Medicare Private Plans Subgroup
Testimony of Mary Jo Hudson, Director of the Ohio Department of Insurance
Before the Senior Issues (B) Task Force
Health Insurance and Managed Care (B) Committee
Public hearing on the Regulation of Medicare Private Plans
Tuesday, September 11, 2007
Hall of States, 444 North Capitol Street NW, Room 333
Washington DC 20001
Good morning fellow task force members. I’m Mary Jo Hudson, Director of the Ohio Department of Insurance, an appointed office I’ve held since January 2007. I appreciate the opportunity to speak before you today to share the experiences we’ve had in Ohio with Medicare Advantage Plans and to express why I think restoring state regulatory authority over these programs would benefit consumers.
In Ohio, our number one priority is to protect insuranceconsumers and promote a healthy insurance market.Along with my staff of over250 dedicated individuals,we work diligently to meet this goal.
As of September 1 this year, our office has fielded more than 112,000 calls to our consumer assistance division, plus an additional18,000 calls to our Ohio Senior Health Insurance Information Program (OSHIIP).
We license and regulate the activities of more than 220,000 agents, monitor the financial solvency and market conduct of more than1,700 insurance companies and 17,000 insurance agencies.
The 29 staff members in ourfraud and enforcement division respond to more than1,800 insurance fraud and enforcement referrals each year.
We act swiftly and aggressively on behalf of all policyholders against any carrier, agent or agency that has acted unlawfully or otherwise not delivered on their promise to policyholders.
As a rule, insurance departments nationwide receive a multitude of consumer complaints about the Medicare program. Ohio is no different.
In many instances, the complaints we receive are routine…but increasingly we are fielding consistent complaints from consumers about the marketing and sales of Medicare Part D and Medicare Advantage.
As of August 1, we had received about 16,000 calls this year alone from consumers who need information about Medicare Part D and Medicare Advantage options.
Although our tracking system doesn’t separate Part D and Medicare Advantage Plan complaints, we can estimate that about 75 percent of them involved Medicare Advantage Plans.
As of August 1, there were 142 formal written complaints filed this year with the Department related to Medicare Part D and Medicare Advantage.
Many complaints that we receive from seniors – and the family, friends or support workers for seniors – are about questionable marketing practices.
These confusing marketing practices often lead Medicare beneficiaries to enroll in a Medicare Advantage Plan without adequately understanding their choice to remain in traditional Medicare — or without adequate understanding of the consequences of their decision.
In some cases, beneficiaries think they are signing up for a Medicare Part D stand-alone drug plan or a Medigap plan to supplement their traditional Medicare – but instead they have enrolled into a Medicare Advantage plan.
In many cases, the beneficiary didn’t understand that he or she made this choice – or was not made aware of the implications of this decision. In the most troubling of cases, unscrupulous agents have enrolled beneficiaries with dementia into an inappropriate plan.
We recently helped an elderly couple resolve a dilemma with their Medicare plan. They had allowed an agent into their home, and the agent convinced them to enroll in the Insurer’s Choice PFFS, which they later discovered they couldn’t afford because of the co-pays and deductibles. Additionally, they were both very sick and found that their doctors didn’t even accept the PFFS plan. The Department worked with Medicare to get this couple back onto original Medicare with a stand-alone Part D plan.
In another situation, we received a call from an elderly gentleman with an employer retirement plan that received a letter from a Part D plan confirming his enrollment. He was confused about this letter. He told us that he had never enrolled in the Part D program because he had coverage through his retirement plan. It appears that the Part D plan had purchased a list of all the retirees and enrolled them into its plan without their knowledge. We referred the complaint to CMS since federal law ties our hands and does not allow us to regulate Part D plans.
This federal preemption is the reason that many plans and agents take advantage of seniors and the reason I am here today to express our concern.
As a result of our lack of enforcement authority, we are turning to grassroots efforts, as well. Our seniors in Ohio and across the nation deserve more than grassroots educational efforts to protect them from the bad actors out there.
We are working to leverage our relationship with senior advocacy groups across the state. We also have staff out in the field telling folks what we need to see in complaints against agents using questionable sales tactics – they need to get us the agent’s name, contact information and the company he or she represents in order for us to take action against the bad actors.
Specificity is the key. Unfortunately, when working with seniors, those agents seeking to confuse, or fade into the shadows, are more often successful than not.
Providing states with enforcement authority over the plans would provide us with more tools in our toolkit to limit such predatory sales practices that we hear about regularly, but are unable to address.
The Department’s Fraud and Enforcement division is currently processing 74 referrals from seniors related to agent sales practices for Medicare Part D prescription drug plans and Medicare Advantage plans.
Our Fraud and Enforcement division relies on plan information from CMS to conduct its investigation against agents who are engaging in illegal and predatory sales practices. We recently entered into an MOU with CMS to better facilitate this exchange of information to improve our enforcement efforts.
In fact, we just sat down with CMS representatives last week, and we will continue to communicate with them regularly in order to do all we can to improve our enforcement efforts. An important outcome of our meeting was establishing a plan for joint training sessions regarding our respective enforcement activities.
We are also working out a system for CMS to share agent complaint information and audit private fee-for-service with us. We have also established plans to meet by telephone and in person on a regular basis.
We must work with CMS since our enforcement authority is split, under federal law, between the agents and the plans.
In the past several months, we have initiated several additional measures to make sure that Ohio’s Medicare beneficiaries receive the protection to which they are entitled.
We have contacted each Medicare Prescription Drug and Medicare Advantage plan to inform them of their responsibilities regarding compliance to federal and state marketing guidelines.
OSHIIP staff and volunteers are now specifically documenting consumer complaints regarding stand-alone Part D and Medicare Advantage Part D plans.
Our OSHIIP new volunteer and update training sessions now include a segment on proper and improper sales practices.
We are developing a consumer brochure with tips about questions to ask, what to watch for and general guidelines.
We are also connecting our Fraud and Enforcement division with senior advocates and an OSHIIP team so everyone understands the information needed to build a case against the bad actors.
Ultimately, it is our hope that, by taking these steps, many of the marketing abuses we are currently seeing will further limited.
However, we need to be realistic. Seeking to weed out the bad actors, one agent at a time, among hundreds and thousands of Ohio-licensed agents, is like looking for a needle in a haystack.
If state insurance regulatory authority were restored over the plans, all of the stories you have heard about abusive marketing tactics would be prohibited by state law, monitored and questioned by state insurance regulators, and controlled by state-based insurance regulations.
We would no longer be looking for the needle in the haystack. Instead, we would be working with the plan, which hired the agent and is benefiting from his or her sales. It would provide the state with enforcement authority to ensure that consumers’ interests are protected.
Ultimately, I believe that by allowing states to assure that the plans are involved in state compliance efforts, many of the marketing abuses we are currently seeing would be reduced drastically.
Thank you again for this opportunity to share Ohio’s viewpoint on this issue, which affects many seniors nationwide. This problem must be solved. Thank you.
Ohio Department of Insurance10/28/2018Page 1 of 4