Senate Finance Targets Medicare Advantage Brokers

Stat News / By John Wilkerson
 
Senate Finance Committee members from both parties took aim Wednesday at insurance brokers that sell plans for large Medicare Advantage insurers.
 
Older adults at times have more than 100 plan options, and brokers help them choose the right one. But brokers can be incentivized by large insurance companies to aggressively sell plans that are a poor fit for the Medicare beneficiaries they’re supposed to help. Brokers also sometimes collect private information that they sell to multiple insurance companies. Those brokers tend to have a national scope, just like the large insurers they represent, compared to the independent, local brokers.
 
“They are big private marketing companies in the middle between seniors and their coverage,” Chairman Ron Wyden (D-Ore.) said.
 
There were two main goals of the hearing: to protect seniors and disabled beneficiaries from unscrupulous marketing tactics, and to give small insurance companies a level playing field to compete with large, national insurers.
 
Wyden released a report a year ago that highlighted the aggressive marketing practices that brokers sometimes use, and he said he plans to investigate more.
 
At the heart of the problem is the large amount of money that big insurers pay brokers for 
enrolling seniors in their plans, according to Krista Hoglund, CEO of Security Health Plan in Wisconsin. Medicare places a $611 cap on the commission that brokers can earn from enrolling a beneficiary into a Medicare Advantage plan, but large insurers often pay additional fees to brokers that can add up to more than $1,300.
 
To sell those plans, brokers flood seniors with phone calls and marketing materials that misrepresent the value of those plans. One tactic, which Wyden called “ghost networks,” involves promising older adults access to providers who aren’t taking new beneficiaries. Brokers will even sometimes switch seniors from one plan to the next without the beneficiary’s knowledge, Hoglund said.
 
Hoglund recommended making insurers and brokers disclose how much brokers are paid to sell plans. Once Medicare has that information, it should standardize and limit broker compensation.

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