Medicare Advantage
CMS Actions Regarding Plans' Health Reform Communications Gao ID: GAO-10-953R September 20, 2010In August and September 2009, Humana--a large private health insurer--sent a letter to the approximately 930,000 beneficiaries enrolled in its Medicare Advantage (MA) plans, advising that leading health reform proposals could adversely affect MA beneficiaries. Signed by Humana's Chief Medical Officer, the letter stated that if proposed funding cuts became law, "millions of seniors and disabled individuals could lose many of the important benefits and services that make MA health plans so valuable," and encouraged beneficiaries to contact their members of Congress and ask them to protect MA funding. Once the Centers for Medicare & Medicaid Services (CMS) learned about the mailing, the agency directed Humana on September 18, 2009, and all other MA organizations on September 21, 2009, to immediately stop all communications to beneficiaries about the potential impact of health reform legislation while CMS investigated whether such communications violated federal laws, regulations, or MA program guidance. CMS issued clarifying guidance to all MA organizations on October 16, 2009, and took compliance action against some organizations, closing its investigation. CMS is responsible for overseeing communications between MA organizations and beneficiaries enrolled in their plans. Because MA organizations are Medicare contractors, communications to beneficiaries must comply with various requirements, including marketing guidelines and restrictions on the use of beneficiary information obtained from CMS databases. CMS requires that MA organizations submit marketing materials--defined as materials targeted to beneficiaries that, among other things, provide information on plan benefits--to the agency for review and may impose penalties for distributing marketing material inappropriately. This report responds to your request that we review CMS's actions in response to MA plan communications to beneficiaries about pending health reform legislation. We examined: 1. how CMS learned that Humana sent a mailing to beneficiaries on the impact of pending health reform legislation in 2009; 2. the concerns CMS officials cited regarding the Humana material and the reasons they gave for suspending all MA plan communications about pending health reform legislation; 3. how CMS learned whether any other MA organizations had communicated with enrolled beneficiaries about pending health reform legislation; 4. what criteria CMS used to evaluate whether MA communications on pending health reform legislation violated any laws, regulations, or agency guidance; 5. what CMS found in its investigation into MA communications on pending health reform legislation; 6. what specific actions CMS took after it investigated MA communications; and 7. the extent to which CMS's actions were in accordance with agency policies and procedures, and consistent across MA organizations.
1. According to CMS, during the third week of September 2009, officials from its Office of Legislation were on a phone call with a number of Senate staff discussing unrelated Medicare Advantage issues. At the end of that call, staff indicated they had reports from beneficiaries who had received mailings from their MA plan urging them to contact their members of Congress. Staff asked whether it was permissible for an MA organization to lobby the beneficiaries enrolled in their plans or ask beneficiaries to lobby Congress on the plan's behalf. The Office of Legislation referred the question to CMS's Center for Drug and Health Plan Choice, which is now the Center for Medicare. Subsequently, the Office of Legislation received and forwarded a number of additional inquiries from other congressional offices. 2. On September 18, 2009, CMS instructed Humana to discontinue mailings containing its views on pending health reform legislation and to remove any related materials from its Web site while the agency investigated whether any federal laws, regulations, or MA program guidance had been violated. CMS's letter to Humana stated that (1) the information contained in the mailing could mislead and confuse beneficiaries; (2) the mailing represented information to beneficiaries as official communications about the MA program; and (3) the mailing potentially contravened federal laws, regulations, and guidance, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA). 3. To identify whether any other MA organizations communicated with beneficiaries on pending health reform legislation, CMS relied primarily on its regional offices. On September 21, 2009, CMS's central office provided the regional offices with information about the Humana mailing and told them to "be on the lookout" for similar communications from other MA organizations. Then, on September 24, 2009, CMS's central office directed the regional offices to examine plan marketing materials that had been submitted for CMS review in order to identify any health reform communication. 4. In responses to congressional correspondence following CMS's September 21, 2009, memorandum, the agency reported that it is required by law and conforming regulations to ensure that (1) MA beneficiary communications are accurate and not confusing or misleading, (2) MA organizations do not use beneficiary information for purposes other than those agreed to under CMS's data use agreement that all MA organizations sign, and (3) federal funds are not used for impermissible activities, such as lobbying. 5. CMS's investigation into MA communications found violations by 6 of the 189 MA organizations under contract with CMS in September 2009. These organizations used various means to communicate with about 3 million beneficiaries on pending health reform legislation. The agency concluded that four violated CMS's Medicare Marketing Guidelines, all six violated CMS's Data Use Agreement, and three violated the prohibition on using federal funds to lobby members of Congress on pending legislation. 6. After determining that some MA organizations violated federal law, regulations, or MA program guidance, CMS took several actions. In a memorandum issued October 16, 2009, CMS provided clarifying guidance to amplify previous MA guidance on allowable uses of Medicare beneficiary information obtained from CMS. In addition, the agency issued letters of noncompliance--their lowest level of compliance action that carries no penalty--to five MA organizations in October 2009 and a sixth MA organization in June 2010. Finally, CMS stated in correspondence to members of Congress that the agency had asked several MA organizations that inappropriately used federal funds to reimburse Medicare for those funds. 7. In general, CMS's handling of MA communications on pending health reform legislation appeared to adhere to the agency's policies and procedures.
