper meaning and terminology associated with enrollment periods and their dates. Not being familiar with the terminology and the correct dates involved could lead to inappropriate enrollment dating, which is illegal. The currently effective enrollment dates are the following:
    • initial election period (IEP)—When the enrollee turns 65 (“aging in”). This is the seven-month period that begins three months before the month the individual turns 65 and concludes at the end of the third month following the month he or she turns 65.
    • annual coordinated election period (ACEP)—When Medicare beneficiaries can elect to enroll, drop, or change their enrollment in a Medicare Advantage and/or Part D plan. This period runs from October 15 through December 7 every year. (This period is also known as the fall open enrollment period or annual enrollment period.)
    • annual disenrollment period—When Medicare Advantage and/or Part D enrollees can elect to disenroll from their MA or Part D plans and enroll in Original Medicare. This period runs from January 1 through February 14 of each year. This period is formally termed Medicare Advantage Disenrollment Period, or MADP.
    • special election period (SEP)—Any time an enrollee is permitted entry to an MA or Part D plan because of certain special conditions.
    • five-star plan enrollment option—At any time during the year, an enrollee can elect to enroll in a CMS-certified five-star MA plan. This is a once-a-year option and is only available to those who live in an area served by a five-star plan. Producers who represent CMS-approved five-star plans can market and sell those plans at any time of the year. This essentially allows an MA or a PDP producer to enroll anytime during the year in two cases: the initial election period and when representing a five-star plan.
  2. With regard to advertising, the producer must use only the advertising, brochures, forms, etc., that the MA company provides. As is the case with Medicare supplement advertising, companies use only materials approved by CMS and do not tolerate a producer’s attempt to go beyond approved materials for advertising or self-representation. Use of extraneous materials is cause for termination.

In addition to the above, many MA companies require their representatives to complete a “Marketing Sales and Marketing Code of Ethics” form with an initialized paragraph-by-paragraph understanding of the rules described above and an ethics generalization regarding the sale of MA and Part D products. Also, a “Marketing Practices Statement” is required by some companies, which agents must sign, attesting that they understand the rules. These devices are for the protection of the consumer, the companies, and the agents themselves.

MA/MAPD and PDP producers also need to be aware of the “marketing surveillance” techniques of CMS. CMS actually contracts with “secret shoppers” as part of its “secret shopper program” to attend events and individual “sit-down” appointments and to listen to a producer’s presentations. The purpose of this program is to identify agents who employ the kind of sales tactics that led to some of the marketing problems explained earlier in the chapter, which resulted in congressional action and additional CMS regulation. The surveillance program even monitors articles or advertisements by searching for key words. In addition, CMS has established partnerships with the departments of insurance in all states to report and cooperate in curtailing illegal practices through “Memorandums of Understanding.” This allows states to be involved in controlling questionable agent sales practices, which is a compliance measure that MMA 2003 did not provide for. Agents who choose to overlook the rules in light of the secret shopper list of possible violations are indeed risking losing their appointment as well as their insurance license should charges of this nature be substantiated.

Enrollment Timelines and Procedures

An eligible individual may enroll in a Medicare Advantage plan a number of times. Each of these periods has been given an identifying name (and associated acronym). Though other periods are available, the following are most commonly used:

  • initial election period (IEP)—Also known as initial coverage enrollment period, the key word is “initial.” This period is when an individual initially becomes eligible for Medicare. Accordingly, an individual may elect to enroll in a Medicare Advantage plan when he or she first becomes entitled to both Part A and Part B of Medicare. The initial election period begins three months before, includes the month of, and ends three months after a person’s birthday. This creates a seven-month initial election period.

This is the same election period as the initial enrollment period of Medicare itself. In MA jargon, this period is known as the “aging in” period (when the enrollee turns 65) and allows the MA producer to enroll prospects who qualify under the IEP at anytime during the year. In other words, prospects within this initial period do not need to wait—coverage begins the first day of the birth month. The IEP rules are the same for all MA plans, regardless of whether they include prescription drug coverage. For those who are receiving Medicare disability benefits, the IEP for enrolling in an MA plan is seven months from the time that the individual receives Medicare disability benefits.

