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Medicare plans focus of abuses

Sales agents take advantage of seniors, a Senate panel is told.

By STEPHEN NOHLGREN
Published May 17, 2007


Claiming that sales agents are misleading seniors about private Medicare plans, several state insurance commissioners asked Congress on Wednesday for more power to crack down.

"Right now I have more authority to deal with pet insurance than I do with seniors in Medicare plans," Oklahoma Commissioner Kim Holland told a hearing of the Senate Special Committee on Aging. Lack of state control has led to "virtual lawlessness in Oklahoma."

Georgia has arrested agents for forging signatures and signing up dead people, said insurance regulator Sherry Mowell.

Florida officials did not testify but said in interviews that abuse has also been widespread here.

"People go to free lunches and sign in and put down their Social Security number and all of a sudden they find themselves switched (into a private plan) and they don't know how it happened," said Ann Whiting, counselor for Florida's SHINE program, which helps seniors with insurance issues.

People discover the truth when their regular doctor refuses to treat them or when they can't fill a prescription that is not on the plan's formulary, Whiting said.

"We tell them, if they go to a free lunch, do not to put down their Social Security number," she said.

Whiting, one of SHINE's counselors in Pinellas and Pasco counties, said she fielded two or three sales complaints a week during early part of this year.

One woman went to a health fair and stopped by a Medicare plan's booth, Whiting said. "The agent said, 'Please sign this. If you don't sign, my boss won't accept that I talked to you.' She didn't read it and she was signing herself up."

Particularly vulnerable are poor older and disabled people on Medicaid and Medicare. They have no Part B Medicare premiums, no deductibles and very low co-payments for services -- as long as they stay on traditional Medicare. On many private plans, they can end up paying $30 every time they see a doctor.

Kathryn DeLong helps poor residents of St. Petersburg's Lutheran Apartments navigate Medicare and other social services.

"After the whole plan fiasco, I don't let insurance people in the building anymore. They call and ask to make a presentation and I say 'We don't need any more talk about insurance,'" she said.

One resident signed up for a new product called "private fee for service," where plans pay doctors and hospitals on a per-visit basis, rather than having an HMO-like network.

An agent told the resident "he could see any doctor or go to any hospital and any pharmacy he chose," DeLong said. Unfortunately, many health care providers won't accept those payments.

"His bills were not getting paid. He could not get his prescriptions filled, and lo and behold, he found out he could not go to any of his providers."

DeLong declined to identify the agents or companies involved.

Florida's Office of Insurance Regulation has received 148 complaints about Medicare sales, mostly since late 2006, said investigations chief Barry Lanier.

"The most common pattern is people not realizing they are disenrolling" from traditional Medicare, he said. "All it takes is a signature."

With most insurance, states can hold companies responsible for agent conduct. But when Congress rewrote Medicare law three years ago, the federal government got sole authority over how private plans conduct sales.

States can sanction agents but not companies. Like state regulators who testified Wednesday, Florida insurance regulators would like more power to regulate companies when sales abuses become a pattern, said senior economist Ray Spudeki.

"We don't like the idea of Florida consumers being taken advantage of," Spudeki said.

Sen. Herb Kohl, a Wisconsin Democrat who chairs the aging committee, said he would draft legislation to expand state authority. "This is simply unacceptable," he said.

Medicare HMOs have been around for decades. Because the government pays private plans up to 19 percent more per person than on traditional Medicare, HMOs often provide extra benefits like eyeglasses and hearing aids.

Recently, new types of private plans have complicated Medicare's landscape, including drug plans, PPOs and the new "private fee-for-service" plans.

In addition, Medicare now locks people into their choice for most of the year. In the past, people could switch back to traditional Medicare within weeks if a private plan displeased them.

That change created a marketplace where agents could earn sizable commissions, because anyone who signed up could be stuck until the end of the year.

Abby Block, director of Medicare's Center for Beneficiary Choices, told the senators that "the vast majority" of people are satisfied with their private plans, which now cover one-fifth of the people on Medicare.

She acknowledged that sales abuses have occurred, but said the federal government needs to maintain its oversight. Next year, she said, Medicare will require "specific, unambiguous language in all marketing materials" that describe what private plans cover and don't cover.

Companies also will have to call everyone who signs up, to make sure they understand their plan and really want it.

"We believe very strongly we need to get this under control," Block said. "But I don't want to see the whole program disparaged because of the behavior of some bad apples."

Fast Facts:

If you need help

- Florida's SHINE program helps seniors with insurance issues. Call toll-free 1-800-963-5337 between 8 a.m. and 5 p.m. and ask for SHINE. Someone will take your name and a volunteer will call you back.

- To report sales abuses, contact the Florida Office of Insurance Regulation consumer hotline at 1-800-342-2762.

- People who have been enrolled in a private Medicare plan through fraud or deceit may seek a special waiver to switch out of that plan, even after regular enrollment has closed. Call Medicare at 1-800-633-4227 and ask for an agent. If the person answering does not know about this appeal process, insist on talking to a supervisor.