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47–954 PDF 2009

S. HRG. 110–771 

WHAT SENIORS DON’T KNOW 

BEFORE THEY ENROLL—AGGRESSIVE SALES OF 

MA PLANS IN MISSOURI 

FIELD HEARING 

BEFORE THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

ST. LOUIS, MO 

June 30, 2008 

Serial No. 110–31 

Printed for the use of the Special Committee on Aging 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

SPECIAL COMMITTEE ON AGING 

HERB KOHL, Wisconsin, Chairman 

RON WYDEN, Oregon 

BLANCHE L. LINCOLN, Arkansas 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

BILL NELSON, Florida 

HILLARY RODHAM CLINTON, New York 

KEN SALAZAR, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

CLAIRE McCASKILL, Missouri 

SHELDON WHITEHOUSE, Rhode Island 

GORDON H. SMITH, Oregon 

RICHARD SHELBY, Alabama 

SUSAN COLLINS, Maine 

MEL MARTINEZ, Florida 

LARRY E. CRAIG, Idaho 

ELIZABETH DOLE, North Carolina 

NORM COLEMAN, Minnesota 

DAVID VITTER, Louisiana 

BOB CORKER, Tennessee 

ARLEN SPECTER, Pennsylvania 

DEBRA WHITMAN, Majority Staff Director 

CATHERINE FINLEY, Ranking Member Staff Director 

(II) 

C O N T E N T S 

Page 

Opening Statement of Senator Claire McCaskill .................................................. 1 

PANEL OF WITNESSES

Statement of Gloria Maples, Troy, Missouri ......................................................... 4 

Statement of Kathryn Coleman, Associate Regional Administrator, Division 

of Medicare Health Plans Operations, Centers for Medicare and Medicaid 

Services, Kansas City, Missouri .......................................................................... 8 

Statement of Rona McNally, Project Manager, The Missouri SMP .................... 17 

Statement of Carol Beahan, Director, Claim Program ......................................... 21 

Statement of Hon. Wes Shoemyer, State Senator from Missouri ........................ 25 

Statement of Mary Kempker .................................................................................. 30 

Statement of Robb Cohen, Chief Government Affairs Officer, XLHealth ........... 36 

APPENDIX 

Prepared Statement of Senator Claire McCaskill ................................................. 55 

CMP charts from CMS ............................................................................................ 57 

Letter submitted from Howard County Home Health and Hospice .................... 59 

Medicare Prescription Plans and Medicare Advantage Plans fact sheet ............ 62 

(III) 

(1) 

REGARDING THE MEDICARE ADVANTAGE 

PROGRAM 

MONDAY, JUNE 30, 2008 

U.S. SENATE

SPECIAL COMMITTEE ON AGING

St. Louis, MO 

The committee met, pursuant to notice, at 9:04 a.m., at the St. 

Louis Senior Center, 5602 Arsenal, Hon. Claire McCaskill, presiding. 

Present. Senator McCaskill. 

OPENING STATEMENT OF SENATOR CLAIRE McCASKILL 

Senator MCCASKILL. Good morning. I want to welcome everyone 

here. I appreciate everyone being here. This is a special hearing of 

the Senate Special Committee on Aging. I am honored to be a 

member of that committee in Washington, and I want to thank 

Chairman Kohl, Senator Kohl from Wisconsin, and Ranking Member Gordon Smith from Oregon who have agreed to allow this committee hearing to take place in St. Louis. 

In visiting with Chairman Kohl, he is very aware of the challenges that seniors face right now in terms of health care decisions. 

He is very aware of how confusing it is and how difficult it is to 

make the right decisions and how susceptible many seniors are to 

unfortunate sales tactics that may be implemented. So he was enthusiastic about the idea of having a hearing here in St. Louis 

where we could get testimony from people, not just people that may 

be dealing with this issue nationally, but people here in Missouri 

that can talk about the challenges that Missourians are facing as 

they are confronted with the issues of health care decisions, particularly around the Medicare Advantage program. 

I want to make one brief introduction. I told my mother what we 

were doing this morning, and she said, well, I think I need to go 

as an exhibit. [Laughter.] 

My mother, who will turn 80 in August, is here with me. Say hi 

to everybody. [Applause.] 

I will give a brief opening statement and then I will introduce 

the panel and we will take testimony from all of you. We will have 

a period of time where we, hopefully, can ask some questions and 

make sure that we leave this hearing with a clear understanding 

of the good news and whatever bad news there may be about these 

programs and the implementation of these programs. 

I want to discuss Medicare Advantage plans here in Missouri. I 

understand these plans may be helpful under the right conditions. 

I am very worried, however, that after more than a year of congresVerDate Aug 31 2005 15:11 Mar 23, 2009 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 H:\DOCS\47954.TXT SAG PsN: JOYCE
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sional scrutiny, I am still hearing from constituents, almost on a 

daily basis, who feel they have been victims of predatory and sometimes illegal sales and marketing techniques. 

Our investigations have also revealed these concerns apply to the 

relatively new Medicare Advantage product, special needs plans. 

These plans are designed for low income or seriously ill seniors 

who may lose much needed assistance from Medicaid to cover 

copays when placed in one of these Medicare Advantage plans. It 

is important to ensure vulnerable seniors are not pressured into inappropriate plans due to high sales agent commissions and company profits. 

Medicare Advantage was created to improve access, choice, and 

services for seniors. They have been touted as the solution for rural 

citizens, those with special needs, and as a way to increase choice 

and efficiently bundle services for low income seniors eligible for 

both Medicare and Medicaid. 

In February, however, the GAO—and GAO is the Federal auditing agency that looks into all the Government programs and provides objective information to Government about those programs— 

released findings that under many different scenarios Medicare Advantage actually costs seniors more money out of pocket and limits 

the services they would have received with regular Medicare. 

In addition, GAO issued another report just last week stating 

that Medicare Advantage plans had under-reported profits to CMS 

by $1.14 billion on top of the $35 billion the plans and studies 

made in 2005, while 80 percent of the beneficiaries were enrolled 

in plans for which expenses for medical care were lower than projected. In other words, what these companies are paying out in expenses are lower than we anticipated, and the money they are 

making is higher than we anticipated. 

Further, there exists today an alphabet soup of choices for seniors, be it MA, PDP, PPO, HMO, SNP, PFFS, or MSA. Be assured 

the senior is given multitudes of options for each separate plan. So 

if the goal of these plans was to offer more choices, we should say 

that we have certainly succeeded. However, some would say this is 

a confusing array of choices. It has been to the detriment of seniors 

in this country. 

In Missouri alone, there are over four dozen Medicare Advantage 

plans and special needs plans. All this choice is expensive. Congress’ expert advisory panel on Medicare payment policy, which is 

the Medicare Payment Advisory Commission, known as MedPAC, 

and the Congressional Budget Office, CBO, have determined that 

on average the Federal Government is paying these private plans 

12 percent more than it costs to treat comparable beneficiaries 

through traditional Medicare, with some plans receiving up to 19 

percent more. 

The commission has also warned us that unless we rein in these 

expenses, the Medicare Hospital Insurance Trust Fund will become 

insolvent much more quickly than currently projected. 

Furthermore, Medicare’s actuary has recently testified that seniors who choose to remain on traditional Medicare are subsidizing 

these Medicare Advantage plans by $48 per couple each year, adding up to $700 million coming from taxpayers to help finance the 

overpayments to these Medicare Advantage programs. 

3 

Last week, the Senate minority blocked legislation to prevent a 

large cut in physician Medicare reimbursement that would also 

have prohibited some predatory sales tactics under Medicare Advantage. I am particularly concerned about the individuals who are 

at greatest risk, frail elders and people with complex or serious 

chronic needs who are supposed to be served by the special needs 

plans. These are some of the fastest growing plans contributing to 

an 11 percent growth in overall Medicare Advantage enrollment in 

the last 6 months. Their growth is surely fueled in part by the 19 

percent premium they receive for these plans. In other words, these 

plans make even more money for the companies than the regular 

Medicare Advantage plans. So there is an incentive for these companies to, in fact, market the special needs plans. They are more 

profitable for the companies. 

I look forward to hearing from our witnesses about these issues. 

It is my intention to continue efforts in Washington to address and 

resolve them, including putting pressure on Congress and this administration to assure that seniors are not being swindled and that 

the American taxpayer is not either. 

Today I want to get a ‘‘boots on the ground’’ look at how the 

Medicare Advantage plans have impacted my State. 

With that, I welcome the testimony from today’s witnesses and 

their information as to how we can best move forward from here 

to protect seniors with good quality health care that is not so confusing to seniors that it makes them sick. 

Let me introduce the panel. First, I will begin on my right and 

I will introduce all of the panel, and then each of you will be given 

5 minutes to testify. Then we will have time for questions and answers that will all go on the record. 

Gloria Maples is here. She is a senior from Troy, MO. She is a 

courageous woman, caring for others so much she is here to share 

her story to prevent others from suffering the same problems that 

she has encountered. 

Next is Kathryn Coleman. She is the Associate Regional Administrator for the Division of Medicare Health Plans Operations for 

CMS in Kansas City. She has spent years working for better health 

for senior citizens in Missouri and 13 States across the Midwest. 

Rona McNally is the Project Manager for the Missouri SNP. She 

is a caring woman who has fought for years to provide advocacy 

and accurate education for Missouri’s senior citizens. 

Carol Beahan is the Director of the CLAIM Program. She has 20 

years of experience working with older adults and providing them 

with things like home health, senior centers, and Medicare education. 

Mary Kempker is the Consumer Affairs Director for the Missouri 

Department of Insurance Institutions and Professional Registration. Beyond her 14 years as a consumer advocate, she is an active 

member of multiple boards dealing directly with senior health 

issues. 

Wes Shoemyer is the Senator from the northeast corner of our 

State. He is a farmer. He is a tireless advocate for the people in 

his district, and he has introduced legislation in the Missouri legislature dealing with some of the problems that he has learned 

about. He came to this issue the same way I did, seniors calling 

4 

him on the phone as their elected representative saying, help, I am 

confused. Something is wrong. I accidentally got the wrong plan. I 

do not know how to get out. I am not sure what plan to be in. This 

is the kind of calls that all elected officials are getting on a constant basis from the people we represent because of the confusing 

choices that are out there right now. He is here to testify about his 

perspective on this important problem. 