  • annual coordinated election period (ACEP)—Also known as fall open enrollment, or annual enrollment period, the key word is “annual.” This is the period every year during which Medicare beneficiaries can sign up for, drop, or change their enrollment in a Medicare Advantage or Part D plan. This period runs from October 15 through December 7.

During this annual enrollment period, beneficiaries can elect to remain in their current Medicare Advantage plan, change to a new MA plan, or drop out of Medicare Advantage and enroll in Original Medicare. Those who are enrolled in Original Medicare can switch to an MA plan during this time. Also during this time, beneficiaries can add, change, or drop prescription drug coverage. The member can make one change per year to any plan, and can make more than one change during the AEP, but the plan in which he or she is enrolled as of December 7 will be the plan that becomes effective January 1 of the following year. The enrollee is locked into that plan. There is an exception to the lock-in: the enrollee may drop the plan during the Medicare Advantage disenrollment period between January 1 and February 14 of the next year; otherwise, he or she is locked into the plan until the next annual election period.

As noted, plans that obtained a “five-star” designation under Medicare’s star rating system are allowed to be sold at any time during the year.

  • Medicare Advantage disenrollment period (MADP)—This is the period during which individuals can disenroll from a Medicare Advantage plan or an MA Prescription Drug plan and enroll in Original Medicare (either with or without a stand-alone PD plan). This period runs from January 1 through February 14 of each year. New coverage is effective the first day of the next month following the change. Part D coverage can be added or dropped, and a Medicare supplement policy can be purchased.
  • special election period (SEP)—SEPS are special periods (anytime) during which an enrollee is permitted entry into or allowed to discontinue enrollment in a Medicare Advantage plan and change his/her enrollment to another Medicare Advantage plan or return to Original Medicare. The person may enroll in an MA plan if he or she is recently disabled or begins receiving assistance from Medicaid and does not have to wait until the October 15 (annual enrollment) period.

In the event of the following circumstances, a SEP is warranted:

  • The MA plan in which the member is enrolled is terminated, which is called involuntary disenrollment—involuntary loss of creditable coverage.
  • The enrollee permanently moves out of the service area or continuation area of the MA plan.
  • The Medicare Advantage company offering the plan violated a material provision of its contract with the enrollee.
  • The enrollee meets such other material conditions as CMS may provide, such as an involuntary loss of creditable group coverage.
  • Enrollment is delayed because an employer’s coverage or spouse’s employer group health insurance coverage is being terminated.
  • The individual experienced a recent disability.
  • The individual is receiving any assistance from Medicaid. This includes:
    • full dual eligibles;
    • partial dual eligibles (Medicare Savings Program enrollees);
    • beneficiaries residing in long-term care facilities; and
    • other qualifications relating to long-term care facilities, creditable coverage, LIS (low-income subsidy) eligibility, Part D coverage, and other circumstances that give CMS discretion to create a SEP.
  • general enrollment period (GEP)—This is a little-used Medicare period from April 1 to June 30, with coverage effective July 1 for those who did not enroll in Part B at the time they became eligible for Part B.

The preceding dates notwithstanding, note that October 1 is the start date of the “marketing” or “discussion” of MA plans. On this date, MA producers can market plans for the annual election period even though the plans may not be written until the dates indicated. Some of the problems in the marketing of MA plans came about from marketers (producers) working outside of the guidelines and attempting to enroll prospects outside of the legal enrollment dates.

Voluntary Disenrollment

A person may choose to end his or her membership in a Medicare Advantage plan for any reason, but only during one of the election periods—annual, MADP, or special. Beginning in 2012, a person may disenroll from an MA plan to enroll in one of the Medicare-rated “five-star” plans at any time of the year. An individual who wishes tovoluntarily disenroll should write a letter or complete a disenrollment form and send it to his or her plan’s customer service department. The date of one’s disenrollment depends on when the plan receives the written request to disenroll. In general, written requests to disenroll must be received by the Medicare Advantage plan no later than the tenth of the month to be effective the first of the following month. Written requests to disenroll that are received after the tenth of the month will be effective the second month after the request is received.

An exception to this general rule is that disenrollment requests received between November 1 and November 10 are usually effective December 1. However, because the month of November is also the annual election period, one can ask for a January 1 effective date.

