Testimony on
The Regulation of Medicare Private Plans
By
Lois Wattman
Senior Policy Counsel
Blue Cross Blue Shield of Minnesota
Before the
National Association of Insurance Commissioners
September 11, 2007
Good Afternoon. My name is Lois Wattman. I am Senior Policy Counsel for Blue Cross Blue Shield of Minnesota. My plan appreciates the opportunity to share our concerns with you about proposals that could lead to new state oversight of certain aspects of the Medicare Advantage program.
Blue Cross Blue Shield of Minnesota is a non-profit health plan that serves over 2.9 million members. It provides Medicare coverage to over 225,000 Minnesotans through a variety of health and prescription drug product options including Medigap, a Medicare cost contract, a fully integrated Medicare/Medicaid dual eligible Medicare Advantage Special Needs Plan, Medicare Advantage Regional PPO products and a stand-alone Medicare Part D prescription drug product. For purposes of this testimony, I will focus my remarks on our current Medicare Advantage cost contract and our Regional MA PPO and PDP products. These products will highlight my plan's concerns about the impact of dual regulation on our products and members.
Blue Cross has a small membership in a cost contract which is a Medicare Health Plan product that is not subject to the same comprehensive federal preemption provisions as other MA products. This means that this product is subject to dual regulation at the state as well as federal level. For example, while CMS reviews the budget for the cost contract, premium rates are approved only by the state. In addition, since our cost contract product provides benefits in addition to Part B benefits, it is subject to state mandates. However, critical member publications including the Evidence of Coverage and enrollment or application forms are required to be based on CMS Medicare Advantage model language yet are subject to approval by both the state and our regional CMS office. This dual approval process has created problems the past two years in assuring that Blue Cross is able to meet the CMS model language requirements while assuring our members receive timely notice as required under the MA regulations.
For example, this last year Blue Cross received CMS approval for its cost contract Evidence of Coverage (EOC). We then submitted the approved EOC to the Minnesota Department of Commerce for approval. Upon review, our Department requested language changes relative to clarification of a state mandate as well as several modifications to model CMS EOC language. Without these changes, the Department would not approve the EOC. If these changes had been made, the EOC would have had to be sent back to the CMS regional office for another approval and Blue Cross would not have been able to deliver the EOC to the Medicare member by the CMS regulatory deadline of January 31. Ultimately, we reached an agreement with our Department of Commerce whereby the EOC was "Approved" with the additional changes to be sent separately to members in an Amendment. We received CMS approval of those changes in March 2007 and mailed the amendments to our members. This resulted in two mailings, additional administrative time and expense, and confusion for our members.
While we were able to cooperatively resolve this issue with our Department, this example raises serious concerns about the implications of increased state regulatory involvement in the Medicare Advantage and stand-alone PDP programs. These concerns are particularly acute for a plan like Blue Cross Blue Shield of Minnesota that participates in the Medicare Advantage and PDP programs through regional options that are offered in multiple states where CMS rules require a uniform premium and benefit plan.
One of the unique features of the Medicare Modernization Act (MMA) was the introduction of regions for the delivery of both MA and PDP products. There are 26 CMS Regions for PPOs and 34 Regions for PDPs. The regional concept was adopted to encourage the development of Medicare product offerings in parts of the country where they had previously not been available. While some regions are composed of a single state, several, including ours, cross multiple states. In fact, our region covers seven states. All member materials, including marketing materials, are the same across the entire region because the product offered by a company must be the same benefit design and price for all the beneficiaries living in the region. Under the Medicare Modernization Act and supporting regulations, there can be no modifications or differences in benefit interpretation within the regional product. The products must be uniformly administered across the entire region. These same statutory and regulatory requirements do not apply to a Medicare Advantage plan that participates in the program as a local plan.
My plan is a member of the Blue Cross Blue Shield Northern Plains Alliance that sponsors regional PPO, MA-PD and PDP options in the seven state region composed of Nebraska, Iowa, Minnesota, North and South Dakota, Montana and Wyoming. This is the largest Medicare PPO and PDP region in the country. The Northern Plains Alliance is composed of the six Blue Cross plans that serve these seven states.
Blue Cross believes that the implications of increased oversight and authority for state regulators in a Medicare multi-state regional plan would make it extraordinarily difficult for the regional plan to meet its statutory and regulatory requirements. For example, the House of Representatives CHAMP Act proposes that the NAIC develop model regulations governing marketing, advertisement and other related protections. Based on the recommendations of an NAIC workgroup, the Secretary of HHS would then publish these proposed guidelines which would then need to be adopted by the states. From experience, I have never seen a model regulation or law that the Minnesota Legislature did not think it could improve. As a participant in a seven-state region, I am confident that other policy makers in the region would feel likewise and it is highly questionable whether there would be consistent guidelines across our seven-state region. This would make it impossible for our Region to continue to meet the MA and Part D requirements of a product uniformly administered across the entire region.
Further, the CHAMP Act expands the role of state oversight and authority over plans relative to an array of issues. It is totally unclear to us how this would work in a seven state region. Would the regional Northern Plains Alliance plan be subject to seven individual regulators? What happens when they don’t agree? Who would have the final decision-making authority? How can the CMS timelines be met when multi-state regulators are involved in reviewing or approving the materials? Blue Cross believes that federal preemption is critical to the long-term success of the Medicare Advantage and PDP program, particularly in a multi-state region.
Blue Cross Blue Shield of Minnesota is sympathetic to concerns that state regulators have articulated regarding certain market conduct in the past. While the Northern Plains Alliance offers plans across the entire region, each individual Blues plan is responsible for marketing and sales activities within their state including agent/broker relationships, training and monitoring. The current NPA on-line broker and agent training component is standardized across the region. To date, Blue Cross Blue Shield of Minnesota has not received any complaints from either CMS or the Minnesota Department of Commerce regarding the marketing activities of any of our agents. In fact, our only Department inquiry was the result of complaints received by the Department from agents complaining that our training requirements were too robust.
We urge regulators to use the full authority they have to apply appropriate sanctions for agent and broker misconduct. We are hopeful that the Memorandum of Understanding with CMS will expedite the flow of information between the agencies and better assure compliance with marketing guidelines. The fact that all states have now entered into the MOU is clearly a step in the right direction.
Thank you for the opportunity to provide this testimony. I would be happy to answer any questions.