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Seven Medicare Companies to Stop Marketing Temporarily

Seven insurance companies have agreed to temporarily stop marking private Medicare plans after allegations surfaced that their agents were using illegal or unethical sales tactics. The companies – United Healthcare, Humana, WellCare, Universal American Financial, Coventry Health Care, Sterling Life Insurance, and BlueCross BlueShield of Tennesee– will not resume marketing the plans until they meet six basic conditions.

This stop in marketing comes after months of concern over the tactics used by the companies. Between 2003 and 2007, there were nearly 3000 agent complaints lodged against Medicare private fee-for-service salesmen. The sales halt comes in the middle of a Congressional hearing on the topic. Congress has uncovered documents detailing unethical practices in at least 39 different states. Some of the practices included enrolling dead or mentally handicapped people into Medicare programs, impersonating Medicare personnel, and using personal information from stolen medical records.

Robert Hayes, president of the Medicare Rights Center, says, “It’s time the administration paid attention to this. We’re swamped with people reporting abuse, fraud, and misrepresentation.”

The conditions include the following:
- Plans must not guarantee that a doctor will accept the patient
- Agents must pass a written test on how the plans work
- Companies must call prospective beneficiaries to ensure that they know how the plan works
- Companies must make sure doctors know how the plans work

These seven companies account for about 90% of the Medicare beneficiaries enrolled in fee-for-service plans. The companies will still be allowed to market to current customers.

Fee-for-service plans offer extra benefits in exchange for reimbursement from the government that is about 19% higher than traditional Medicare coverage, according to the Medicare Advisory Committee. The services typically require a co-pay and members of these plans may seek care from any provider who receives payment for Medicare covered services.

Unlike the traditional plan, providers do not bill Medicare, but bill the private plan. The private plan, in turn, pays the bills from money they receive from Medicare on a monthly basis.

For more information on private fee-for-service plans, you can read Medicare’s guide here.