Robb Cohen is Chief Government Affairs Officer for XLHealth. 

He has over 20 years of health care experience, including health 

care consulting and investment banking, and he frequently lectures 

on health care policy and management topics. 

We will begin the testimony this morning with Ms. Maples from 

Troy, MO. Thank you so much for being here. 

STATEMENT OF GLORIA MAPLES, TROY, MISSOURI 

Ms. MAPLES. I went on Medicare May 1, 2006. I have Part A and 

B. Physicians Mutual is my supplement and Advantra RX Premier 

is my prescription D plan. I pay $5 for generics, $25 for nongenerics. I have had no copays for doctor, hospital, blood work, and 

for specialists. 

In October 2006, I had unexpected three-way bypass surgery and 

was in the hospital for 7 days. I ended up with four specialists and 

paid no money out of pocket. 

On January 13, 2007, a lady came to my house from GHP. She 

showed me what I was paying for Physicians Mutual and prescription D a year and what GHP Advantra Option II would cost a year 

with copays to doctors and specialists. It sounded good. So I signed 

up for it. 

Later in January, when I got my card and literature, I decided 

it was not a good deal when I started reading a $175 copayment 

per day for 5 days for phase 1 through 5 per stay because if you 

go in 2 weeks or a month later, the hospital days start over again, 

a $250 copayment for out patient facility, 20 percent coinsurance 

for outpatient procedures, and much more. I decided, since I already had a serious surgery, this was not the plan for me. 

I called GHP on January 29, 2007 and told Christine I wanted 

to cancel GHP Advantra Option II that was to start February 1. 

She put it in the computer and said, OK, it is canceled. Then I 

called Advantra RX Premier, my prescription plan, and talked to 

Robert and told him not to cancel me February 1. He put that in 

the computer and said, OK, it is not canceled. 

February 22 I found out I was still with GHP. Fourteen phone 

calls later between Advantra RX and GHP, I sent a copy of all paperwork around April 16th to the Department of Insurance. 

Finally, on May 20, 2008, I received a letter from GHP stating 

I will be disenrolled as of May 31, 2008. 

On May 29, Deb Mitchell from GHP called Medicare and we had 

a three-way call with Tea Smith. She took my Medicare information and re-enrolled me with Advantra RX Premier, telling me it 

would take effect June 1. Six phone calls in June to Advantra RX, 

three phone calls from them, two faxes, that I sent them stating 

they did not get, I have no health insurance or prescription plan 

for the month of June, going into July and have to pay out of pockVerDate Aug 31 2005 15:11 Mar 23, 2009 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 H:\DOCS\47954.TXT SAG PsN: JOYCE
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et for my prescriptions and one I did not get, as it would have been 

$120 out of pocket. 

[The prepared statement of Ms. Maples follows:] 

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Senator MCCASKILL. Thank you very much. I think that was a 

pretty good illustration of how difficult it can be to undo one of 

these decisions once you have made it based on a salesperson convincing you that it is a good thing and then later figuring out that 

maybe it is not the right thing. Thank you very much for your testimony. 

Ms. Coleman. 

STATEMENT OF KATHRYN COLEMAN, ASSOCIATE REGIONAL 

ADMINISTRATOR, DIVISION OF MEDICARE HEALTH PLANS 

OPERATIONS, CENTERS FOR MEDICARE AND MEDICAID 

SERVICES, KANSAS CITY, MO 

Ms. COLEMAN. Good morning, Senator McCaskill. 

Senator MCCASKILL. Good morning. 

Ms. COLEMAN. My name is Kathryn Coleman. I am from the 

Kansas City Regional Office of the Centers for Medicare and Medicaid Services (CMS). I am pleased to be here today to discuss the 

CMS oversight of sales and marketing on Medicare health plans, 

specifically Medicare Advantage (MA) programs. 

Building on the lessons learned and information gathered during 

2006 and 2007, CMS has continued to strengthen its oversight of 

MA organizations this year. Examples of our recent compliance and 

oversight improvements include posting surveys of corrective actions taken against MA organizations on our Web site, establishing 

higher star ratings for plan performance, embarking on an extensive secret shopping program of plan marketing events that has led 

to compliance actions, and more accurate sales presentations, requiring private fee-for-service plans to call new enrollees to verify 

their desire to join the plan, and most recently proposing an extensive set of new regulations related to marketing and beneficiary 

protection. 

Fundamentally, before a plan sponsor is allowed to be participating in Medicare Advantage, it must submit an application and 

secure CMS approval. CMS performs a comprehensive review of 

each application to determine whether the sponsor meets program 

requirements. Participation one year is no guarantee that the plan 

would be permitted to participate in future years. Every year plans 

also must submit formulary and benefit information for CMS review prior to being accepted for the following contract year. For 

each 10 sponsors, CMS has established a single point of contact 

known as an account manager for all communications with the 

plan, and the account managers work with the plans quickly to resolve any problems, including compliance issues. 

CMS also collects and analyzes performance data submitted by 

plans’ internal systems and beneficiaries on an ongoing basis. We 

have established baseline measures for performance data and have 

been tracking results. Plans not meeting these baseline measures 

are contacted by CMS and compliance actions are typically initiated. Actions range from warning letters all the way through civil 

monetary penalties and/or pulled from the program depending on 

the extent to which plans have violated program requirements. All 

violations are taken very seriously by CMS, with beneficiary protection, of course, the foremost concern. 

9 

Oversight efforts are not limited to CMS’ efforts alone. We have 

strengthened our relationship with State regulators that oversee 

the market conduct of health insurers, including MA organizations. 

But clearly, we have more work to do. Specifically, CMS has 

worked cooperatively with the National Association of Insurance 

Commissioners and the State’s Department of Insurance in Missouri to develop model compliance and enforcement of a memorandum of understanding (MOU). This MOU enables us and the 

State’s Department of Insurance to freely share compliance and enforcement information to better oversee the operations and market 

conduct of the companies we try to regulate and to facilitate the 

sharing of specific information about marketing agent conduct. Missouri, of course, was very involved with the drafting of the MOU 

and was the first State to sign it in April of 2007. 

CMS recently issued a proposed regulation as a continuation of 

our efforts to enhance compliance and oversight of the MA program. The proposed rule would incorporate into regulation a number of requirements that CMS previously applied through operational guidance and it also would introduce several new Medicare 

Advantage plan requirements. The new proposed prohibitions on 

door-to-door marketing and cold-calling, as well as new proposed 

requirements pertaining to broker-agent commissions, are even 

more stringent than what the insurance industry recently endorsed 

as necessary for the program. 

The proposed rule would also make a number of changes to the 

requirements for special needs plans, a type of Medicare Advantage 

plan that provides coordinated care to individuals in certain institutions such as nursing homes, and those who are eligible for both 

the Medicare and Medicaid programs and/or have certain severe or 

disabling chronic conditions. These plans are required to adhere to 

the same marketing guidelines and other general Medicare Advantage program requirements. 

Among other things, the proposed rule would add the following 

additional requirements. Plans would be required to have documented arrangements with States to facilitate the coordination of 

Medicare and Medicaid benefits. Plans would be required to verify 

a beneficiary’s special needs plan’s eligibility prior to enrollment, 

and plans would be required to include in the contract with providers language specifying that the beneficiary is not liable for 

costs that are the responsibility of the State under Medicaid. Finally, plans would be required to have models of care specifying delivery of care standards specific to the types of special needs individuals enrolled in the plan. 

In addition, to discourage churning of beneficiaries from plan to 

plan each year in a manner that earns agents and brokers the 

highest commissions, the proposed regulation would establish commission structures for sales agents and brokers that are level 

across all years and across all Medicare Advantage plan products. 

These requirements are designed to ensure that beneficiaries are 

receiving the information and counseling necessary to select the 

best plan based on their needs. 

In addition to the regulation, we also will be using several mechanisms to ensure that Medicare Advantage organizations conduct 

marketing activities that are compliant with existing regulations 

10 

and guidelines. We have been very clear that organizations are responsible for the actions of sales agents and brokers whether they 

are employed or contracted. They must ensure that they are properly trained in both Medicare’s requirements and the details of the 

products being offered. 

Part D sponsors also must provide strong oversight and training 

for marketing activities. Employees of an organization or independent agents or brokers acting on behalf of an organization may 

not solicit Medicare beneficiaries door to door their health-related 

or non-health-related services or benefits. Employees, brokers, and 

independent agents must first ask the beneficiary’s permission before providing assistance in their residence prior to conducting any 

sales presentation or accepting an enrollment form in person. 

We continue to make significant progress in overseeing Medicare 

Advantage organizations and Part D plan sponsors. With ongoing 

effort and vigilance, I am confident we will continue to see high 

levels of plan compliance with program requirements, along with 

significant improvements where necessary. 

Thank you for the opportunity to be here this morning, and I 

look forward to the questions. 

[The prepared statement of Ms. Coleman follows:] 

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Senator MCCASKILL. Thank you. Thank you for your public service. 

Ms. McNally. 

STATEMENT OF RONA McNALLY, PROJECT MANAGER, THE 

MISSOURI SMP 

Ms. MCNALLY. Good morning, Senator McCaskill. I thank you for 

the opportunity to share my experiences regarding Medicare Advantage marketing issues. 

I am Rona McNally, Project Manager for the Missouri SMP. We 

are a statewide program empowering seniors to prevent Medicare 

and Medicaid error, fraud, and abuse. We are funded by the U.S. 

Department of Health and Human Services, Administration on 

Aging. We partner with the Missouri Alliance of Area Agencies on 

Aging to provide education and advocacy for Missouri’s seniors. 

The implementation of Medicare Part D coincided with the statewide availability of Medicare Advantage, increasing the task of insuring that all people with Medicare understand the choices that 

are available to them. This increased beneficiaries’ vulnerability to 

very aggressive sales tactics. 

Prior to the approved date that marketing activities could begin, 

aggressive sales practices were already apparent. Insurance agents 

were requesting opportunities to present educational seminars at 

senior centers and volunteer for programs stating that they are 

representatives of Medicare or mandated by Medicare to do outreach and education. When these efforts failed, agents attended 

presentations given by area agency on aging staff in order to provide information regarding the plans they represent. 

