08 November 2004

State Officials Criticize Medicare Benefit Wording

WASHINGTON, Nov. 6 - The nation's insurance commissioners say the federal Medicare agency has made misleading statements about the new drug benefit in an effort to persuade people to sign up.

The National Association of Insurance Commissioners, which represents insurance regulators in all 50 states, registered its concern in a letter to the agency. State officials elaborated on their concerns in recent interviews.

If private insurers made such statements about their products, the association said, state officials would investigate their marketing practices for possible violation of consumer protection laws.

Since President Bush signed the Medicare law on Dec. 8, 2003, he has portrayed it as a boon to the elderly, "the greatest improvement in senior health care since Medicare was enacted in 1965.''

The insurance commissioners objected to a proposed federal rule requiring insurers to tell policyholders that the Medicare drug benefit provided "greater value'' than did the drug coverage available to people with private Medigap insurance. Similar statements appear on the Web site of the Department of Health and Human Services.

In their letter, the insurance commissioners agreed that a notice to beneficiaries was desirable. But the letter said the government had gone beyond the scope and purpose of the law and was requiring Medigap insurers to use "misleading language in an attempt to persuade beneficiaries to enroll'' in the new program.

"As regulators,'' said Sandy Praeger, the Kansas insurance commissioner, "we should focus on getting facts and information to people, not on cheerleading for a particular plan or a particular type of coverage.''

Administration officials denied that their characterization was misleading. Beneficiaries who switch to the Medicare drug benefit from Medigap policies will save more than $1,000 a year, they said.

The views of state insurance commissioners are significant for several reasons. The commissioners regulate the marketing and advertising of all sorts of insurance. They have years of experience in evaluating the claims made for insurance products. The federal government is required to consult them in setting Medigap standards. Their letter had no apparent ties to this year's elections and expressed no opinion on the merits of the new Medicare law.

In fact, the letter was signed by a Republican, Ms. Praeger, who is chairwoman of the association's committee on health insurance and managed care.

The proposed notice to beneficiaries "sounds a little too much like advertising'' for the new drug benefit, Ms. Praeger said in an interview.

Members of the association said they were speaking not as Republicans or Democrats, but as professional insurance regulators responsible for protecting consumers.

The Bush administration contends that the new drug benefit will be superior to existing private coverage.

"The new Medicare prescription drug coverage clearly offers a much better value to beneficiaries than Medigap, including comprehensive drug coverage at a lower cost to the beneficiary," the Department of Health and Human Services says on its Web site.

Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said, "Beneficiaries will generally be better off with the new drug benefit because they can get a 75 percent federal subsidy and protection against very high costs, which is not available in Medigap plans."

Under the law, Medigap insurers must send a notice to policyholders with drug coverage, explaining what options they will have in 2006. The administration says insurers should tell beneficiaries, in the first paragraph of any notice, that the new drug benefit "will provide greater value than your current coverage.''

State insurance commissioners object to that requirement. The new benefit, they said, does not necessarily offer greater value for all Medicare beneficiaries.

"Value can be measured in many ways, not just in the monetary value of benefits,'' the association said. Whether the new benefit provides greater value depends on many factors, including an individual's medical condition, drug costs and financial circumstances, it said.

In its letter, the National Association of Insurance Commissioners said the federal government was using "precisely the type of 'push' advertising technique that the N.A.I.C. and its members consistently oppose and prohibit at the state regulatory level.''

An elderly person who has had years of satisfactory experience with a particular insurer "may conclude that the Medigap coverage provides a better value,'' the association said in its letter. Moreover, it said, there is no guarantee that Medicare drug plans available on Jan. 1, 2006, will still be available two years later.

"The stability of something known and proven may be of more value than experimenting with an unknown and unproven prescription drug plan,'' the association said in its letter. The letter was dated Oct. 4, the deadline for comment on new Medicare rules.

The Wisconsin insurance commissioner, Jorge Gomez, said the federal government appeared to be "steering beneficiaries into the new Medicare drug coverage, which may or may not be appropriate, depending on an individual's circumstances.''

Consumer groups and some insurers expressed similar concerns.

A coalition representing dozens of consumer groups said the statement about the superior value of the Medicare drug benefit "may not be accurate for all beneficiaries.'' The coalition, known as the Medicare Consumers Working Group, includes the Epilepsy Foundation, Families U.S.A. and the Health Policy Institute of Georgetown University.

Diana C. Dennett, executive vice president of America's Health Insurance Plans, a trade group, said the government's derogatory comments about Medigap policies were "unnecessary and misleading.''

Deborah Armstrong, head of the New Mexico Department of Aging and Long-Term Services, said beneficiaries desperately needed objective, factual information.

"There's no one pat answer for everyone,'' Ms. Armstrong said. "If a Medigap policy is meeting your needs, you may want to stay with it. On the other hand, beneficiaries should be aware that if they later need more coverage and switch to a Medicare drug plan, there will be a financial penalty for late enrollment.''

By ROBERT PEAR
NY Times

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