CMS Marketing Violations: A Cautionary Tale

  • Originally published November 23, 2010 , last updated April 3, 2018

Compliance is a constant point of focus for Medicare Advantage and Part D sales — especially during this time of year. But just in case you needed a reminder that CMS is always watching, see last week’s announcement of CMS sanctions on three Medicare health and drug plan sponsors — Health Net, Universal American and Arcadian — for violations of Medicare’s rules and regulations.

As a result of the sanctions, Health Net is required to immediately suspend marketing to and enrolling new beneficiaries into their Part D and Medicare Advantage plans. Arcadian and Universal American will be required to cease marketing to and enrolling beneficiaries on December 5.

These actions will not impact the one million beneficiaries currently enrolled in these three plans.

Health Net’s violations were identified during a CMS audit of the plan, which found that Health Net had improperly administered the Medicare drug benefit in its national prescription drug plan (PDP) and local Medicare Advantage Prescription Drug plan (MA-PD) contracts.

Sanctions were applied to Universal American’s MA-PD plans (not its stand-alone PDPs) because, according to CMS, “agents misled beneficiaries about network providers who were not actually part of the network or drugs that were not part of the plan’s formulary.”

CMS reported that Arcadian’s sanctions came for similar marketing violations, saying “sales agents were misleading beneficiaries about network providers and/or drug plan formularies.”

So of the three, Health Net was the only one where sanctions arose in response to an internal problem with the plan itself. The other two were due to actions on the part of agents marketing and selling the plans.

It would be a mistake to dismiss these as cases of “bad” agents who were intentionally misleading people to make a sale. Instead, look at yourself and ask “am I doing everything I can to make sure my clients understand the plan they’re buying and why they’re buying it?”

Make sure you’re using the CMS-approved sales presentation provided by the carrier and that you’re reviewing all disclosures from the enrollment kit. Many times with a $0 premium product, the consumer might decide the price is right and make their decision before they really know the particulars of the policy. This puts you in an unfamiliar position where you, as the salesman, need to hold the consumer back a bit and review the details with them to make sure everything is understood.

Make sure your clients understand:

  • Whether or not their drugs are included in the plan’s formulary
  • Whether or not their providers are included in the plan’s network
  • What their co-pays are going to be
  • Why they’re switching from their current plan (if they are switching)
  • Why they’re choosing this particular plan over other available plans in their area

In this time of heightened oversight, knowledge is your friend. Knowing more about CMS’ marketing regulations, the products you’re selling and the clients you’re talking to, will not only make you a better agent, but you’ll also be less likely to run into compliance issues.