Free meals are one of the tactics used by sales people. Seminars 

are often offered at local restaurants in order to educate seniors 

about Medicare benefits. I attended one such meeting. The representatives provided information about investments, insurance 

plans, and told about the helpful resources they could offer. However, the information and resources were not available at the meeting. In order to receive any information, an agent would need to 

visit their home. 

We have noticed that the calls are often the same regardless of 

the area of the State they come from. Common calls include a senior receives a call from a person claiming to be with Medicare, stating that someone needs to come to their home to discuss their benefits. Many seniors report the caller to be very insistent and at 

times rude or threatening. One person made a call to an insurance 

company with the intention of purchasing a prescription plan but 

eventually discovered they have enrolled in a Medicare Advantage 

plan or been convinced that a free Medicare Advantage plan would 

be better for them. This is frequently discovered when a person visits their physician’s office only to find that the physician will not 

accept the plan’s payment. 

Agents come to the door unexpectedly and state he or she is with 

Medicare and need to speak to the resident about their Medicare 

benefits. Most report they believe the plan to be a supplement to 

Medicare, a Medicare prescription plan, or a specific plan to pay for 

vision, dental, and hearing services only. 

18 

Agents who visit senior housing apartments and complexes often 

go door to door or host bingo games with prizes. Residents are then 

switched to a Medicare Advantage plan. 

People receiving both Medicare and Medicaid benefits, known as 

dual-eligibles, are prime targets for sales representatives as they 

are able to change plans one time per month all year long. Agents 

will change these individuals from plan to plan, called churning. It 

happens so many times, that most often the individual is unable 

to inform us of which plan that he or she is currently enrolled in. 

At one point, an agent had churned an individual so many times 

that the agent himself called our office for help. Plan information 

is shared through databases, and the client had been switched from 

plan to plan so many times that the databases were not matching 

information and the pharmacy database was showing that the client had no drug coverage. It took us 4 days to unravel the situation 

providing her access to prescription coverage. 

A lady from a senior housing complex in our town received a call 

one day at approximately 11 a.m. from someone stating he needed 

to come to her home to discuss her Medicare and Medicaid benefits 

with her at two that afternoon. She called my office with questions 

and concerns, and I agreed to come to her apartment to be with 

her during her visit. A young man came to her door, sat down in 

her living room, and proceeded to inform her that he had a plan 

for her that would provide her with vision, dental, and hearing coverage at no cost to her. 

The resident questioned him as to how his company could afford 

to provide those benefits to her at no cost. He replied that the Government pays them well to provide the benefits, and besides, he 

would enroll her in this policy build a trusting relationship with 

her and then sell her a life insurance policy. 

I asked the agent to leave material behind for her to discuss with 

her son and stated that she had questions she needed answers to 

before making this commitment, such as whether her doctor may 

accept this plan. The agent wanted us to get the phone right away 

and he would call for her. When he finally left her apartment, she 

stated that she did not know what she would have done if she had 

been alone. She felt so pressured. 

These circumstances often come between people with Medicare 

and their access to health care. For example, we assisted one lady 

who relies on weekly injections to be able to walk. She has not 

been able to receive the injections for about four weeks because her 

physician would not accept the Medicare Advantage plan she had 

enrolled in. However, the agent that sold her the plan assured her 

that all providers accept the plan. 

I thank you for this opportunity to share with you the experiences and concerns that have been expressed to us. I welcome the 

opportunity to answer any questions you may have. 

[The prepared statement of Ms. McNally follows:] 

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Senator MCCASKILL. Thank you so much. 

Ms. Beahan. 

STATEMENT OF CAROL BEAHAN, DIRECTOR, CLAIM PROGRAM 

Ms. BEAHAN. On behalf of the CLAIM Program, it is my pleasure 

to testify before this—— 

Senator MCCASKILL. You probably need to hold that a little closer. 

Ms. BEAHAN. Get closer? 

Senator MCCASKILL. That is better. 

Ms. BEAHAN [continuing]. Testify before the Senate Special Committee on Aging. My name is Carol Beahan and I have the privilege and honor to serve as the Director of CLAIM, the State health 

insurance assistance program for Missouri. 

The Centers for Medicare and Medicaid Services provide our 

funding through a contract with the Missouri Department of Insurance Financial Institutions and Professional Registration. We collaborate with community partners and community hospitals, community action agencies, area agencies on aging, and faith-based organizations to train volunteer staff about Medicare. We do not only 

teach them about Medicare Part A, B, C, and D, but also about 

supplemental insurance, Missouri Health, net Missouri’s Medicaid 

Program. Every day our volunteers provide objective guidance as 

they assist people to make informed decisions regarding their 

Medicare benefits. 

Medicare Advantage plans challenged our training and counseling due to the complexity of the plans. During December 2007 

and through May 2008, we have documented over 1,400 inquiries 

regarding the plans. CLAIM identifies two primary concerns regarding Medicare Advantage plans. Improper sales tactics by 

agents and brokers; lack of education to agents, providers, and consumers regarding enrollment, benefits, and plan mobility. I would 

like to address both of these issues. 

CLAIM concurs with prior statements made by our colleagues. 

One of our volunteers, regularly attends Medicare Advantage plan 

luncheons and public events and indicates the sales pitch often 

lacks detail. Specific information about cost sharing or benefit coordination with providers is often glossed over. 

Several of our community partners are located in public housing 

facilities. They have explained to us that agents visit a resident 

and use the opportunity to get referrals for other clients within the 

building. Although not illegal, it has resulted in many residents 

changing their plans without totally understanding what they have 

done. Important health plan changes are being made on the fact 

that their friend told them about the nice lady or gentleman who 

just visited them. Older adults are often trusting and can be easily 

misled. 

The individual ability of an agent to sell his product can be very 

effective. For example, we determined that one of our recent callers 

purchased the same plan she was already enrolled in because the 

new agent made the benefits sound so much better than the benefits they had. 

In Missouri, we do have 47 Medicare Advantage plans and 12 

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able in all portions of the State, it still makes choices overwhelming even for the savviest consumer. The following are just a 

few examples of the concerns. 

Lack of provider education can ultimately cost the consumer. 

When inadvertently referring a patient to a follow-up test to an 

out-of-network provider, who is responsible for that error? The doctor and provider of the test or the consumer? The consumer is responsible for the bill. 

Medicare Advantage plans in nursing home facilities. We are 

aware of situations where a person in a nursing home had been 

told to drop their Medicare Advantage plan. This is not the best advice. The person may or may not able to purchase a supplemental 

policy or they may not be eligible for Medicaid, leaving them with 

Medicare only. The Medicare Advantage plan is responsible for 

skilled nursing care just as much as traditional Medicare. 

Each Medicare Advantage plan is set out to service specific areas 

by designated ZIP codes. Education must be provided to ensure clients understand what areas of the State are included in the network. Hardships are incurred by clients who move to new ZIP 

codes and learn their plan no longer works for them as they are 

out of network, out of the service area, or providers do not accept 

the payment from the plan. 

Traditionally Medicare benefits do not cover all medical expenses. There are deductibles and coinsurance to consider. Enrollment in a Medicare Advantage plan needs special attention to details in order to determine the best alternative for their individual 

cost sharing. Decisions for dual-eligibles, some of our most vulnerable clients, become even more difficult. It is especially important 

for Medicare Advantage plan agents to thoroughly understand the 

ramifications of their plans with respect to the client’s needs. This 

does not always occur. 

These problems are symptoms of lack of education by agents, 

providers, and consumers. The stories could fill volumes. One thing 

that is clear. These plans may be great for the marketplace, but 

improvements should serve the public. It is obvious the older an individual becomes, the more difficult it becomes for them to understand the multitude of choices presented. Due to the number of 

plan sales and marketing practice requiring closer scrutiny and authority and enforcement by the Missouri Department of Insurance, 

agents must be fully educated before they are allowed to sell plans. 

A company offering Medicare Advantage plans must also commit to 

educating providers and consumers. 

I appreciate the opportunity to speak before you today, and I 

shared with you some real-life situations about Medicare Advantage plans and how they are impacting Missourians. The employees 

and the volunteers at CLAIM will continue to assist people with 

Medicare so they can make informed decisions regarding their benefits. 

Thank you and I welcome the questions. 

[The prepared statement of Ms. Beahan follows:] 

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Senator MCCASKILL. Thank you, Ms. Beahan. 

Senator Shoemyer. 

STATEMENT OF HON. WES SHOEMYER, STATE SENATOR FROM 

MISSOURI 

Mr. SHOEMYER. Thank you, Senator McCaskill. Thanks for holding this. Of course, I thank Senator Kohl for putting this out. I 

thank the St. Louis Senior Center for allowing all of us to be here. 

I am Senator Wes Shoemyer, and I serve 13 counties in northeast Missouri, a very rural area. I think my being here this morning tells us how widespread this problem is. In fact, in rural Missouri, what I have really found—we hear Medicare supplement 

policies, and what many folks do not understand is that these are 

replacement policies. In an era of HMO’s and PPO’s and fee-forservice, the folks in my area, especially in the rural parts of Missouri, are under a fee-for-service scheme. When they buy this policy, certainly benefits are put before them that are available, but 

they only find that those benefits are available 300 miles away or 

200 miles away. I think when you are a senior and your access to 

transportation and your access to mobility—this is very disheartening to those folks who have been sold a policy that they thought 

was going to really cover their health care and only go to their local 

doctor and be turned away. 

I want to thank the folks from CLAIM and RSVP, Heartland 

RSVP, from Kirksville in my area. They have been very diligent in 

working with the folks to get them back on the red, white, and blue 

card. 

Much of my testimony also goes into being very confusing aspects 

that folks have. So I do not want to go through all of it, except I 

wanted to highlight—maybe the most abused is dual-eligibles with 

Medicaid. These applicants are the ones, in fact, that they are very 

targeted. 

I do want to tell you what we did in Missouri. Obviously, we cannot, as the Federal Government can do——and I got to tell you, 

Senator, with $1.4 billion, we could get a lot of health care I believe. So I really appreciate that. 

