Baucus Examines Suspension of Marketing of Private Fee-For-Service Plans
Finance Chairman requesting information, recommendations regarding CMS oversight of insurance plans
Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) is requesting
more information regarding the recent suspension of marketing of private fee-for-service plans by major Medicare Advantage organizations. On Monday, Baucus wrote to the Acting
Administrator of the Centers for Medicare and Medicaid Services (CMS), the president of
America’s Health Insurance Plans, and the CEOs of the seven health plan sponsors. He asked
what triggered the suspension of marketing activities, how CMS will strengthen its oversight of
plans, why insurers agreed to temporarily cease marketing their plans, and what improvements
insurers would recommend to the private fee-for-service program. Baucus has criticized
inappropriate marketing of private Medicare plans, and recently expressed his support for the
marketing suspension.
“Seniors need straightforward information to pick the drug benefit plan that’s right for
them, and they should get the benefits they’ve been promised,” said Baucus. “CMS needs to
take a long, hard look at the way private insurers are marketing their Medicare plans to
American seniors and to step up its oversight. I’m going to ask a lot of questions of a lot of
folks to make sure seniors come first in the private fee-for-service program.”
Baucus is the Chairman of the Senate Finance Committee, which has jurisdiction over Medicare.
The text of the letters follows here.
June 25, 2007
Via Electronic Transmission
Leslie V. Norwalk, Esq.
Acting Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Dear Acting Administrator Norwalk:
The Committee on Finance (the Committee) has exclusive jurisdiction over the Medicare
program. As Chairman of the Committee, I take this responsibility very seriously. Therefore, I
conduct oversight of the Centers for Medicare and Medicaid (CMS) to ensure, among other
On Friday, June 15, 2007, CMS announced that in response to concerns about marketing
practices of certain Private-Fee-For-Service (PFFS) plans, seven health plan sponsors signed
agreements to voluntarily suspend marketing of these plans. Pursuant to the agreements, CMS
will lift these voluntary suspensions when it certifies that a given plan has the systems and
management controls in place to meet all of the conditions specified in the 2008 Call Letter and
CMS May 25, 2007 guidance, “Ensuring Beneficiary Understanding of Private Fee-for-Service
Plans, Actions and Best Practices.”
As you know, I have previously expressed concerns about the marketing activities by Medicare
Advantage (MA) plans in general and of PFFS plans specifically. Therefore, I write today to
request that you explain what precipitated these voluntary suspensions and inform the Committee how CMS will conduct this suspension and strengthen its oversight of PFFS plans. Please answer the following questions:
1. What precipitated these voluntary suspensions?
2. Why didn’t CMS mandate a marketing suspension?
3. Does CMS have the authority to suspend the enrollment activities of these seven plans?
If so, why didn’t it do so during the marketing suspension?
4. Does CMS have the legislative authority to require MA organizations to cease specific
actions that CMS deems inappropriate or harmful to beneficiaries? Does CMS have
legislative authority to suspend activities such as marketing until the organizations have
met new guidelines published by the agency? Under what circumstances can CMS
require an immediate suspension of marketing and enrollment activities?
5. Furthermore, what are the administrative processes and the associated timeline for
exercising this authority?
6. How will CMS determine that the seven MA plan sponsors, which voluntarily suspended
their PFFS marketing activities, are in compliance?
7. What will CMS do to ensure that MA organizations that did not volunteer a suspension
adhere to the latest marketing guidelines in the most expeditious timeframe?
8. Please explain what actions CMS will undertake during this suspension to improve its monitoring of all MA plan sponsors marketing activities and beneficiary protections in
general. This is of particular concern, in light of the allowance that CMS gives to all MA
organizations to enroll dual-eligible beneficiaries at anytime during the year.
Thank you in advance for your cooperation. Please provide a written response to my questions
no later than July 9, 2007. Should you have any questions regarding this matter please contact
[staff] at (202) 224-4515.
Sincerely,
Max Baucus
Chairman
June 25, 2007
Via Electronic Transmission
Karen Ignagni, M.B.A.
President and CEO
America’s Health Insurance Plans
601 Pennsylvania Avenue, NW
South Building, Suite 500
Washington, DC 20004
Dear Ms. Ignagni:
The Committee on Finance (the Committee) has exclusive jurisdiction over the Medicare
program. Accordingly, the Committee has a responsibility to the more than 40 million Americans
who receive health care under the program and to the taxpayers who fund it.
As Chairman of the Committee, I take its oversight responsibilities for Medicare very seriously.
