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 SHIP Director,
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 many states responding to the NAIC’s survey on
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,
during the Annual SHIP Director’s Conference in June, many SHIP
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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 Plans as 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
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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 Plans are 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
Department for disciplinary action against the producer.
However, we have heard that some Insurance Departments are
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
would forge a closer relationship between the DOIs and SHIPs,
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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 abuses from happening in the
first place. Such state oversight will strengthen Medicare Parts C and
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D by promoting consumer confidence and creating a level playing
field.
I believe that although CMS has the will, they do not have the
expertise or 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 not a 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 of Medicare Supplement companies,
products and producers strengthened the marketplace as 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.
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