But we can only regulate how business is conducted, and I think 

that we heard that there are some rules being written. But what 

my legislation—what I thought really needed to be done was require a two business day waiting period between the presentation 

of the plan to an applicant and to sign the paperwork enrolling 

them in a plan. Let us give a little cooling off period so the pressure that is put on people immediately—they have a chance to 

think. As they always say, go sleep on it. 

Then we will require the agent to provide each client with a 

statement, approved by our department, that advises the applicant 

to check with their doctor or other health care providers to make 

sure that they will accept the plan. Make this very clear and very 

bold. 

They also require the agent to have the applicant to sign a disclosure statement that they were given information stating that 

Medicare Advantage plans are not Medigap or supplemental plans. 

Make it very clear that this is a replacement policy. 

26 

We heard this legislation in committee. Obviously, there was no 

one testifying in opposition. It did not move any further than the 

committee hearing in the State. Obviously, there are some pretty 

powerful interests that do not want to see this type of regulation 

for protection of little people go forth. 

Senator Engler offered a similar bill. We did get that amended 

on House bill 1283, which was the Insure Missouri bill. However, 

that bill died in the Senate. 

So I think the real reason I came was to see the number of folks 

here in the city. I drove across a lot of vast area. I have really got 

a lot to do when I get home. I have got to plant some beans. That 

means that is how important it is all across the State, and that is 

why I appreciate so much you traveling here and taking this testimony. I look forward to any questions. Thank you. 

[The prepared statement of Mr. Shoemyer follows:] 

27 


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Senator MCCASKILL. Thank you, Senator. We really appreciate 

you. I know this is a busy time for farmers, and you are glad to 

get out of the city and get back to the honest work that you do and 

get those beans in the ground. I am glad to hear you can plant. You 

are not close enough to the river to have any problem. It should 

be a good year for you then. Those commodity prices are pretty 

darned good right now. 

Ms. Kempker. 

STATEMENT OF MARY KEMPKER 

Ms. KEMPKER. Good morning. I appreciate the opportunity to testify and to participate and hopefully strengthening the consumer 

protections, especially for our most vulnerable population. The comments I am about to give are those of my own personal observations through my employment and not that of my employer. 

In my capacity as Director of Consumer Affairs, I actively participate in investigating complaints on Medicare Advantage solicitation abuses. I also participate on the NAIC Senior Issues Task 

Force, and I am a member of Missouri SHIP or CLAIM Advisory 

Board. 

While CMS retains the jurisdiction over the actual product, the 

marketing of the product, and the training and certification of the 

agents, the States are allowed to pursue solicitation abuses, and 

through those investigations, I find that the following concerns still 

exist and are still occurring. agent solicitation abuses, insurance 

company oversight, Federal waiver issues, and oversight over the 

marketing centers. 

Agent complaints brought to light the following abuses through 

our investigations. 

Agents representing themselves as Medicare. You are going to 

see a common theme between the three agencies here. 

Agents sponsoring a bingo event. As one agent was calling 

‘‘bingo,’’ the other agent was literally having the seniors sign applications while they were playing bingo. 

Agents churning dual-eligibles on a monthly basis. The churning 

monthly caused disruptions in coverage and the individuals were 

unable to secure health care and/or prescriptions. 

Agents asking consumers to just sign the form to prove to my 

boss that we met today. However, the signature on the form enrolled the unsuspecting senior in the Medicare Advantage plan that 

they did not want. 

Agents are unaware that Missouri’s HealthNet, or our Medicaid 

program, does not cover copayments, leaving many financially vulnerable individuals with even greater out- of-pocket expenses. 

Agents fail to provide consumers information on the fee-for-service networks which do not have a standard network but rely on 

doctors to accept or participate in the plan. By failing to disclose 

the network requirements on a special needs, a private fee-for-service plan, one elderly disabled senior went 11⁄2 months without his 

18 prescriptions. 

While States can pursue Unfair Trade Act violations against the 

agents and take action to suspend or revoke their license, our 

hands are tied in actually taking actions and pursuing violations 

against the insurance companies on these products. CMS retains 

31 

the authority, again, over approving the benefit plan and the product, the marketing of materials, the training and the certification 

of the agents. While investigating complaints on agents, we at Consumer Affairs will request the marketing materials and the training materials from the company. However, we lack the authority to 

police the content of those programs. 

Another issue for me is the Federal waiver grant by CMS. The 

Federal waiver allows a plan to operate within the State without 

a certificate of authority from the Department of Insurance. It allows this for 3 years, but CMS encourages the plans to pursue a 

COFA by the end of those 3 years. By foregoing the State COFA 

process, CMS further restricts the State’s ability to apply the appropriate regulatory pressures necessary. The States lack the 

COFA to revoke if concerns are not resolved and/or financial solvency secured. Missouri’s experience is that those companies with 

Federal waivers generate the most complaints within our division. 

Finally, companies and/or insurance agencies hire call marketing 

centers to initiate contacts with the seniors and to set up the appointments. I do have two examples from call centers that I would 

like to play for you, and I would like for you to be cognizant of the 

following. They identify themselves as from Medicare Advantage. 

They never identify the company or the product that they are soliciting. They make it appear that they mailed out the red, white and 

blue book, the Medicare and you book. They intrigue the senior by 

saying, there are changes to your Medicare. You are entitled to 

these new programs at no additional cost, and it will actually save 

you money on Medicare. 

One senior requested that the information be mailed to her because she is not comfortable with individuals entering her home. 

But the caller succeeded in setting the appointment anyway. 

Finally, the product being solicited on these policies as a special 

needs plan for duals or for those with special health care or specific 

medical conditions. 

On one call, the caller keeps questioning the consumer on her 

health conditions until he finds anything that may qualify her for 

an SNP plan. Then he rejoices by setting up the appointment 

whether it is appropriate or not. So if you bear with me, I will play 

these for you. 

Senator MCCASKILL. Thank you. 

Ms. KEMPKER. Senator McCaskill, while she is doing that, I can 

go ahead with the remainder of my speech for the sake of time. 

Senator MCCASKILL. Sure. 

Ms. KEMPKER. During the 2008 session, the legislation that the 

Senator mentioned was introduced for the abuses by the agents by 

encouraging or by requiring the agent to contact their provider to 

make sure that they participate in the program, to contact their 

local SHIP program for general and unbiased information and answers to their questions, and again to require two business days 

before the application becomes effective. 

CMS indicated the requirements, however, are more stringent 

than MMA. So even if the legislation were to pass, the States 

would still lack the authority to enforce that particular legislation. 

The NAIC, in collaboration with CMS, insurance companies, and 

advocacy groups, is working on a white paper that addresses the 

32 

abuses nationally, and they are providing suggestions for strengthening consumer protections. It is anticipated that the white paper 

will be adopted at the September NAIC meeting in D.C. This white 

paper provides more extensive suggestions to remedy the abuses, 

more extensive solutions to remedy the abuses than what are currently being proposed in the legislation. 

Here is an example of the phone calls. I want you again to keep 

in mind the abusive areas that I mentioned. 

Senator MCCASKILL. Sure. 

[Audio recording played.] 

Ms. KEMPKER. That call is from the fall of 2007, the other from 

February 2008. The insurance company presented before the department and agreed to address the problems, but as you can tell, 

the 2008 call pretty well mirrors still the 2007 call. While CMS requires the call center script to be filed and adhered to, the oversight appears to be lacking as far as onsite visits or audits to ensure compliance with those call scripts. 

In addition to the abuses I mentioned prior to playing, what certifications are they talking about? There are so many abuses 

ladened in these that I think the oversight of the call center is 

lacking. 

Anyway, I applaud your efforts in pursuing this issue. 

I will be glad to answer any questions. 

[The prepared statement of Ms. Kempker follows:] 

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36 

Senator MCCASKILL. Mr. Cohen. 

STATEMENT OF ROBB COHEN, CHIEF GOVERNMENT AFFAIRS 

OFFICER, XLHEALTH 

Mr. COHEN. Senator McCaskill, thank you for inviting me to testify regarding Medicare Advantage sales and marketing oversight. 

I am Robb Cohen from XLHealth. We are headquartered in Maryland and operate chronic special needs plans in the Southeast and 

South Central United States. These are areas of high prevalence of 

chronic disease. We serve 64,000 members, of which 3,500 are in 

Missouri, including in 113 of 114 counties, offering a valuable 

choice with added and disease-tailored benefits to chronically ill 

seniors who have historically had limited Medicare options. Our 

sole business is as a chronic special needs plan. Our company was 

founded as a disease management organization focused on diabetes, CHF, COPD, and ESRD. Our goal is to offer a beneficial Medicare product option to Medicare beneficiaries with one or more of 

the qualifying conditions and to deliver improved quality and satisfaction at a reduced cost through a targeted care model and benefit 

design. 

My testimony will focus on issues related to and efforts to improve beneficiary education and marketing. We believe each beneficiary should make a well informed choice and it is our responsibility to do everything possible to ensure that occurs. We believe 

our care model and benefit design offer value for disease-qualified 

beneficiaries and that over time our care model will result in beneficiaries experiencing better quality and outcomes. Special needs 

plans, because they care for Medicare’s most needy beneficiaries, 

must be required to be special. An important component of beneficiary education is our work with the area agencies on aging, state 

health insurance plan counselors, and other members of the aging 

services network. We want to inform educators, as well beneficiaries, to make appropriate Medicare coverage choices. 

We acknowledge that there have been problems with Medicare 

Advantage sales and marketing, including with Care Improvement 

Plus. Also, we agree with proposed increases in regulation and 

oversight so that seniors are able to make well reasoned Medicare 

choices. We have experienced growing pains, including beneficiary 

complaints. Our goal is to address every single complaint in a manner that resolves the complaint and use the knowledge gained to 

fix root causes and eliminate future complaints. 

Our efforts to address marketing issues include a pre-enrollment 

verification call, mandatory agent testing, and thorough investigation of all member complaints with agent discipline where warranted. Beginning in November 2007, we have required completion 

of a recorded pre-verification call with each applicant. The 

verification call asks the applicant questions, including whether the 

applicant understands they are enrolling in Medicare Advantage 

and that they are leaving Medicare fee-for-service or any other 

Medicare Advantage or Part D plan. As a result, disenrollments 

have been reduced. 

