The Centers for Medicare & Medicaid Services (CMS) have just released two final regulations to protect Medicare beneficiaries from deceptive or high-pressure marketing tactics by private insurance companies and their agents during the upcoming 2009 Medicare Advantage and prescription drug open enrollment period.

The regulations contain prohibitions on telemarketing and other unsolicited sales contacts. The new rules also prohibit financial incentives for agents and brokers signing up a beneficiary in a plan and then moving the beneficiaries from plan to plan, a practice known in the industry as churning. Plans must be in compliance with these provisions when they begin their marketing activities on October 1. In addition, the regulation requires that agents and brokers be state licensed and appointed in accordance with state laws by that date.

"The regulations give insurers bright-line guidance on what types of marketing activities are acceptable and what types are not acceptable," said CMS Acting Administrator Kerry Weems. "Medicare beneficiaries can be assured that we will monitor marketing activities and move aggressively with enforcement measures or other actions if these rules are violated."

CMS efforts will continue past marketplace surveillance program activities to ensure that drug plans' and health plans' marketing practices meet the new requirements. Surveillance will include: tripling the number of "secret shopper" activities in which a Medicare official poses as a prospective enrollee and monitors sales agents' presentations for inaccurate information and prohibited sales tactics; reviewing plans' local print and broadcast advertisements; reviewing recordings of enrollment calls to ensure compliance with the new regulations; and ensuring that health and drug plans detect, report, and respond to agent/broker marketing misrepresentation and other issues.

During last year's open enrollment period, three organizations were required to develop corrective action plans and one organization's marketing activities were suspended. Other plans received warning letters from CMS.

"The vast majority of beneficiaries are extremely pleased with their prescription drug and Medicare Advantage plans and have not encountered heavy-handed sales tactics," said Weems. "CMS takes its enforcement role very seriously, however, and we will monitor activities throughout this year's enrollment period to ensure that beneficiaries are protected from aggressive marketing behavior from agents and brokers."

The final rule implementing MIPPA marketing requirements may be viewed at http://www.cms.hhs.gov/HealthPlansGenInfo/.