Therefore, I conduct oversight of the Centers for Medicare and Medicaid Services (CMS) to
ensure, among other things, that plan sponsors and providers comply with all program rules and
regulations as administered by CMS.
On June 15, 2007, CMS announced that in response to concerns about marketing practices of
certain Private-Fee-For-Service (PFFS) plans, seven health plan sponsors, all of whom are
members of America’s Health Insurance Plans (AHIP), signed voluntary agreements to suspend
marketing these plans. Pursuant to the agreement, CMS will lift these voluntary suspensions
when it certifies that a given plan has the systems and management controls in place to meet all of the conditions specified in the 2008 Call Letter and CMS’ May 25, 2007 guidance, “Ensuring
Beneficiary Understanding of Private Fee-for-Service Plans, Actions and Best Practices.”
It is critical to me that beneficiaries are protected against inappropriate or harmful actions by any
organization or provider that participates in the Medicare program. As you know, I have
previously expressed concerns about marketing activities by Medicare Advantage plans. I am
aware of AHIPs concerns about this as well and note the principles its Board of Directors issued
May 15, 2007, “Protecting Beneficiaries: Improving and Monitoring Medicare Marketing
Practices.”
To more fully understand what led the seven organizations to enter into the agreements with CMS and AHIP’s role in these voluntary suspensions, please answer the following questions:
1. How did these seven health plan sponsors and CMS decide to enter into these voluntary
suspensions? Please describe AHIP’s role in these agreements.
2. Please explain AHIP’s understanding as to why these suspensions do not apply to all MA
organizations offering PFFS plans?
3. What are AHIP’s expectations of its members and of CMS, during this suspension?
I thank you in advance for your cooperation and request your written response to my questions no later than July 9, 2007. In complying with this request for information, please respond to each
enumerated question by repeating the questions, followed by AHIP’s response.
Should you have any questions regarding this matter please contact [staff] at (202) 224-4515.
Sincerely,
Max Baucus
Chairman
June 25, 2007
[Medicare Advantage Private Fee-For-Service Plans]
Dear [CEO]:
The Committee on Finance (the Committee) has exclusive jurisdiction over the Medicare
program. Accordingly, the Committee has a responsibility to the more than 40 million Americans
who receive health care under the program and to the taxpayers who pay for it. As Chairman of the Committee, I take its oversight responsibilities for Medicare very seriously. Therefore, I conduct oversight of the activities of CMS to ensure, among other things, that plan sponsors and providers comply with all program rules and regulations.
On June 15, 2007, CMS announced that in response to concerns about marketing practices of
certain Private-Fee-For-Service (PFFS) plans, seven health plan sponsors, all of whom are
members of America’s Health Insurance Plans (AHIP), signed voluntary agreements to suspend
marketing these plans. Pursuant to the agreement, CMS will lift these voluntary suspensions
when it has certified that a given plan has the systems and management controls in place to meet all of the conditions specified in the 2008 Call Letter and CMS’ May 25, 2007 guidance,
“Ensuring Beneficiary Understanding of Private Fee-for-Service Plans, Actions and Best Practices.”
Protecting Medicare beneficiaries is critical to me and I appreciate that you agreed to this
voluntary suspension of marketing activities. To more fully understand the circumstances that led
[your company] to make this agreement with CMS and the actions that it will take to achieve
certification by CMS please answer the following questions:
1) What was [your company] understanding of the CMS marketing guidelines under
which it marketed its PFFS plan prior to the suspension? Please describe in detail the
efforts [your company] took to comply with these guidelines.
2) In addition to its efforts to meet CMS marketing guidelines, please describe any other
beneficiary protections that [your company] has previously incorporated into the
development and marketing of its PFFS plan.
3) Please describe why [your company] decided to enter into this voluntary agreement.
4) How long does [your company] believe it will take its PFFS plans marketing
activities to be certified so that this suspension can be lifted?
5) During the time [your company], PFFS plan’s marketing activities are suspended, what does your company hope that CMS will do and, describe the actions that [your company] will undertake during the suspension to achieve compliance with CMS guidelines.
6) What changes or recommendations if any does [your company] have to offer the Committee that would improve PFFS Medicare, marketing PFFS plans, and CMS' oversight of PFFS plans and marketing?
Thank you again for entering into this voluntary agreement to address problematic marketing
practices in the Medicare PFFS program. I thank you in advance for your cooperation and
request your written response to my questions, no later than July 9, 2007. In complying with this
request for information, please respond to each enumerated question by repeating the questions, followed by your response.
Should you have any questions regarding this matter please contact [staff] at (202) 224-4515.
Sincerely,
Max Baucus
Chairman
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