We instituted mandatory testing for all the agents in 2007, and 

we support proposed regulations to require agents to pass a written 

test. We employ sales managers in each market, including MisVerDate Aug 31 2005 15:11 Mar 23, 2009 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 H:\DOCS\47954.TXT SAG PsN: JOYCE
37 

souri, to manage the broker network. Our compliance department 

investigates all network complaints, including ones that allege 

agent misconduct. We have improved our complaint management 

process, including growing our compliance staff from 3 employees 

in early 2007 to over 20 today. We believe our number of complaints is within CMS’ expected industry benchmarks and we strive 

to process complaints within CMS expected timeframes. In addition, we do not tolerate unacceptable broker practices and implement various levels of discipline, including suspensions and terminations. 

We believe there is much work that can be done by Care Improvement Plus and State and Federal regulatory authorities to 

improve how we market our health plan. We support proposed 

changes in regulation of Medicare Advantage marketing, including 

regulation of broker commissions, appointment of agents through 

State insurance departments, and creation of a national registry of 

agents who have been disciplined so that all Medicare companies 

can benefit from each other’s efforts to eliminate agents with confirmed violations. 

Finally, while we are highly respectful of the need to reduce and 

respond to complaints, we are pleased about the following statistics 

from member surveys conducted in 2008 by an independent research firm. These are just a couple of statistics from the survey. 

Ninety-four percent of members were satisfied with the plan. Ninety-six percent of members were satisfied with the enrollment process, and 91 percent of members said their health status was the 

same or better since joining the plan, with 30 percent saying they 

had gotten better, and 97 percent of those saying XLHealth Support contributed to their improvement. 

In summary, every complaint is one too many. We want to improve beneficiary education and agent oversight to eliminate complaints. To the extent there are complaints, we want to protect 

beneficiaries and handle complaints appropriately. As a new company that has grown tremendously, we believe that we have improved significantly in the past 18 months and we constantly strive 

to be responsive to all member comments and concerns. 

Thank you, and I would be pleased to answer any questions. 

[The prepared statement of Mr. Cohen follows:] 

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41 

Senator MCCASKILL. Thank you, Mr. Cohen. I sincerely appreciate you being here. It is brave in many ways, Mr. Cohen, because 

all of the witnesses and all of the testimony is about the frustration 

and the problems with these plans. So I do not want you to leave 

this hearing not realizing that we appreciate you being here, and 

it does say a lot about your company that you were willing to come 

to this hearing and willing to take questions and willing to withstand some of the criticisms. That does make me believe that you 

want to do the right thing or you would not be here. So I am very 

appreciative of that. 

I would like to go through a number of questions I have for many 

of you. I think one of the things I would like to start with is the 

notion that these are called Medicare Advantage programs. 

Ms. Coleman, has CMS taken a position over whether or not it 

is appropriate that we call these private insurance companies— 

that we allow them to be called ‘‘Medicare’’? 

Ms. COLEMAN. They are required to refer to themselves as something other than Medicare or Medicare Advantage. They are not required to describe themselves as not being from Medicare. So when 

the caller referred—the comment that they were from Medicare, 

that was not appropriate. They are not in compliance with our 

rules. 

Senator MCCASKILL. If we know that the word ‘‘Medicare’’ is the 

green light, I mean there is not a person in this room who does not 

get that, that when you use the word ‘‘Medicare,’’ that sends a signal to seniors that this is the Government. Well, this is not the 

Government. They have nothing to do with the Government. This 

is entirely a private—now, if they called and said, this is Acme Insurance Company and I think I have got a better product to sell 

to you, it seems to me—I mean, you heard them refer to themselves on that call as a Medicare training specialist. 

Obviously, this is going on in every—I should not say in every 

call—but they are getting in the door with these seniors by using 

the word ‘‘Medicare.’’ Why should we not pass a law that says you 

cannot call yourself Medicare if you are not Medicare? [Applause.] 

Ms. COLEMAN. As a daughter of a Medicare beneficiary, I try to 

view my job as a career civil servant through her eyes, and I could 

not agree more with you personally how confusing the program can 

be to seniors. It is unfortunate that you hear calls like that. I find 

it terribly sad. I guess we can make all the rules in the world, and 

there is always going to be someone out there who tries to get right 

up to the edge. 

But those calls that Mary shared were clear violations of our 

rules, and if that information was forwarded to my office in Kansas 

City, we would follow up immediately with the plan. It always 

helps to have the agent/broker information, names. We will follow 

up with the plan to ensure that they are aware of what happened 

and that that was a clear violation of our rules. 

Senator MCCASKILL. Mr. Cohen, would your company have any 

problem if we changed the laws in Washington and quit allowing 

any of these insurance companies to be called Medicare Advantage 

programs? 

42 

Mr. COHEN. I am not sure actually I have an answer to that 

question for you sitting here today. I would be happy to get back 

to you. 

Senator MCCASKILL. Well, obviously common sense——you would 

have to acknowledge that it is a huge advantage—pardon the expression—to able to call this the Medicare program. 

Mr. COHEN. Yes. I would agree that using the word ‘‘Medicare’’ 

is something that alerts the beneficiary. It is a word they are very 

used to. 

Senator MCCASKILL. Well, that goes on the list for changes that 

need to occur. We should not call these things Medicare. They are 

not Medicare, and that is what causes the confusion, I think, for 

a lot of seniors. 

Let us talk a little bit about compliance. Let me start with you, 

Mr. Cohen. What kind of compliance actions have been taken 

against your company and in how many States? 

Mr. COHEN. I am actually here today with our compliance officer, 

Tom Mapp, who came with us today. I am not the compliance officer. 

As I mentioned, we have had complaints. We have complaints 

come into our office through a number of channels, through CMS 

system, as well as direct beneficiary complaints. They are all followed up on through our compliance office. So we certainly do—we 

have had complaints in each our markets. I think all Medicare insurance companies have complaints. 

The question is to what extent do you follow up with them and 

process them and, as I said, not just process them on an individual 

basis, but look at them to get at the root cause to stop future complaints to improve the process. 

Senator MCCASKILL. I can explain the root cause. It is money. 

The problem is money because people make more money the more 

insurance policies they sell. So they are motivated to cross the line 

slightly or completely in order to close the sale because they do not 

make the money if they do not close the sale. 

How many of your agents have been fired for engaging in unfair 

marketing techniques? 

Mr. COHEN. I would not be surprised if we know a very specific 

answer to that question. About 80. 

Senator MCCASKILL. So 80 agents have been fired? How many 

agents do you have? 

Mr. COHEN. About 3,000, a little more than 3,000. So I guess 

about 3 percent have been terminated. 

Senator MCCASKILL. OK. 

How many civil monetary penalties has your company been assessed? How many CMP’s by CMS? Have you ever been assessed 

a fine? 

Mr. COHEN. We have never been, no. We are a relatively new 

company. We started in 2007. We have certainly had audits by 

CMS, routine audits, nothing special for us, if you will, and those 

audits have gone well. 

Senator MCCASKILL. But you have a corrective action plan as a 

result of those audits. Do you not have corrective action plans that 

have been imposed upon your company as a result of the audits? 

43 

Is there not a corrective action plan, in fact, that you went through 

in Missouri? 

Mr. COHEN. I think that the corrective action plan that we have 

had is fairly standard. It is just a standard term as part of the 

audit process. I do not think we have had—— 

Senator MCCASKILL. Well, it is standard to the extent that a lot 

of the insurance companies who go through it have corrective action plans, but it means there is something you have got to fix. 

Mr. COHEN. Absolutely, and we have submitted to CMS and had 

those approved. Yes, that is correct. 

Senator MCCASKILL. OK. 

Now, let me ask you, Ms. Coleman, are you aware of any CMP’s 

that have been imposed, civil monetary penalties that have been 

imposed, on companies in your region? 

Ms. COLEMAN. I am not aware of any CMP in particular. I do not 

believe that there are any—well, let me think. There are national 

plans which may have members in our region, but I am not aware 

of any that are smaller, localized plans. But I would have to get 

back to you to confirm that. 

Senator MCCASKILL. Do you have the ability to go in? Let us assume that you take this call back and you figure out who that 

agent was. Do you have the ability to take money out of that 

agent’s pocket? 

Ms. COLEMAN. No. 

Senator MCCASKILL. Do you have the ability at the Missouri Division of Insurance to take money out of that agent’s pocket? 

Ms. KEMPKER. No, we do not. 

Senator MCCASKILL. OK. That has got to be fixed. So the only 

person who can be penalized for an agent going out and lying to 

these people and saying that they are Medicare training specialists 

when they are really insurance salesmen—the only people who can 

be penalized there are the people that have stock in that insurance 

company, the insurance company itself? 

Mr. COHEN. Senator McCaskill, I would like to note that if a beneficiary is misled or enrolls in a plan and later finds out that it is 

not what they had expected, they can disenroll from that plan. We 

do not question the individual. We do not go back and say, are you 

sure you did not understand? 

Senator MCCASKILL. No, no. I mean the agent. I mean the person 

who—what I have learned the hard way is the way you stop that 

behavior is the person who engages in the bad behavior has to pay 

a price. What is happening in these instances is you have got 

agents—and we were able, I should tell you, Mr. Cohen, even you 

though you did not provide it, to get your sales incentive payments. 

We Googled it. You did not provide it for us after we asked, but 

we were able to Google it and get the money that your agents are 

paid for selling the policy and we have that information. 

So the agent wants to sell the policy because they make money 

if they sell the policy. If they get the person to sign the card, they 

get the money. If we had the ability to say, you find the person who 

made that call. You find the agent that went out to that house and 

said they were a Medicare training specialist. I assume that would 

be something that would be wrong. You cannot say you are a MediVerDate Aug 31 2005 15:11 Mar 23, 2009 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 H:\DOCS\47954.TXT SAG PsN: JOYCE
44 

care training specialist when you are an insurance salesman. Can 

you? 

Ms. COLEMAN. No, you cannot. 

