The Centers for Medicare & Medicaid Services (CMS) issued a long-awaited memo outlining best practices for Medicare marketing campaigns conducted by third parties. But does it go far enough? RISE weighs in.

In an Oct. 8 memo to Medicare Advantage (MA) organizations, the agency expressed concerns with misleading national advertisements that promote MA plan benefits and cost savings. In some cases, the plans are only available in limited-service areas or for limited groups, and the advertisement may use words and imagery that may cause beneficiaries to think the message is coming directly from the government.


Kathryn Coleman, director, Medicare Drug and Health Plan Contract Administration Group, said in the memo that CMS has received complaints from beneficiaries and caregivers that highlight sales tactics designed to rush or push beneficiaries into enrolling in a plan.

RELATED: New RISE Association workgroups tackle Medicare marketing compliance issues, KPIs for marketing and sales

Coleman didn’t name the advertising offenders but, in recent months, RISE members have expressed concern with the controversial Joe Namath commercials that tell viewers they are entitled to eliminate premiums and copays and get dental care, dentures, eyeglasses, in-home health services prescriptions, unlimited transportation, and home delivered meals at no additional cost. It also touts a give-back benefit for those who live in certain ZIP codes that adds money back to their monthly Social Security check.

In some instances, the commercials aired in markets where the benefits were not available, and this caused lead generation companies to aggressively promote their lead sales to e-brokers who were not always vetting vendors on how they obtained the leads. RISE members said the ads drove rapid disenrollment at some MA plans because members didn’t understand the implications of plan switching. As a result, RISE created a workgroup to address Medicare marketing compliance.

CMS response

The CMS memo reminded MA organizations that they are responsible for first-tier, downstream or related (FDR) entities adherence to CMS guidelines, including compliance with applicable Medicare laws and regulations when acting on the plan’s behalf. This includes the requirements that all marketing materials be submitted to CMS in advance and that MA plans may not mislead, confuse, or provide materially inaccurate information to current or potential enrollments.

Advertisements that address plan premiums, cost sharing, or benefit information—even those that don’t specifically mention a plan by name or are made on behalf of multiple MA organizations—are defined as marketing under 42 CFR §422.2260. This means that they must be submitted to CMS prior to their use.

“MA organizations are accountable and responsible for their marketing materials and activities, including marketing completed on a MA plan’s behalf by an FDR. Where such marketing materials and activities fail to meet our requirements, the MA plan may be subject to compliance or enforcement actions,” Coleman said in the memo.

The agency urged MA organizations to take the following actions:

  • Make outbound phone calls to beneficiaries, as opposed to letters, to establish and maintain a system for confirming that enrolled beneficiaries have, in fact, enrolled in the MA plan and understand the rules applicable under the plan.
  • Review rapid disenrollment to identify trends associated with “bad players.” In addition to recouping agent/broker compensation for rapid disenrollment, organizations must recoup any administrative payments made to an FDR where rapid disenrollment occurs.
  • Review actual marketing and enrollment calls between beneficiaries and call centers/agents to ensure compliance with the communications and marketing requirements.
  • Require FDRs to identify the origin of the enrollment lead (e.g., call in based on TV ad, response to mailing).
  • Record the entire sales call as well as all telephonic enrollments.
  • Require FDRs to disclose all contracted third-party relationships.

CMS said it is monitoring the “chain of enrollment,” which includes the marketing materials, lead generating activities, sales talks, and enrollment process, to ensure that organizations follow the requirements. Coleman also said that CMS is working with other federal agencies regarding the appropriateness of the content of certain advertisements.

RISE and industry reaction

Kevin Mowll, chair of RISE’s Medicare Member Acquisition & Experience Community, said he was pleased that CMS is calling out the activities and tactics that third-party lead generators have used, which have caused confusion and mislead beneficiaries about MA plans and benefits available to them.

CMS won’t go after these offenders directly and instead will rely on the long-established requirement that MA organizations are responsible for the activities and actions of the downstream actors in their member acquisition chain. CMS calls the tools that it expects MA plans to use as “best practices,” but they are the standard methods for conducting business in a compliant manner, according to Mowll.

“In short, CMS is reminding MA organizations that it will hold them accountable for any misdeeds involved in the daisy chain of lead generation and marketing. The reason for this is that CMS has no contractual relationship to enforce federal regulations with these third-party actors, only with the MA plans themselves,” he explained.

Compliance expert Naomi Irvin, who will present a session on Medicare marketing compliance with Mowll at the upcoming RISE Medicare Marketing and Sales Summit, said the memo should remind MA organizations of three points:

  • The importance of vendor/downstream entity oversight
  • Well documented oversight activities are an essential element of doing business–if it isn’t documented, it is as if it never happened
  • CMS will always look for health plans to act in the interest of beneficiaries

“The memo treads lightly in referring to the messages as possibly confusing,” she said, adding, “there is a fine line between confusing and deceptive.”

The takeaway: MA plans must become more diligent and scrupulous about where leads are coming from, who generated them, and whether they were generated in a compliant manner.  

“CMS reminds plans that they are monitoring rapid disenrollments and complaints from each MA plan, and CMS will hold the outlier plans accountable for their failures to police their lead generation ecosystem,” Mowll said.

To stay in compliance, he said organizations must have a thorough process to identify all downstream actors, a rigorous training and education process, tracking and monitoring all the way downstream, and a proactive communication response system. CMS will expect plans to show this system is in place and it works. Furthermore, he said, plans will need to conduct a root cause analysis if there is a problem and follow up with appropriate corrective actions and remediation.

“CMS is going to demand proof that these steps are taken,” he said. “The signals are clear: CMS is not going to step in and rescue MA plans from these bad actors. The onus is and always was on the MA organizations to ensure that these regulations are applied systematically and completely.”

One word of caution: “Many of us who were around during the wild days of the private Fee for Service MA plans in 2006 through 2008 remember the intense and micro-managed compliance reactions of CMS to the bad actor insurance brokers and agents,” Mowll said. “Those extreme oversight activities were onerous, painful, and expensive, lasting for many years. We do not want to experience a rerun of that movie.”