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Spurred by Hearing, Industry Promises to Improve Training of Insurance Agents

WASHINGTON - At a hearing held today by the U.S. Senate Special Committee on Aging, Chairman Herb Kohl (D-WI) challenged the sales and marketing practices employed by insurance agents selling Medicare Advantage plans. Medicare Advantage plans, which are private plan options offered to Medicare beneficiaries as an alternative to traditional Medicare, now account for nearly 20 percent of total Medicare plans and are an increasingly profitable enterprise for many corporate providers. The Committee's investigation has uncovered such questionable sales practices as removing seniors from traditional Medicare without their knowledge, signing seniors up for plans they cannot afford, and misleading seniors regarding which physicians and hospitals accept the plan. Officials representing the state insurance commissions from Wisconsin, Oklahoma, and Georgia offered testimony about complaints they have received concerning the aggressive, and at times deceptive, marketing practices of Medicare Advantage sales agents.

"Widespread confusion, and in some cases outright misrepresentation and fraud, have been associated with the sale of these plans. Our investigation has revealed a disturbingly consistent picture, one which only seems to be growing," Chairman Kohl said. "Too many seniors are paying a terrible price for those frauds, misunderstandings, and outright ignorance. This is simply unacceptable."

Based on current law, the Centers for Medicare and Medicaid Services (CMS) has exclusive authority to investigate and discipline plans marketing and selling Medicare advantage products, leaving states only with the power to investigate and enforce violations against individual insurance agents. Abby Block, Director of the Center for Beneficiary Choices at CMS, offered testimony about this federal-state oversight relationship, one which has left a sizable enforcement gap and has exacerbated the problems found by the Committee.

In response to this enforcement gap, Chairman Kohl announced his intention to work with the National Association of Insurance Commissioners and other stakeholders to develop legislation that would give states expanded authority to oversee plans and agents. Kohl also stated the Committee's intention to continue exercising oversight and investigation of the industry and its sales practices.

"If more hearings are necessary to hold feet to the fire, we will hold them," said Chairman Kohl. "Cleaning up these marketing and sales practices is a priority of mine. Let me be clear, this issue will not go away after this hearing."

Karen Ignagni, President and CEO of America's Health Insurance Plans (AHIP), revealed during testimony today a new initiative to strengthen training for its members' agents and brokers. AHIP represents approximately 1,300 health insurance plans. Additionally, executives from Humana Inc., UnitedHealth Group, and WellCare-all of which are corporate providers of Medicare Advantage plans-announced efforts to reform their marketing and sales practice guidelines during their testimony.

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