Senator MCCASKILL. So if that agent himself or herself was fined 

and had to pay the money out of their own pocket, it seems to me 

the word would travel pretty quickly. If you cross the line, it is not 

going to come out of the company’s pocket, it is going to come out 

of your pocket. Has there been any attempt to try to do that that 

you are aware of? 

Ms. COLEMAN. Not that I am aware of, but I do know through 

information sharing what we are now doing with the departments 

of insurance, one thing that we can do regionally is to share information about brokers like that or agents, so other States can be 

aware this is happening in Missouri and this person may end up 

in Iowa or Kansas or Nebraska. So we are trying to be very 

proactive. We are just getting off the ground. To be quite honest 

with you, we have a lot more work to do, but we are very pleased 

with the relationships we do have with the State departments of 

insurance. I think the more we can share and work together, there 

will be pressure put on companies like Mr. Cohen’s to have agents 

that are trained and licensed and working appropriately. 

I am sure they do not look forward to having calls like that come 

to their health centers, and I am certain they take action to pursue 

people like that, I would hope, and address things so that they do 

not violate our rules. 

Senator MCCASKILL. Well, obviously, it is going to be very difficult for us to catch people who do this because most of the time 

it happens in someone’s living room when the only person there is 

the senior and the salesperson. The senior is going to say XYZ happened, and the salesperson could say, oh, no, XYZ did not. I explained it fully. They are just confused. So it is a he said/she said 

in terms of the conduct of the agent. But in the instances where 

we catch agents doing it, it seems to me we ought to have an ability to go after not just their companies, but the agents themselves. 

Would that take a legislative change on the State level for you 

to be able to do that, Ms. Kempker? 

Ms. KEMPKER. Part of the problem is we have the authority to 

suspend or revoke the license. As far as redacting commissions, 

that would be through the insurance companies, and because it is 

a Medicare Advantage product, we have no authority over the commissions. It would be at the Federal level. They would have to impose some type of legislation to either allow the States to do that 

or enforce it on the Federal level through the companies. 

I will tell you that the call center calls——those individuals are 

not agents. They are literally a marketing company and they pay 

these individuals a certain dollar amount for every appointment 

that they set. So not only do you have the very rogue agents pushing the products for the high dollar commission, you have the individuals in the call center who are not agents who are making those 

statements. The oversight should be by the company or the insurance agency that hires them, and that appears to me to be lacking 

or nonexistent. 

Senator MCCASKILL. So what is happening is, to get the agents 

in the door, they are hiring just a bunch of people in cubicles with 

45 

headsets that are making these phone calls based on generated 

data lists of people who potentially—let us talk a little bit about 

the special needs program. 

I think this is interesting because it is my understanding—and 

somebody correct me if I am wrong—that there are two instances 

where special needs comes into play. One is somebody who is dually eligible. Right? So somebody who is Medicaid, they can also get 

a special needs, or if they have a chronic illness by virtue of calling 

her where he got the woman to say that she had a breathing problem that allowed the special needs to kick in. 

What is the reasoning behind allowing the Medicaid people to be 

sold a new policy every month? What is the reasoning behind that? 

Does anybody know? Ms. Coleman, do you know what the reasoning is? 

Ms. COLEMAN. We did not want any of those individuals to lapse 

in coverage. We wanted to make sure that they had coverage 

throughout the year at every day of the month. 

Senator MCCASKILL. Well, I think that sounds as a good reason, 

but I think we can see what the problem is. Mr. Cohen, I am correct, am I not, that your agents would get an extra bonus on top 

of their commission for getting a special needs plan signed up? It 

is my understanding they make another $150 on top of the regular 

commission if it is a special needs program. 

Mr. COHEN. I do not know the details of that. I do know that we 

only offer—our company only offers special needs plans. So I would 

be a little confused that we could offer something as a bonus for 

doing something when we do not do anything else. 

Senator MCCASKILL. I am thinking it is somebody who is already 

on the program who you sign up for another one. Is that right? 

I have got here, we are pleased to announce the launch of our 

2008 sales bonus program. Beginning March 1, 2008, effective 

through December 1, 2008, in addition to the commission you currently receive from your FMO selling entity, we are pleased to announce the following bonus program paid directly to you through 

your FMO selling entity. This comes off the Internet from your 

company, Care Improvement Plus, specialized care for Medicare 

beneficiaries. 

Members enrolled in the green or blue counties are eligible for 

bonus incentives beginning March 1, 2008. Members enrolled in 

yellow or red counties have revised commissions beginning April 1, 

2008. We will be paying a $150 bonus for each new Care Improvement Plus member who meets the following criteria. has an effective date of March 1 through December 1, resides at the time of 

enrollment in one of the green counties in the attached map. Please 

note the 90-day charge-back policy still applies. $112.50 bonus for 

each new Care Improvement Plus member. 

So basically if you get somebody involved in one of these programs and your agent sells them another program in a month, they 

are going to get a $150 bonus during this period of time. 

Mr. COHEN. From what you have read, yes, there is a bonus that 

sounds like it is county-related. It does not sound like it is taking 

an existing person and selling them something different. It sounds 

like it is taking someone who is not in any of our plans and enrollVerDate Aug 31 2005 15:11 Mar 23, 2009 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 H:\DOCS\47954.TXT SAG PsN: JOYCE
46 

ing them into one of our plans, from what you have said. But yes, 

you are correct that there is a bonus there. 

Senator MCCASKILL. So if somebody is already in one of these 

plans and your agent manages to put them in a different plan, 

even though they are already in a special needs plan, they get to 

change every month, as you know. The people in special needs that 

are dually eligible can change plans every month. So if your agent 

calls upon someone who has company A’s special needs program 

and you sell them your policy, CIP special needs program, even 

though they are both special needs programs, your agent is going 

to get 150 bucks for selling that policy, extra besides their commission, based on this document. 

Mr. COHEN. Yes. It sounds like we are paying bonuses related to 

members that join our plan whether they came from Medicare feefor-service or another special needs plan or no matter where they 

came from. 

Senator MCCASKILL. I am assuming it is fairly easy to find the 

people who are on Medicaid. I assume you can find the people who 

are on Medicaid in terms of approaching them for sale? 

Mr. COHEN. I do not know. 

Senator MCCASKILL. OK. 

Do you have agents from other States—brokers from other States 

that are working in Missouri selling your plans, Mr. Cohen? 

Mr. COHEN. I am fairly certain we have a requirement that to 

be able to sell a plan, you need to be licensed in the State in which 

you sell. So, yes, I have heard that complaint in the industry. We 

as a company have a specific requirement that you must specifically be licensed in the State in which you sell. I do not know that 

we have had that in effect since we started January 1, 2007, but 

we heard that issue in the industry and we instituted that. 

Senator MCCASKILL. Well, one of the disappointments that I was 

hearing I will share now for the record. We had an insurance agent 

who contacted us that wanted to come testify, and he shared with 

us his frustrations about these programs and the way they are 

being marketed. Without telling you where he is from or his name, 

he says that there are a lot of unhappy seniors in his area who had 

been given the hard sell on Care Improvement Plus in his town. 

They were working two senior low income subsidiary building towers in the city. Insurance brokers, one as far away as Oklahoma, 

were going door to door in these buildings, selling these policies to 

seniors who were not told they were being taken out of Medicare. 

He had to personally help one elderly lady disenroll after she 

signed up last November and was unable to pay her bills. 

Another elderly woman was taken out of her Part B after specifically asking not to be removed from it due to its subsidies on drug 

costs. After being signed up for the CIP policy, she then got a bill 

from her pharmacy for $131 for drugs. She had previously paid a 

$2 copay. 

Unfortunately, for this agent, afterward he called someone else 

in the company and said that he was going to testify. He began getting e-mails and contacts that he thought was going to hurt his career, and he then called us back and said he was going to decline 

to participate because of that. 

47 

Is it illegal for agents from Oklahoma to be working in Missouri, 

Ms. Kempker? 

Mr. KEMPKER. Missouri has a law that any solicitation of insurance—insurance products—that all agents have to be licensed. So 

it is a Missouri requirement, and both agents on the calls were 

from Oklahoma City. 

Senator MCCASKILL. OK. What were the dates of those calls? 

Mr. KEMPKER. One was, I think, August or September last year, 

and the other one we received February this year. As far as the actual dates, I do not know. We were surprised that we were able to 

obtain the actual recordings, much less anything else. 

Senator MCCASKILL. Ms. Coleman, I know that you all have done 

the secret shopping program, and Senator Kohl asked me to convey 

to you—and I know this is probably somewhere above you in the 

bureaucracy, but if you would convey—we were frustrated. Senator 

Kohl had asked for the results of that secret shopping program. 

Evidently there were some write-ups about it I understand maybe 

in the New York Times or somewhere, but yet our committee has 

not been allowed to access the results of the secret shopping program. There have been a number of written requests to CMS about 

that. 

For the record, I wanted to reiterate Chairman Kohl’s frustration 

that that information is still not forthcoming to our committee and 

we are anxious to look at the secret shopping program to determine 

what you all learned as you sent people out to these various companies to see what kind of information they were being given in 

terms of the marketing practices. If you would convey that, we 

would appreciate that. 

Ms. COLEMAN. Sure. I could certainly follow up with my folks on 

that. 

I can tell you that we did take some corrective actions after the 

secret shopping concluded last summer. Several plans were sent 

warning letters following our attendance at their events, and we 

did request corrective action from two plans that we found in serious violation of our rules. We actually issued an intermediate sanction against one plan, and it required them to suspend their marketing and enrollment until they could demonstrate that they had 

actively and adequately corrected their problems. 

Senator MCCASKILL. Ms. Maples, could you tell me how much 

time did you put into trying to get your situation straightened out? 

Did you do it all on your own? 

Ms. MAPLES. No, I did not do it. At first, I did it on my own, and 

a lot of it you have to do on your own. But I had an excellent, excellent insurance man with Physicians Mutual. He was at the 

house one day for 31⁄2 hours, and we was on the phone with GHP 

all that time just talking to different people. 

A lot of these—you talk to one person. They will tell you one 

thing. You hang up and call right back and talk to somebody else. 

They will tell you something completely different. I am having the 

same problem with Advantra RX Premier right now too. 

