New Medicare Advantage Marketing and Sales Rules Will Help Better Protect Consumers

This blog is part of a series focusing on changes to Medicare’s private plan option (known as Medicare Advantage) aimed at strengthening the program to better serve the more than 30 million individuals enrolled in a Medicare Advantage plan today.

Recent evidence indicates a sharp increase in consumer complaints about the marketing and sales of health insurance plans under Medicare Advantage (MA), Medicare’s private-plan option. This rise in consumer grievances coincides with soaring MA enrollment in recent years, resulting in about half of the entire Medicare population (over 30 million individuals) enrolled in an MA plan today.

In a move intended to better protect consumers from confusing and potentially misleading marketing practices, the Centers for Medicare & Medicaid Services (CMS) recently revised federal rules governing how MA insurers advertise their plans. In addition to tightening regulations for insurers, this latest set of rules changes also aims to curb problematic tactics by the agents, brokers, and third-party marketing organizations (such as entities that generate sales leads for agents and brokers) involved in the promotion and sale of MA plans.

The latest standards — which become effective in October 2023, when advertising will begin for MA plans offered in 2024 — are an important step forward in protecting consumers from MA marketing and sales abuses. Yet, ensuring that people receive useful, accurate information to help them choose the Medicare option that best meets their needs remains an important issue that will require significant ongoing attention and further policy action.

The consumer cost of deceptive marketing and sales practices

While MA plans are required to cover the same services as the traditional Medicare option, most MA policies also offer additional benefits like dental or vision coverage. People who enroll in MA generally must get care from a provider in their plan’s network, and must follow their plan’s coverage rules, such as getting approval to see a specialist.

MA plans use a variety of marketing, advertising, and sales strategies, and people often enroll in plans through insurance agents and brokers. These marketing approaches have contributed to insurers reaching millions of consumers and increasing their shares in the lucrative MA market.

In response to the recent rise in consumer complaints about aggressive marketing practices, policymakers and consumer advocates have called for tightening of federal rules around MA marketing. An important focus has been the need to put in place more robust protections against enrolling individuals in an MA plan without their full understanding of the implications of their decision or signing people up in a plan that is not suitable for their needs. For example, experts have raised the alarm that marketing schemes to lure people into an MA plan even though their clinician is not covered have become more widespread. Seeing a doctor or nurse who is out-of-network means MA enrollees’ care may not be covered or that they must pay more out of pocket. Other concerning practices include inaccurate information emphasizing supplemental benefits for which the individual is not eligible or that are not available in the person’s particular location, misleading ads resembling official mailings from federal agencies that can cause some consumers to confuse the private companies with the traditional Medicare program, and numerous unsolicited sales calls from brokers and insurance agents.

Holding responsible parties to a higher standard

This year’s rule changes are the latest in recent efforts by CMS to bolster federal guidelines for how health insurers can communicate about and market their MA plans. Previous changes strengthened rules that hold MA insurers accountable for improper agent and broker activities (where many of the consumer complaints originate), required MA insurers to maintain oversight of agent and broker activities, and imposed more stringent requirements on third-party marketing organizations. This year’s revisions to the MA marketing rules build on those and other existing regulations to increase oversight of MA plan marketing.

Among its key provisions, the latest guidelines make clear that supplemental benefits cannot be advertised in areas where they are not available, require MA plans to notify their enrollees each year that they can opt out of phone solicitations, and prohibit the use of Medicare’s name or logo in a misleading way (as has been the case in some television ads and mailings).

Other changes have the potential to help protect people from inappropriate enrollment in an unsuitable coverage option by requiring MA insurers and agents to gather pertinent information (such as an individual’s preferred health care providers and health care needs) when discussing their plan choices and explain to prospective enrollees that their current coverage will end once they enroll in an MA plan.

Finally, many consumers could benefit from new rules specific to agents’, brokers’ and third-party marketing organizations’ conduct. For example, sales agents can only call potential enrollees within a year of a person first asking for information.

More action needed to strengthen beneficiary protections

The new rules are a significant step in the right direction, but more is needed to make sure that MA marketing efforts are not misleading or harmful to consumers.

For starters, the new guidelines will help consumers only if they are followed. An important first step will be for federal agencies to develop effective monitoring mechanisms and to use their enforcement authority to hold insurers and other entities accountable for inappropriate marketing of their plans. Key to this effort will be to continue improving coordination between the federal government, which oversees MA plans, and state governments, which oversee agents and brokers and receive consumer complaints about Medicare-related marketing. Together, these efforts could go a long way to address problems with MA marketing in a timelier manner and to stop inappropriate marketing practices before they cause harm to people with Medicare.

Finally, despite the progress made by these new consumer protections, additional policy improvements will continue to be needed. For example, improved transparency about agent, broker, and third-party organizations’ compensation and financial incentives could help better inform consumer decision making. Also critical is equipping consumers with clearer information about available options to lodge a complaint about problematic marketing practices. In addition, given widespread confusion among consumers evaluating their Medicare coverage options, increasing access to unbiased sources of information — including through greater promotion of and funding for State Health Insurance Assistance Programs — is essential to helping consumers navigate Medicare marketing information.

As the number of people who choose Medicare’s private plan option continues to grow, it will become even more important for the federal government to be vigilant in protecting consumers from troubling marketing practices. This will help ensure that older adults are best equipped to make the coverage decisions that best meet their needs.