From October to December, airwaves are flooded with advertisements for Medicare Advantage plans, urging beneficiaries to call and review their options.
Though CMS has implemented new restrictions on the types of advertisements third-party agencies can air, the federal agency and some lawmakers are eyeing further restrictions.
A KFF analysis published in September found that around 9,500 Medicare Advantage ads aired on television each day during the 2022 open enrollment period. Some of these ads featured misleading tactics — displaying a government-issued Medicare card or encouraging enrollees to call a "hotline" other than CMS' official 1-800 Medicare number.
CMS put in place new regulations that took effect for the fall 2023 open enrollment period, including:
- Prohibiting advertisers from using Medicare cards and logos in a way that could be misleading to beneficiaries.
- Barring advertisements that do not mention a specific Medicare Advantage plan.
- Requiring television ads to be approved by CMS.
The agency has rejected at least 300 ads submitted for approval this year, most of these from third-party marketing agencies, Politico reported Oct. 18.
Beyond television advertising, many Medicare-eligible people receive daily phone calls, mailers and are even approached in person by third-party marketing organizations, a 2022 report from the Senate Finance Committee found.
"As seniors experience Medicare's Annual Open Enrollment … our investigators have found marketing middlemen are the latest sleazy set of private sector scoundrels targeting seniors on Medicare Advantage," Senate Finance Committee Chair Ron Wyden said at an Oct. 18 hearing.
More regulations on the horizon
In a proposed rule issued in November, CMS proposed more regulations aimed at curbing aggressive sales and marketing tactics in the program, including:
- Prohibiting insurers from paying volume-based bonuses to third-party marketing organizations for steering a certain number of enrollees to its plans.
- Requiring plans to issue a mid-year notice to enrollees, informing them of any supplemental benefits they have access to in their plan that they have not used, to prevent benefits from being used as marketing tactics only.
- Restricting marketing of supplemental benefits for chronically ill enrollees by requiring ads to disclose these benefits are only available to beneficiaries with certain chronic illnesses.
In addition to adding more regulations to advertising, CMS is also proposing stricter caps on broker payments. The proposed cap limits all compensation plans can pay brokers at $632, regardless of the plan a beneficiary enrolls in. This cap is currently $601, but plans can also pay administrative fees and other payments on top of this cap to brokers.
In an Oct. 18 Senate Finance Committee hearing, Security Health Plan CEO Krista Hoglund told lawmakers steep marketing and broker compensation payments make it difficult for smaller plans to compete with larger players.
"We have been forced to make tough decisions between adding extra benefits for seniors and lowering costs or increasing our administrative budget to keep pace with national competitors in order to retain and grow enrollment," Ms. Hoglund said.