Senator MCCASKILL. That is Medicare D? 

Ms. MAPLES. Yes, Part D. I mean, every time you call, you are 

talking to somebody different. I called the enrollment department 

48 

at Part D, and they say, well, we do not do anything. We are just 

hired to enroll. We do not even know what is in your file. 

Then I get a phone call the other night asking me why I got off 

of Advantra RX, and this is like at 8:30 at night. I said, I am trying 

to get back on the Advantra RX. Well, we are just making a survey 

to better ourselves. I said, well, I got lots I could tell you. I do not 

think you have got enough time to listen to it all. You know? 

I said, I would rather talk to somebody higher up than you. Well, 

he started asking me the questions like what plan was I on, this 

and that. Then I finally got him to let me talk to his supervisor. 

So I explained everything for about 10 minutes it took me, and 

then she started saying, are you white, black, Hispanic, Indian, 

blah, blah, blah, and I answered that. She said, are you on Medicare A, A/B, and all this and that? I told her what I was on. She 

said, OK, thank you. I said, wait a minute. Can you help me with 

my problem or tell me who to talk to? No, ma’am, I cannot. 

Senator MCCASKILL. Well, you know what that was. 

Ms. MAPLES. A survey. 

Senator MCCASKILL. What these companies do is they do surveys 

to validate that they are terrific. 

Ms. MAPLES. Exactly. 

Senator MCCASKILL. The person who called you had nothing to 

do with that company. 

Ms. MAPLES. Exactly. 

Senator MCCASKILL. The person who called you is somebody who 

was hired by the company to call people and find out what it was 

that—— 

Ms. MAPLES. Exactly. 

Senator MCCASKILL. They are trying to help their marketing 

and, in fairness to them, make sure they do a better job, if they 

can, in terms of customer service. But the person you talked to had 

nothing to do with the company. They were just hired to survey 

you and ask you questions about it. 

Ms. MAPLES. Yes. To me, though, the supervisor should have 

said, sorry, you know, I cannot help you. 

You would not believe how many times I have had to explain this 

over and over and over. I mean, my paperwork shows it right here. 

Actually this has been going on going back to January 29, and then 

I started again on May 29, when GHP finally disenrolled me, that 

I wanted to be disenrolled from. Like I said, as of now, I have no 

health insurance and no prescription. 

Senator MCCASKILL. Are you paying now out of pocket? 

Ms. MAPLES. I have had to pay for June out of pocket, and I am 

on a diabetic pill also called Actos and it was going to cost me $120 

and I did not get it refilled. 

Senator MCCASKILL. Tell me about when the sale occurred, was 

it in your house? 

Ms. MAPLES. Yes. 

Senator MCCASKILL. How did they get there? Did they call you 

to make an appointment? 

Ms. MAPLES. Right. They called me to make an appointment, and 

then I decided—I even tried calling and canceling. I was working. 

I have 5 acres. So I was working out in my yard because it was 

a nice day, even though it was January. Oh, this will not take long. 

49 

I drove all the way out here. I need to talk to you. It is very important. I said, well, I really like being outside. She just insisted. So 

she went inside, and like I said, she made everything sound so 

good, but I sure did not know about all the 20 percent off of this 

and that and 5 days in the hospital and—— 

Senator MCCASKILL. Ms. Maples, were you sure at the point in 

time that you signed on the dotted line—did you understand that 

this was a private insurance company, that you were no longer 

going to have Medicare coverage? 

Ms. MAPLES. No. I signed it all and then she said something to 

me right before she left. She said, now, when you get your card, 

do not show your red, white and blue card. Only show that card. 

Do not show any other card. She said that is for prescription and 

everything. But she did not tell me that I would not be—yes, off 

of Medicare. 

Senator MCCASKILL. So you did not understand, at the point in 

time she left, that by signing up with this private insurance company, you were no longer going to have any Medicare coverage at 

all. 

Ms. MAPLES. Exactly. 

Senator MCCASKILL. OK. 

Ms. Beahan, I am curious, and maybe somebody else on the 

panel can explain this to me. What would be the motivation that 

a nursing home would want someone to drop their Medicare Advantage program? Why would that be to the benefit of the nursing 

home to convince their residents to no longer have MA programs? 

Ms. BEAHAN. It may be that nursing home does not accept that 

plan, so they believe that if they drop that Medicare plan, they will 

be back on original Medicare. But that person may not be able to 

purchase a Medicare policy because they may have lost their guaranteed issue for a Medigap policy or they may not be eligible for 

Medicaid or they may only be in there for skilled care and it will 

be a short period of time. So they may not understand how the 

Medicare Advantage plan actually works for them or maybe the 

benefits are not as equal as the traditional fee-for-service. 

Senator MCCASKILL. Generally speaking, Mr. Cohen, do your 

agents match—this goes to Senator Shoemyer’s point. Senator 

Shoemyer talked about one of the reasons that these programs 

were touted by this administration—this administration wants everything private. This administration wants everything to be private, including Social Security. So Medicare Part D was their big 

plan to take pharmaceutical private. Medicare Advantage is their 

plan to begin the process of getting everyone off any Government 

insurance and getting them all on private. This is their ‘‘your are 

going to be private’’ program for this administration in terms of 

getting people to private coverage as opposed to Medicare coverage. 

You know, I guess what I am trying to get at is are you all 

matching what services are available in the county with what you 

are selling. In other words, when an agent comes into Kirksville, 

which Senator Shoemyer represents, and she is going to sell a special needs policy. Does she, before she sells that policy, know what 

doctors in that community take your policy? Does she know whether or not there is dental available? Does she know whether or not 

50 

there is vision available in that community? Is that information 

that your agents know when they make the sale? 

Mr. COHEN. We are a chronic special needs plan, not a dual-eligible special needs plan. So the issues are a little different, but for 

the most part, yes, we try to structure our benefits in a way to offer 

benefits that the beneficiary—the added benefits that the beneficiary—would not otherwise have. So that is the work we try and 

do on benefit design and benefits that are targeted toward the diseases that we cover. So in terms of on the benefit side, the answer 

should be yes. 

On the doctor side, we are a little unique in that we are what 

is called a regional PPO. So we do have a network. But yet we 

allow beneficiaries at any time to go out of the network so beneficiaries should not have to travel. We are potentially subject to the 

issue that has come up with private fee-for-service where a doctor 

could turn down the plan, but we work very hard to go educate 

physicians that we will pay them the same way as Medicare. We 

do not have any network requirements. So beneficiaries are allowed 

to go to any doctor at any time. 

Senator MCCASKILL. Does it cost them more to go to someone out 

of network? 

Mr. COHEN. No. 

Senator MCCASKILL. Well, then why do you have a network? 

Mr. COHEN. We have a network to assure access and because it 

is a CMS requirement to be what is called——special needs plans 

by definition under Medicare law have to be what is called a CCP, 

a coordinated care plan. So there is no such thing as a special 

needs plan that does not have a defined network. There is no such 

thing as a private fee-for-service special needs plan. That is not 

possible under the law. So we have to have a network and we do. 

Senator MCCASKILL. All right. So you have a network, but anybody who has your plan can go to any doctor. 

Mr. COHEN. Yes. In our case, yes. 

Senator MCCASKILL. They do not pay any extra. 

Mr. COHEN. That is absolutely correct. 

Senator MCCASKILL. So if somebody buys your plan in Kirksville 

and they go down to their local doctor to get diabetes treatment because they have been getting all their diabetes medication and 

strips and everything from one doctor—they go to that doctor and 

that doctor says, I do not take your plan, then all that person has 

to do is say, well, yes. They will pay you the same as they will pay 

any other doctor in the network. 

Mr. COHEN. That is correct, though it is not just the beneficiary 

that would do that. If we heard from the beneficiary that they were 

having difficulty with their doctor, we would work very hard to do 

outreach to that physician and to educate them to what you just 

described, that we are not there to be intrusive. As a special needs 

plan for the chronically ill, our goal is to provide an added level of 

care coordination and not in any manner to interfere with patientdoctor relationships. So we will pay the Medicare fee schedule with 

no negative impact on the beneficiary. 

Senator MCCASKILL. Senator Shoemyer, in your legislation—or 

are you aware, Ms. Coleman, at the Federal level? Has there been 

any attempt to, in fact, require these plans to include in whatever 

51 

they give to the person they are selling the plan to the list of doctors that they can see in their area? 

Mr. SHOEMYER. Well, I think that would be something that 

would be very helpful. Obviously, that was one of the things that 

we were asking to give time to ask a trusted family member to give 

time to—— 

Senator MCCASKILL. Check. 

Mr. SHOEMYER [continuing]. Check with their doctor to ensure 

that if they do buy it, that they are covered. You know, there is 

just a whole host of these, especially with Medicaid in Missouri and 

the secondary payor issue that comes out of that, that I think are 

things that people just need to be informed. That is why in the legislation we pursued in Missouri that is all that we can do in regards to selling these insurance policies, is regulate the way that 

agents’ behavior is acted on in Missouri. 

Senator MCCASKILL. Ms. Coleman, has there been any effort to 

require the sales people to match up—I know that when I look at 

what plan I have taken in the past, I get a booklet that shows me 

all the doctors that are available under that health care plan. Is 

there any requirement anywhere that that be done on these plans? 

Ms. COLEMAN. I do not believe there is a requirement that they 

specifically give them the list of doctors, but we do review all Medicare Advantage applications for network adequacy in the areas in 

which they are marketing and enrolling individuals, and we do ask 

the agents to tell the beneficiary—I believe it is in our rules, but 

I have to confirm—that the plan does limit their access if they do 

have a network that is closed. They do need to inform the beneficiary at the time of the application of that fact. 

Senator MCCASKILL. Do you know whether CMS agents have 

done super shopper programs in Missouri? Secret shopper, not 

super shopper. Super secret shoppers. [Laughter.] 

Ms. COLEMAN. I know there was limited secret shopping in Missouri during the initial phase last year, but we do have plans to 

resume and expand our secret shopping in the fall through the next 

benefit year. 

Senator MCCASKILL. Do you all actually monitor the marketing 

materials? Do you get the marketing materials into your office and 

look at them? 

