ALAN HEUMANN, SHIP DIRECTOR
LOUISIANA DEPARTMENT OF INSURANCE
TESTIMONY TO THE
NAIC Medicare Private Plans Subgroup
SEPTEMBER 11, 2007
Thank you, Commissioner Dilweg, fellow members of the subgroup and interested parties, for the opportunity to comment on the need for state regulatory oversight of federal prescription drug and Medicare Advantage plans. As both an insurance regulator and a SHIPDirector, I firmly support earlier Congressional testimony provided by Commissioners Dilweg, Holland and others including Kathleen Healey, the SHIP Steering Committee Chair and Director of the Alabama SHIP, who testified at the House Energy and Commerce’s Subcommittee on Oversight and Investigations. Their testimony highlighted the experiences of many Medicare beneficiaries and discussed the issues that state regulatory agencies are grappling with as companies and agents market these plans to our citizens.
As one of the manystates responding to the NAIC’s surveyon marketing practices of Medicare Advantage and Prescription Drug Plans, we were not surprised at the similarity of experiences among the responding states when the survey results were released. Indeed, duringthe Annual SHIP Director’s Conference in June, many SHIP
1
Directors shared similar experiences and echoed the same concerns.SHIP directors also discussed the disparity of commissions between stand-alone Prescription Drug and Medicare Advantage Plansas well as the growing number of plans and companies offering different benefits, formularies and provider restrictions with each new year. These issues are universal.
In Louisiana, we have seen complaints involving producers who enroll beneficiaries with Alzheimer’s Disease or other cognitive impairments without a personal representative present. Producers have enrolled dual-eligibles into plans they do not need. Producers have made misleading statements about competing plans or have gone so far to tell the beneficiary that they represented Medicare.It has been our experience that these complaints centered on producers new to Medicare Advantage or represented companies new to the Medicare Advantage or PDP market.As we investigate these complaints, it has become clear that many producers do not necessarily understand the very products they are selling. We have found that intensive initial and on-going producer training is needed on these products as well as the Centers for Medicare and Medicaid Services’ (CMS) marketing guidelines. State Insurance Departments are well-positioned to ensure that these producers understand their products and if they continue to misrepresent them, to take appropriate action.
SHIPs are on the front line in counseling and assisting Medicare beneficiaries on Medicare Advantage and prescription drug coverage, among other insurance concerns. At present, complaints against Medicare Advantage and Prescription Drug Plansare sent to the appropriate CMS Regional Office. If the complaint involves a producer, the beneficiary,or the SHIP acting on behalf of the beneficiary,files a complaint with their respective Insurance Departmentfor disciplinary action against the producer.
However,we have heard that some Insurance Departmentsare hesitant in taking disciplinary action on complaints against Medicare Advantage or prescription drug plan producers since the Insurance Departments are pre-empted from regulation of the companies. By providing Insurance Departments with oversight of the marketing practices of these very companies and the producers, it allows the states to better protect their citizens. In addition, such oversight wouldforge a closer relationship between the DOIs and SHIPs, particularly in those states where the SHIP is housed elsewhere than the State Insurance Department. SHIPs can quickly identify problems and refer them to the Insurance Department for action. Insurance Departments can utilize SHIPs to assist them in protecting the people they serve. This results in a strong partnership which better serves the citizens.
I applaud the actions taken by CMS to address plan and producer marketing issues since the NAIC survey was released. However, none of the solutions presented by CMS truly reach the heart of the problem. While Insurance Departments may proceed against producers, it is after the damage has been done and only addresses the producer, not the company. It does not stop a pattern and practice of a company in its marketing efforts. The company cannot be held accountable for the actions of its producers at the state level and as such, there is little incentive for the company to stop supporting these producers. The ability of Insurance Departments to regulate the marketing practices of these companies, using the Medigap model as a template, will go far in preventing these abusesfrom happening in the first place. Such state oversight will strengthen Medicare Parts C and D by promoting consumer confidence and creating a level playing field.
I believe that although CMS has the will, they do not have the expertiseor the manpower to successfully regulate these companies. This clearly is a job for state regulators as this is a primary function of a State Insurance Department. To draw a parallel, if someone is stopped for speeding on an interstate, it is nota federal agency such as the FBI that is charged with enforcing the speed limit or punishing the violator. It is state law enforcement that handles these duties. So should it be here. State regulators have proven under the Medigap model that such state oversight ofMedicare Supplement companies, products and producers strengthened the marketplaceas well as strengthen consumer confidence in the insurance product.
In developing this new regulation with all parties participating, we State Departments of Insurance can assist CMS and provide better use of resources. With apologies to former House Speaker “Tip” O’Neill, “All regulation is local.” As a regulator, I believe we should welcome this challenge.
Thank you again for allowing me to enter into the record.
1