GAO-10-953R, Medicare Advantage: CMS Actions Regarding Plans' Health Reform Communications
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GAO-10-953R:
United States Government Accountability Office:
Washington, DC 20548:
September 20, 2010:
The Honorable Joe Barton:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Michael C. Burgess:
Ranking Member:
Subcommittee on Oversight and Investigations:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Greg Walden:
House of Representatives:
Subject: Medicare Advantage: CMS Actions Regarding Plans' Health
Reform Communications:
In August and September 2009, Humana--a large private health insurer--
sent a letter to the approximately 930,000 beneficiaries enrolled in
its Medicare Advantage (MA) plans, advising that leading health reform
proposals could adversely affect MA beneficiaries.[Footnote 1] Signed
by Humana's Chief Medical Officer, the letter stated that if proposed
funding cuts became law, "millions of seniors and disabled individuals
could lose many of the important benefits and services that make MA
health plans so valuable,"[Footnote 2] and encouraged beneficiaries to
contact their members of Congress and ask them to protect MA funding.
[Footnote 3] Once the Centers for Medicare & Medicaid Services (CMS)
learned about the mailing,[Footnote 4] the agency directed Humana on
September 18, 2009, and all other MA organizations on September 21,
2009,[Footnote 5] to immediately stop all communications to
beneficiaries about the potential impact of health reform legislation
while CMS investigated whether such communications violated federal
laws, regulations, or MA program guidance. CMS issued clarifying
guidance to all MA organizations on October 16, 2009, and took
compliance action against some organizations, closing its
investigation.
CMS is responsible for overseeing communications between MA
organizations and beneficiaries enrolled in their plans. Because MA
organizations are Medicare contractors, communications to
beneficiaries must comply with various requirements, including
marketing guidelines and restrictions on the use of beneficiary
information obtained from CMS databases. CMS requires that MA
organizations submit marketing materials--defined as materials
targeted to beneficiaries that, among other things, provide
information on plan benefits--to the agency for review and may impose
penalties for distributing marketing material inappropriately.
[Footnote 6]
This report responds to your request that we review CMS's actions in
response to MA plan communications to beneficiaries about pending
health reform legislation. We examined:
1. how CMS learned that Humana sent a mailing to beneficiaries on the
impact of pending health reform legislation in 2009;
2. the concerns CMS officials cited regarding the Humana material and
the reasons they gave for suspending all MA plan communications about
pending health reform legislation;
3. how CMS learned whether any other MA organizations had communicated
with enrolled beneficiaries about pending health reform legislation;
4. what criteria CMS used to evaluate whether MA communications on
pending health reform legislation violated any laws, regulations, or
agency guidance;
5. what CMS found in its investigation into MA communications on
pending health reform legislation;
6. what specific actions CMS took after it investigated MA
communications; and:
7. the extent to which CMS's actions were in accordance with agency
policies and procedures, and consistent across MA organizations.
To address these issues, we interviewed officials from CMS's central
office and its Atlanta, Boston, Kansas City, New York, and San
Francisco regional offices, as well as officials from the Department
of Health and Human Services' (HHS) Office for Civil Rights. We also
interviewed representatives from six MA organizations, including
Humana, which CMS found to be noncompliant with regard to materials
provided to beneficiaries on pending health reform legislation in
2009. We reviewed relevant laws and regulations, CMS standard
operating procedures, and other agency documentation related to its
investigation into MA plans' communications to beneficiaries about
pending health reform legislation. We conducted our work from April
2010 through August 2010 in accordance with generally accepted
government auditing standards. Those standards require that we plan
and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings based on our audit
objectives. We believe that the evidence obtained provides a
reasonable basis for our findings.
1. How did CMS learn that Humana sent a mailing to beneficiaries about
the impact of pending health reform legislation in 2009?