Ms. COLEMAN. Yes, we do. We actually do quite an extensive 

monitoring of marketing submissions from the plans. It is done 

electronically, and the work is actually done for certain plans right 

in the regional office in Kansas City. 

Senator MCCASKILL. What do you think is the best way that we 

can get a handle on these marketing techniques, you know, the 

lunches and the bingo games and the door-to-door? I know somewhere in these materials is a quote from someone going door to 

door, that somebody in one of these facilities—I do not know who 

gave us this—but came into the woman’s room and said, the Lord 

told me to come in here because you had an oxygen sign on the 

door. Did you give us that material, Ms. Kempker? 

Ms. KEMPKER. Yes, I did. 

Ms. MCNALLY. That came from me. 

Senator MCCASKILL. That came from you? This was in a senior 

center? 

52 

Ms. KEMPKER. Subsidized housing. 

Senator MCCASKILL. Subsidized housing, which of course is a 

prime target because in subsidized housing, they are more likely to 

be Medicaid. 

Ms. KEMPKER. Correct. 

Senator MCCASKILL. So there is a chance that if you have a subsidized housing senior facility, that every person in that building 

is eligible every single month to be sold. 

Ms. KEMPKER. Correct. 

Senator MCCASKILL. In fact, one agent could hang out there, get 

to be friends with everyone, and just sell a different company—one 

broker could sell a different company’s program every month to 

every senior and make a really good living. 

Ms. KEMPKER. You have described it. Yes, that is exactly what 

he is doing. 

Senator MCCASKILL. So are there brokers that are staying there 

and selling different policies to different people different months? 

Like let us say if Mrs. Jones—and the same person sells Mrs. 

Jones one company’s policy one month and another company’s policy two months later. 

Ms. KEMPKER. I have reports of that occurring. Hopefully, what 

we hope to do is to encourage—I think it is very important for 

Medicare beneficiaries. We have got to understand what this is and 

what is going on. Once it happens to you—for example, the lady 

who had been churned so many times she was unable to get her 

medicines—it is not going to happen to you again. 

Senator MCCASKILL. Is there a way that we can——we know 

where all the low income senior housing is in the State. Correct? 

Ms. KEMPKER. Correct. 

Senator MCCASKILL. Are we doing something on a proactive basis 

to inform these low income senior housing facilities about the dangers of the marketing of these programs? 

Ms. MCNALLY. We are making every effort to. It seems like one 

of the problems or frustrations that I personally have is that as we 

come up with ways to educate seniors or things to tell them, some 

new salesman comes up with a pretty good idea that sounds very 

appealing to them that we have not thought of yet. So they come 

up with a different way of approaching. 

We have developed the book that you have in your hand. Actually we did not develop that. The Alabama project developed that. 

We just reprinted it with the SHIP’s permission, Ms. Beahan’s program and ours. There is a questionnaire that we hope someone will 

fill out before they actually agree to purchase one of those plans 

and consider all of the questions that are important in that decision. 

Senator MCCASKILL. Well, this is a terrific booklet. I mean, this 

is terrific. If someone goes through these questions and answers on 

these last two pages, they are going to be protected because they 

are going to find out the information that they need to know before 

they have happen to them what happened to Ms. Maples. 

It seems to me, Senator Shoemyer, that it would be a really good 

idea to get the Division of Aging, State of Missouri, to actually 

begin a program in every nursing home and every low income senior center with the help of these organizations to make sure that 

53 

these booklets are available everywhere and that the people who 

are distributing them are the people at the facilities they trust as 

opposed to someone who comes in that they do not know because 

that is part of the problem. I am sure Mr. Cohen’s company would 

not do this, but there might be a company that would now put out 

a marketing piece that looks exactly like this, protect your Medicare by buying a Medicare Advantage program, even though it is 

not really Medicare. It is an insurance policy. 

It seems to me that if we have learned anything today, what we 

have learned is that while these programs—and let me take just 

a couple of minutes on the record to say if there are good things 

about these programs, some of these policies are the right product 

for the right person at the right time. There is nothing about this 

hearing that should imply that all of these companies are evil or 

that all these products are bad. 

But what it is, it is a dangerous marketing environment, Mr. 

Cohen. You have people that are worried about their health from 

the time they get up in the morning until the time they lay their 

head down at night. They are worried about their finances from the 

time they open their eyes in the morning until the time they lay 

their head down at night. Those are the two primary concerns that 

the elderly of this State and every State in our country have. To 

not be more aggressive in terms of going after agents that are taking advantage of those two realities is something that we cannot 

rest until we get this fixed. 

I think that there has been a tendency, I think, Ms. Coleman— 

and I will take this up and I know Senator Kohl will take this up 

with the highest levels of your organization. I think there is a tendency to give companies too many bites at the apple in terms of bad 

behavior. It is a little bit like raising kids. When you tell your kids 

if you do that again, something is going to happen to you, and then 

you tell them again, you know, if you do that again, something is 

going to happen to you, you know what is going to happen? They 

are going to do it again because nothing happened to them. 

I do not think that the civil monetary penalties——and I would 

ask for the record and we will follow up with the people in Washington. We need for the record all the CMP’s that have been imposed because now we know they made $37 billion in profit in 

2005. Now, that is before the marketing and the techniques over 

the last 2 or 3 years. These companies are wildly profitable, and 

they have a desire to continue to be wildly profitable. 

I think the only way we are going to get companies’ attention for 

bad marketing techniques is to hit them hard when they do it. I 

mean the agents. I mean the call centers, every place we can. If 

we start doing that, the word will spread like wildfire, and these 

companies will be very, very careful because it would cost them 

dearly. 

Unless and until we do that, I think the seniors of this country 

are going to continue to be in jeopardy of being misled and spending money they do not need to spend and missing out on benefits 

that they are entitled to that they are not going to get. 

So I will take back the information we have learned today. 

I want to thank each of you individually for your help here today. 

I want to particularly thank the Senior Center, and I know that 

54 

the head of the Senior Center is here. Where is she? Will you raise 

your hand? There she is. Thank you so much for your help. Let us 

give her a round of applause and all of her staff. [Applause.] 

They worked hard to get this ready today, this facility. 

I want to thank everyone who attended this hearing, and if you 

want a copy of this booklet, which is not from an insurance company—this is from people that are trying to make sure you are 

making the right decision—just let us know if you are here attending the hearing, and we will make sure you get a copy of it. I want 

to thank all the witnesses for being here today. 

I particularly want to thank my staff that is here from Washington, D.C. and the staff from the Special Committee on Aging 

from the Senate that is here from Washington, D.C. to help us with 

this hearing today. 

The hearing is adjourned. Thank you. [Applause.] 

[Whereupon, at 10:46 a.m., the hearing was adjourned.] 

(55) 

A P P E N D I X 

PREPARED STATEMENT OF SENATOR CLAIRE MCCASKILL

I would like to welcome everyone to today’s hearing. I particularly want to thank 

our witnesses for taking time out of their busy schedules to be with us here today. 

I want to discuss Medicare Advantage (MA) plans in Missouri. I understand that 

these plans may be helpful under the right conditions. I am concerned, however, 

that after more than a year of congressional scrutiny, I am still hearing from constituents who have been victims of predatory and, sometimes, illegal sales and marketing tactics. Our investigations have also revealed these concerns apply to the relatively new Medicare Advantage product Special Needs Plans. These plans are designed for low income or seriously ill seniors who may lose much needed assistance 

from Medicaid to cover co-pays when placed in a Medicare Advantage plan. It is important to assure vulnerable seniors are not pressured into an inappropriate plan 

due to high sales agent commissions and company profits. 

Medicare Advantage was created to improve access, choice and services for seniors. They have been touted as the solution for rural citizens, those with special 

needs, and as a way to increase choice and efficiently bundle services for low-income 

senior’s eligible for both Medicare and Medicaid. 

In February, however, the GAO released findings that under many different scenarios MA actually cost seniors more money out of pocket and limits the services 

they would have received with regular Medicare. In addition a report GAO issued 

just last week stated that Medicare Advantage plans underreported profit to CMS 

by $1.14 billion (on top of the $35 billion the plans in the study made in 2005) while 

80% of beneficiaries were enrolled in plans for which expenses for medical care were 

lower than projected. 

Further there exists today an ‘‘alphabet soup’’ of choices for seniors, be it a MA— 

PDP, PPO, HMO, SNP, PFFS, or MSA. Be assured the senior is given multitudes 

of options for each separate plan. So if the goal of these plans was to offer more 

choice, we would say they have succeeded, however some would say this confusing 

array of choices has been to the detriment of the senior. In Missouri alone there 

are over four dozen MA and Special Needs Plans. 

All this choice is expensive; Congress’s expert advisory panel on Medicare payment policy, The Medicare Payment Advisory Commission (MedPAC), and the Congressional Budget Office (CBO) have determined that on average the Federal Government is paying these private plans 12 percent more than it costs to treat comparable beneficiaries through traditional Medicare, with some plans receiving up to 

19 percent more. The commission has also warned us that unless we reign in these 

expenses the Medicare Hospital Insurance Trust Fund will become insolvent much 

more quickly than currently projected. Furthermore, Medicare’s actuary has recently testified that seniors who choose to remain on traditional Medicare are subsidizing these Medicare Advantage plans by $48 per couple each year, adding up 

to $700 million, to help finance the overpayments to these MA programs. 

Last week, the Senate minority blocked legislation to prevent a large cut in Physician Medicare reimbursement that also would have prohibited some predatory sales 

tactics under Medicare Advantage. I am particularly concerned about the individuals who are at greatest risk, frail elders and people with complex or serious chronic 

needs who are served by Special Needs Plans. These are some of the fastest growing 

plans contributing to the 11% growth in overall MA enrollment in the last 6 months. 

Their growth is surely fueled in part by the 19% premium they receive. 

I look forward to hearing from our witnesses about these issues. It is my intention 

to continue efforts in Washington to address and resolve them, including putting 

pressure on Congress and the Administration to assure that seniors aren’t getting 

swindled and that the American taxpayer isn’t either. 

56 

Today I want to get a ‘‘boots on the ground’’ look at how the MA plans have impacted my state. And with that I welcome the testimony from today’s witnesses and 

how I can move forward from here. 

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