WASHINGTON — Reform proposals targeting deceptive marketing practices that private insurance companies use against seniors and Americans with disabilities to turn profits appeared to receive broad bipartisan support from members of the Senate Committee on Finance in a hearing Wednesday.
The committee discussed Medicare Advantage plans, with a focus on improving senior experiences by increasing their access to accurate information on the plans before the open enrollment period for the program begins.
Medicare Advantage plans are health insurance plans offered by private insurance companies that have been approved by Medicare. Medicare pays these independent providers to identify the best plan for each recipient and cover their respective Medicare benefits.
The program has been plagued, however, by marketing middlemen who have pocketed an estimated $6 billion of the $4.3 trillion the U.S. spends on health care each year. According to the Committee Chair Ron Wyden, D-Ore., these “slimy” and “sleazy” middlemen turn these profits by selling seniors “the wrong plans.”
Committee members each promised to address deceptive insurance practices in different ways, with several senators mentioning pending pieces of legislation and others suggesting increased aid or action.
Chairman Wyden expressed his desire to get “more value” out of the federal health care budget, partially by cutting out the middlemen, also called Pharmacy Benefit Managers, or PBMs.
Sen. Elizabeth Warren, D-Mass., said for-profit health insurance companies that offer coverage to seniors through the Medicare Advantage program “drown out competition” from smaller health insurance programs offering “a better product.”
She added that, in theory, these private providers “should compete on the merits of the coverage they offer,” but instead they lure seniors into the “wrong plans” with the greatest financial incentives for the providers themselves.
“These companies exaggerate benefits, they claim that seniors can keep seeing doctors that are actually out of network and they deceive seniors about how much they’ll spend for out-of-pocket care,” Warren said. “This is harmful to seniors.”
The federal government pays private insurance companies a set amount of money to fund Medicare Advantage plans, but this number can increase based on the degree of a beneficiary’s sickness. Warren decried insurance companies’ practice of upcoding, which consists of “stuffing” a beneficiary’s medical records with as many diagnosis codes as possible to make them look more sick to the government.
According to Warren, the insurance companies can then pocket the money they don’t spend on care as profits, and use it for more marketing to drown out the smaller, less exploitative insurance options. She said government watchdogs have “uncovered hundreds of billions of dollars in overpayments that result from insurance companies gaming the system.”
Sen. Catherine Cortez Masto, D-N.M., said she is astounded by the issues plaguing the Medicare Advantage program, but not surprised by them. She said, “anytime there is an opportunity to make a profit,” people will inevitably take advantage of that opportunity.
Cortez Masto also emphasized the importance of addressing both deceptive marketing and inflated broker fees.
“The goal here is to make sure this is not as complex for seniors, so they can access it and keep money in their pockets, and not some other predator who is out there,” Cortez Masto said.
The federal government has taken recent steps to reduce deceptive marketing to seniors signing up for Medicare, including the Medicare Advantage and Part D “final rule,” released by CMS in 2023, which increased marketing oversight. This rule explicitly prohibits advertisements referencing Medicare in misleading ways that increase enrollments.
Christina Reeg, the director of the Ohio Senior Health Insurance Information Program, said she has been “cautiously optimistic” that these recent steps, many of which go into effect in 2024, will be successful. She added that she has seen “a bit of a difference” already in online advertising, but still believes that more government action is necessary to accelerate these efforts.
Chairman Wyden and Committee Ranking Member Mike Crapo, R-Idaho, emphasized the importance of cracking down on “ghost networks”–inaccurate health provider directories that include multiple providers who are not capable of covering the patients they claim to serve and thus prevent many Americans from getting healthcare.
Cobi Blumenfeld-Gantz, co-founder and CEO of Chapter, a consumer-first Medicare data and advisory service, said there is an enforcement issue on policy that bans “true ghost networks” that are “straight fraudulent.”
While questioning Blumenfeld-Gantz, Sen. Crapo said protecting seniors’ privacy during the open enrollment period for Medicare Advantage plans should be a priority. He added that Medicare and Social Security numbers are often used to “file false claims” or “enroll beneficiaries in plans without their consent,” making the privacy of vulnerable beneficiaries all the more important.
“Federal regulation prohibits marketers, whether calling on behalf of a plan or a third party, from asking beneficiaries for this information,” Crapo said. “However, a recent survey of seniors over the age of 65 found that 10% of all respondents were asked for their Medicare or social security number.”
Crapo then asked Blumenfeld-Gantz whether there is ever a time when a broker or marketer would need this data outside of the formal enrollment process. Blumenfeld-Gantz responded, telling the senator there should not be.
Later in the hearing, Sen. James Lankford, R-Okla., spoke about the importance of working on “both sides” of the issue, helping seniors who fall victim to ghost networks and providers who are repeatedly denied by Medicare Advantage.
“If they’re on the provider list but they’re not a provider that’s out there, that’s frustrating in many ways,” Lankford said. “But if you are a provider and you’re told that Medicare covers this and you just get an automatic denial for it every time, that also disincentivizes them to be able to be a provider.”
The Medicare Open Enrollment Period occurs annually from Oct. 15 to Dec. 7, which makes this hearing especially timely. Several senators, including Sen. Marsha Blackburn, R-Tenn. and Sen. Maggie Hassan, D-N.H., emphasized the urgency behind ensuring seniors are well informed before deciding on a healthcare package.
Sen. Warren closed out the hearing by calling on the Centers for Medicare and Medicaid Services to do more to protect seniors and people with disabilities from deceptive practices.
“I appreciate the steps that CMS has already taken, but they need to go further by making the Medicare Advantage insurers publish accurate data on patient care and out-of-pocket costs and cracking down on practices like upcoding, doing all of this to the fullest extent of their authority,” Warren said.