Even though a person has requested disenrollment, he or she must continue to receive all covered services from the plan’s contracting medical providers until the date the disenrollment is effective. The individual will be covered by Original Medicare after this, unless he or she has joined another Medicare Advantage plan.

Note that other factors are also involved in voluntary disenrollment. For instance, consider a Medicare beneficiary whose first Medicare enrollment was in a Medicare Advantage program, and within the first 12 months of coverage, decides to disenroll from the program and enroll in Original Medicare. In this situation, he or she has 63 days to purchase any Medicare supplement plan (within the scope of the plans that the carrier offers) on a guaranteed basis.

Also, a person may have originally enrolled in Original Medicare and a Medicare supplement program, then decided to switch to Medicare Advantage—and then decided to switch back to Original Medicare. In this case, the individual may, within 12 months after that decision, go back to Original Medicare and the same Medicare supplement offered by the same MS carrier as before, if he or she has been in the Medicare Advantage plan for less than a year.

A problem that may arise involves Part D coverage. If an enrollee decides to use the one-year guarantee to switch out of Medicare Advantage, CMS rules require the enrollee to complete a stand-alone Part D application and mark the “Special Election Period” box that appears in the “Office Use Only” portion of the application to disenroll from the prescription drug program. CMS will then use the SEP on the Part D application to begin the process for the MA disenrollment and return the applicant to Original Medicare. (This SEP procedure is also available when enrolling into an MA plan when receiving Medicaid assistance or when applying for Medicare disability at any time during the year.)

An individual may voluntarily disenroll during the MADP period (January 1 through February 14) by writing or calling his or her plan (or calling 1-800-Medicare), but a written request for disenrollment may be required. The MA company must provide a disenrollment notice within seven days of receiving the request. If the (dis)enrollee wants to return to Original Medicare and obtain a Medicare supplement policy, the Medicare supplement company will require that the new applicant complete the MA questions on the Medicare supplement application and that he or she send a copy of his or her MA plan disenrollment notice, a copy of the letter that he or she sent to his or her MA plan requesting disenrollment, or a signed statement verifying that he or she has requested to be disenrolled from his or her MA plan. If an individual is disenrolling after the February 14 date, a copy of the applicant’s MA plan disenrollment notice will be necessary.

Involuntary Disenrollment

A Medicare Advantage plan cannot disenroll a member for any health-related reasons. However, a member in a Medicare Advantage plan may be, or must be, disenrolled from the plan for any of the following reasons:

  • permanently moving out of the service area;
  • temporarily moving out of the service area for an uninterrupted absence of more than six months;
  • losing entitlement or discontinuing enrollment in either Part A or Part B Medicare benefits or failing to pay Part B premiums as required;
  • filing false or deliberately misleading information during enrollment;
  • exhibiting disruptive behavior (the plan must first receive permission from CMS to disenroll for this reason);
  • allowing someone other than the enrollee to use the plan membership card;
  • failing to pay plan premiums after the plan has notified the enrollee that he or she has a 90-day grace period during which the enrollee can pay the premiums; or
  • dying.

 

4.6 - Summary

This chapter examined the elements of correct and incorrect marketing techniques. It also offered ways to avoid such faulty practices. If you know, remember, and follow the rules established by CMS and your MA companies, you will be successful, and the rewards of satisfactory customer service will follow.

Following is a sample Scope of Appointment as provided by CMS. Many MA/MAPD and PDP plans have been authorized to use modified SOA forms once they have been approved by CMS. These forms normally reflect only the products used by that particular company.

SoA_1.png

 

 

 

SoA_2.png

Notice: CMS has also approved a revised version of the SOA form that can be used by plan representatives for companies that do not offer PFFS plans, Medicare Cost plans, or MSA plans. In that version, those three items will be excluded from the SOA form illustrated above.

In addition, this revised SOA form will describe a Medicare point-of-service (POS) plan as “a type of Medicare Advantage plan available in a local or regional area that combines the best features of an HMO with an out-of-network benefit. Like the HMO, members are required to designate an in-network physician to be the primary health care provider. You can use doctors, hospitals, and providers outside of the network for an additional cost.”

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