Is it open season for Medicare enrollment or for snagging seniors with incessant advertising?

by Cheryl Tevis, Iowa Capital Dispatch
November 25, 2023

Martha, Martha, are you listening? Martha? Can you hear me?

Is it Dec. 7 yet? No? Two more weeks? I can’t be the only person who has this date highlighted on my calendar. But my motivation might be different than you’d expect.

For those readers who are Gen Xers or Millennials, Oct. 15 to Dec. 7 is the annual Medicare open enrollment period. With a total of 65 million Medicare beneficiaries in the U.S., it’s a big marketing opportunity. It’s also annoying the hell out of everyone under age 65 – and that’s 83 percent of the American public.

In these incessant TV commercials, Martha, a white-haired lady wearing  super-sized glasses, is described by the narrator as a “cranky” 75-year-old. Apparently, she’s been living under a rock for the past 10 years: she has no idea what the narrator is trying to “man-splain” to her. The commercials are condescending and demeaning.

A 2022 Commonwealth Fund survey indicates that three quarters of individuals aged 65 and older reported receiving daily unsolicited calls or ads: “Hello, this is your senior advisor.” Calls are supposed to be federally prohibited unless individuals agree to be called.

Regardless, it’s open season on annoying – and often deceptive – phone calls, TV advertising and mailings. Most of the paid marketing barrage promotes Medicare plans run by private insurers, called Medicare Advantage (Part C) and Part D, the prescription drug coverage.

Medicare Advantage is more than twice as profitable for private insurers than any other type of health insurance coverage, according to the KFF, a nonprofit health policy and polling source (formerly the Kaiser Family Foundation). Advising a senior citizen to remain with a traditional Medicare plan doesn’t generate much profit for an insurance broker unless they can sell a private supplemental insurance plan as well.

But isn’t this just good ole American free enterprise at work? The nonpartisan Commonwealth Fund’s research suggests it might be more accurately pegged as a predatory practice.

Low-income people bear the brunt of the high-pressure marketing and advertising. Many report being asked for Medicare or Social Security numbers. Twelve million Americans who may be eligible for both Medicare and Medicaid have even more confusing choices from the category of special Medicare Advantage plans known as Dual-Eligible Special Needs Plans.

Grocery sacks of Medicare money?

Medicare Advantage plans are based on a managed care model, often limiting access to preferred physicians and pharmacies to a greater degree than traditional Medicare. They typically impose certain cost-sharing requirements, including co-payments or deductibles. Unlike traditional Medicare, they may offer dental, hearing, and vision coverage, but buyer beware: dental cleanings, X-rays, extractions, or exams may be limited, and a co-pay may be required.

However, the most incredible Medicare marketing pitches offer extra money each month to purchase totally unrelated items. For instance, my husband received a postcard touting a grocery allowance of at least $1,965/year for “certain beneficiaries” who switch plans. It reads: “if you have limited income or chronic conditions, at least $1,965/year in benefit assistance may be available for: over-the counter products, home supplies, rental assistance, utilities, pet care, non-Medicare transportation and meal delivery services.” What? More importantly, why?

Most disturbing is when health care providers seem to push these private plans. I received an email from The Iowa Clinic, with the headline, “Helping you understand Medicare Advantage,” and promoting a free Medicare 101 Seminar. I didn’t attend, so I don’t know if both pros and cons were covered. For instance, if serious illness requires out-of-network medical treatment, your costs may be consequential.

Endangering rural hospitals

Private Medicare plans are funded by Medicare, but insurers are allowed to keep part of the payments prior to paying for patient care. When Medicare Advantage plans were created in 2004, the Republican majority insisted on paying private insurers above the Medicare reimbursement rate as an incentive to encourage more participating plans.

It worked. Private plans now cover more than half of those eligible for Medicare.

If I needed another reason to bypass Medicare Advantage, I’m a rural resident who is concerned about the financial health of our small hospitals. Since 2010, about 150 rural hospitals have closed their doors. Medicare Advantage has the biggest negative impact on small, rural hospitals designated by Medicare as “critical access.” Hospitals with this designation are paid extra by Medicare to compensate for their low patient volumes. Medicare Advantage plans offer negotiated rates that typically don’t match traditional Medicare rates.

