State to investigate Medicare firms

Illinois is investigating two companies that sell Medicare drug and managed-care plans after receiving numerous complaints by seniors alleging high-pressure sales tactics and other marketing abuses, state officials said Friday. Earlier this year, the Illinois Division of Insurance fined another company, Humana Insurance Co., $500,000 after finding that unlicensed agents were selling Medicare plans on behalf of that firm. The state's actions come as federal authorities respond to a chorus of consumer complaints over marketing practices for two types of private Medicare plans with 25 million members: Medicare Part D and Medicare Advantage. Proposed federal regulations, announced Thursday, would prohibit salespeople from making cold calls on seniors or going door-to-door in neighborhoods or apartment buildings in efforts to "cross-sell" products to that population. The rules also would prohibit insurance agents from soliciting inside medical clinics, senior centers or assisted living centers. Medicare Part D plans cover the cost of seniors' prescription drugs; Medicare Advantage plans replace traditional Medicare with comprehensive, managed care-style insurance products. Together, they represent more than half of Medicare's 44 million members nationwide. In Illinois, the Division of Insurance has received "hundreds of complaints" from consumers who say they were subject to high-pressure sales tactics, didn't understand what they were buying, given inaccurate information, or wrongly enrolled in plans they didn't want, said spokeswoman Susan Hofer. Insurance agents receive high commissions for selling the Medicare plans, and that's fueling the problem, the state division's director, Michael McRaith, told a Congressional committee earlier this year. In a statement Friday, he argued that states need more authority to monitor Medicare Advantage plans. "In Illinois, our seniors need active and informed enforcement of standards which the federal government simply cannot and does not enforce. Seniors have complaints that are unanswered, swallowed up or lost in the federal government's inefficiency," McRaith said in the statement. Yet, "as of now, the federal government has denied us the authority to do what we know is needed," he continued. Under legislation proposed last year by Sen. Herbert Kohl, D-Wis., the National Association of Insurance Commissioners would curb the potential for abuse by developing standardized marketing requirements for Medicare Part D and Medicare Advantage plans. Similar requirements were set in the 1990s for Medicare supplemental plans that cover co-payments and deductibles after well-publicized marketing abuses in those programs. According to a recent survey of state insurance departments, 39 of 43 states report receiving consumer complaints about alleged marketing abuses related to Medicare Advantage plans. In March, the insurance industry called for stricter marketing standards, including most of the measures proposed Thursday by the government.