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After the Goldrush: The Marketing of Medicare Advantage and Part D Plans

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Abstract:

The Medicare Modernization Act of 2003 (MMA) set off an unprecedented stampede of companies marketing Part D prescription drug plans as well as a wide range of Medicare Advantage plans offering medical benefits to people with Medicare. Although insurance companies have provided Medicare benefits in a managed care setting as an alternative to Original Medicare's fee-for-service benefits for over a decade, the new Part D prescription drug benefit is only available as an insurance product purchased from commercial companies contracting with the Centers for Medicare & Medicaid Services (CMS). As a result, millions of people with Medicare seeking prescription drug coverage are now in the sights of sales departments and marketing agents for insurance companies selling both Part D stand-alone drug plans and Medicare Advantage (MA) plans.

As consumers struggle to find the best combination of prescription drug and medical benefits for their individual needs, they must navigate a dizzying array of configurations and cost-sharing arrangements. That challenge is exacerbated by aggressive marketing tactics employed by insurance companies seeking to maximize their Part D market share for their more lucrative line of Medicare Advantage products.

This brief examines the marketing of Part D Prescription Drug Plans (PDPs) and Medicare Advantage plans by the insurance companies and their contracted agents selling these products in the field. The use of agents and independent brokers working on a tiered commission system has created financial incentives to enroll people with Medicare into plans, particularly Medicare Advantage plans, with little regard to suitability for the individual. Sales agents are often minimally trained and conduct their sales in face-to-face settings, often in a person's home, in which potential plan enrollees are even more susceptible to manipulation than over the phone.