Health care administrators complain that Medicare Advantage pays slowly, and sometimes not at all. They refer to these as “delay, deny, or don’t pay” plans. KFF reports that 2 million prior authorization requests to see specialists were denied by Medicare Advantage in 2021, significantly higher than by traditional Medicare.

Rx is needed for rural pharmacies

Traditional Medicare is widely accepted. But if a hospital or physician doesn’t contract with a Medicare Advantage plan, their patients may be forced to pay for out-of-network care.

If current trends continue, it’s estimated that 50% of rural Medicare beneficiaries may be enrolled in Medicare Advantage within three years.

However, large hospital systems also are experiencing issues with Medicare Advantage plans. Scripps Health, a major health care provider in San Diego, announced in September it would drop Medicare Advantage plans due to such practices, including referral and pre-authorization requirements that jeopardize patients’ medical care. Recently medical groups in Virginia, Ohio, Missouri, Oklahoma, and South Dakota eliminated or cut back on in-network access to individuals enrolled in specific Medicare Advantage plans. The result: Patients are left in health care limbo.

Last spring, a bipartisan congressional group spearheaded by Sen. Sherrod Brown, D-Ohio, sent a letter asking that federal agencies demand that Medicare Advantage insurers pay health systems what is owed for patient stays. The Center for Medicare and Medicaid Services has issued a final rule to speed up care and respond to delays created regarding prior authorization.

Proposed legislation called Seniors’ Timely Access to Care Act of 2023 would streamline prior authorization, and has passed in the House; the  Senate has not acted.

Slow progress on curbing abuses

As a result of increasing consumer complaints, the Biden administration has implemented regulations restricting the use of the Medicare logo and name in 2023 TV ads as well as reining  in misleading promises of cost savings and superlatives like “best” or “most.”

Last month, the Senate Finance Committee, led by Sen. Ron Wyden, held a hearing with the American College of Physicians. Following public comments, more changes regarding deceptive advertising will take effect in 2024.

Last, but not least, there’s good reason to believe that Medicare Advantage plans waste taxpayer resources. Costs to the government have exploded since 2018, due to an “upcoding” formula called a “risk score” that significantly increases the amounts paid by the government to Medicare Advantage plans – and private insurers.

In addition, consumer use of Medicare Advantage’s extra benefits is low, and the U.S. Department of Health and Human Services has proposed a rule requiring insurers to make sure seniors can easily access these benefits. Otherwise, insurers get to pocket more money.

A growing number of experts suggest that federal funds would be better spent by using Medicare Advantage subsidies to reduce premium costs, increase benefits under traditional Medicare, or fortify State Health Insurance Assistance Programs like SHIP (Senior Health Information Program), which provides unbiased, free, local one-on-one counseling to seniors. SHIP received only about $55 million this year.

One more thing

Finally, this marketing tsunami known as Open Enrollment also showcases celebrities, including Joe Namath, William Shatner, and George Foreman advising seniors to call the Medicare Benefits Review 800 number. As we all know, they’re very wealthy folks. Yet we’re supposed to believe an extra $175 in their bank accounts each month is meaningful? A new Biden administration rule will require such celebrities in 2024 ads to disclose what insurance plan they’re hawking.

For some seniors, especially if they’re healthy, Medicare Advantage plans may work well. But much more needs to be done to initiate substantial reform before more Americans are hurt or defrauded.

And what about Martha? Although she’s clearly exasperated by the invisible announcer, she finally seems convinced to call the 800 number by the mere repetition of the words “free offer.”

One out of five seniors doesn’t know how to file a federal complaint about Medicare marketing, according to a 2022 Commonwealth Fund survey. Martha must be one of them.

Iowa Capital Dispatch is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Editor Kathie Obradovich for questions: info@iowacapitaldispatch.com. Follow Iowa Capital Dispatch on Facebook and Twitter.