[Senate Hearing 110-771]
[From the U.S. Government Publishing Office]


                                                        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

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                       SPECIAL COMMITTEE ON AGING

                     HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon                    GORDON H. SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas         RICHARD SHELBY, Alabama
EVAN BAYH, Indiana                   SUSAN COLLINS, Maine
THOMAS R. CARPER, Delaware           MEL MARTINEZ, Florida
BILL NELSON, Florida                 LARRY E. CRAIG, Idaho
HILLARY RODHAM CLINTON, New York     ELIZABETH DOLE, North Carolina
KEN SALAZAR, Colorado                NORM COLEMAN, Minnesota
ROBERT P. CASEY, Jr., Pennsylvania   DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     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)

  


                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 congressional 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.
    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 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 non-generics. 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 pocket 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:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    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.
    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 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:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    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.
    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:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    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 
special needs plans available. Although not all the plans are 
available 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-for- service, 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.
    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:]

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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 1\1/2\ 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 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 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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    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 Missouri, 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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    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?
    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? 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 Medicare 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 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 enrolling 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 fee-for-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.
    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 3\1/2\ 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 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. 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 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 patient-doctor 
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 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?
    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 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 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.]
                            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.
    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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