The Biden administration is proposing a fresh crackdown on private health plans that have grown to cover half of the people on Medicare, restricting marketing practices as part of an effort to help consumers in the federal insurance system for older and disabled Americans get the health services they need.
Under a draft rule issued by the federal Centers for Medicare and Medicaid Services, Medicare Advantage plans would be required to work harder to encourage customers to make use of extra benefits available to them, rather than the companies merely invoking them as a selling point.
The proposal also would help Americans with Medicare drug benefits gain access to biosimilars, less expensive versions of biologic drugs made from living cells or other organisms.
Older Americans choosing Medicare coverage "should not be subject to practices playing fast and loose with marketing rules," Health and Human Services Secretary Xavier Becerra said during a press briefing to outline the proposal.
The proposed rule marks the second time in a year that the administration has sought to stiffen regulation of Medicare Advantage, the private-sector version of Medicare that has soared in popularity in recent years. Late last year, HHS proposed a different set of changes that mainly focused on restricting predatory marketing practices, including deceptive advertising, by insurance brokers and agents trying to sell the private health plans to people on Medicare. That rule became final in April.
As President Biden seeks a second term in office, his senior aides are portraying the proposal as an aspect of the "kitchen-table economics" they are hoping will appeal to voters in the election a year from now.
Medicare Advantage was created in 2003 as part of the same federal law that added prescription drug benefits to Medicare for the first time since the vast insurance program came into existence in the 1960s as part of President Lyndon B. Johnson's "Great Society." The traditional version of Medicare allows people 65 and older and those with disabilities to choose their own doctors and pay monthly premiums for outpatient care. The managed-care plans in the privatized version often offer extra benefits popular with older patients, such as vision and hearing services, but those plans usually restrict patients to a narrower network of health-care practitioners who have signed up to accept patients in a given plan.
When Medicare Advantage was created, replacing a few earlier forms of managed-care Medicare, the Republicans who held a majority in both chambers of Congress insisted the government pay the private plans more than the reimbursement rates under original Medicare, as an incentive for more plans to take part.
The incentive has succeeded. For the first time this year, Medicare Advantage enrollment accounts for slightly more than half of all Medicare beneficiaries - nearly 31 million people with the private plans - and the typical person on Medicare has about 40 private health plans from which to choose, a record number of options, according to KFF, a nonpartisan health-policy organization.
As its popularity has grown, the privatized version of Medicare has attracted increasing scrutiny, including from congressional Democrats.
"This builds on underlying concerns about confusion in the marketplace and aggressive marketing by insurers," said Tricia Neuman, a senior vice president at the health policy organization KFF who directs its program on Medicare policy.
Specifically, the proposed rules would establish guardrails more firmly restricting the compensation of insurance agents and brokers who advise Medicare customers, setting a fixed amount for such advice, no matter which plan a consumer chose. Currently, there are caps but some companies pay agents and brokers lavish extras, such as golf trips for steering business to them, Lael Brainard, director of the White House National Economic Council, told reporters during Monday's briefing.
In addition, the rule change would require private health plans to notify individual Medicare customers halfway through a year what supplemental benefits remain available to them. According to an HHS fact sheet, a typical Medicare Advantage plan offers 23 health benefits not found in traditional Medicare, but usage is low. The proposal's goal is to "ensure that the large federal investment of taxpayer dollars in these benefits is actually making its way to beneficiaries and are not primarily used as a marketing ploy," the HHS document says.
Another facet of the proposal would require private Medicare health plans to expand access to mental health services by expanding the supply of behavioral health practitioners in offices and clinics, including marriage and family therapists and addiction treatment specialists.
The rule change would also affect coverage under Medicare Part D, as the program's drug benefits are known. The proposal would go further than current federal rules in requiring plans selling the prescription drug coverage to help patients more readily gain coverage of biosimilar products.
The proposed changes announced Monday are being issued during the annual Medicare enrollment period, which runs from mid-October to December 7. The proposal will be open for public comments for 60 days. A final version would take effect sometime next year, in time for next fall's enrollment period for 2025 Medicare coverage.