According to CMS, during the third week of September 2009, officials
from its Office of Legislation were on a phone call with a number of
Senate staff discussing unrelated Medicare Advantage issues. At the
end of that call, staff indicated they had reports from beneficiaries
who had received mailings from their MA plan urging them to contact
their members of Congress. Staff asked whether it was permissible for
an MA organization to lobby the beneficiaries enrolled in their plans
or ask beneficiaries to lobby Congress on the plan's behalf. The
Office of Legislation referred the question to CMS's Center for Drug
and Health Plan Choice, which is now the Center for Medicare.
Subsequently, the Office of Legislation received and forwarded a
number of additional inquiries from other congressional offices.
Agency officials could not say with certainty which particular
congressional office made the first inquiry.[Footnote 7]
2. What concerns did CMS officials cite regarding the Humana material
and what reasons did they give for suspending all MA plan
communications about pending health reform legislation?
On September 18, 2009, CMS instructed Humana to discontinue mailings
containing its views on pending health reform legislation and to
remove any related materials from its Web site while the agency
investigated whether any federal laws, regulations, or MA program
guidance had been violated. CMS's letter to Humana stated that:
* the information contained in the mailing could mislead and confuse
beneficiaries;
* the mailing represented information to beneficiaries as official
communications about the MA program; and:
* the mailing potentially contravened federal laws, regulations, and
guidance, including the Health Insurance Portability and
Accountability Act of 1996 (HIPAA).[Footnote 8]
Of particular concern to CMS was the statement on the mailing's
envelope--"Important information about your Medicare Advantage plan -
open today!" Agency officials noted in correspondence to members of
Congress that such labeling on the envelope implied that the
information provided in the Humana mailing was about the benefits
offered under a particular plan.[Footnote 9]
CMS cited similar concerns in its September 21, 2009, memorandum
directing all MA organizations to immediately discontinue all
communications on pending health reform legislation.[Footnote 10] The
subject line for the September 21 memorandum read, "Misleading and
Confusing Plan Communication to Enrollees." In it, CMS expressed
concern that recent mailings by MA organizations claimed to convey
legitimate program information about an individual's specific
benefits, but instead offered opinion and conjecture about the effect
of health reform legislation. Although they were aware only of the
Humana mailing when they issued the September 21, 2009, memorandum,
CMS officials told us they took this preemptive action to protect
beneficiaries and avoid confusion while the agency investigated
whether violations of federal laws, regulations, or MA program
guidance had occurred.
Furthermore, as CMS stated in its correspondence to members of
Congress, the timing of the Humana mailing also raised concerns.
Officials stated that beneficiaries could misconstrue it for their
plan's annual notice of change--a letter describing any changes in
coverage and costs for the upcoming year that MA organizations must
send to beneficiaries by October 31 each year--rather than Humana's
views on the implications of pending legislation.[Footnote 11]
However, neither the September 18, 2009, letter to Humana nor the
September 21, 2009, memorandum to all MA organizations expressed
concern that the timing of these materials could cause them to be
misconstrued with beneficiaries' annual notices of change.
3. How did CMS learn whether any other MA organizations had
communicated with enrolled beneficiaries about pending health reform
legislation?
To identify whether any other MA organizations communicated with
beneficiaries on pending health reform legislation, CMS relied
primarily on its regional offices. On September 21, 2009, CMS's
central office provided the regional offices with information about
the Humana mailing and told them to "be on the lookout" for similar
communications from other MA organizations.[Footnote 12] Then, on
September 24, 2009, CMS's central office directed the regional offices
to examine plan marketing materials that had been submitted for CMS
review in order to identify any health reform communication.[Footnote
13] Also, some regional office staff contacted MA organizations to
inquire whether they had disseminated materials on pending health
reform legislation. Relevant materials were collected and
preliminarily reviewed by regional office staff and then forwarded to
CMS's central office for a final evaluation. Subsequently, CMS
regional office staff learned of additional MA organizations'
communications on pending health reform legislation during the normal
course of business. For example, according to an MA organization we
spoke with, CMS staff conducting a routine on-site audit noticed a
newsletter in the company's reception area that contained information
on health reform, which they forwarded to the central office.
To supplement the regional office review, CMS engaged existing program
management contractors to examine publicly available information to
identify MA organizations' communications on health reform. The
contractors looked at Web sites and placed telephone calls to customer
call centers. They found several instances of organizations warning
that health reform proposals threatened beneficiaries' coverage under
the MA program. In their October 9, 2009, final report to CMS, the
contractors indicated which MA organizations had used these outlets to
encourage beneficiaries to contact members of Congress and object to
program cuts.
In addition, in October 2009, the Connecticut Attorney General, in
conjunction with Connecticut's Office of the Healthcare Advocate,
asked the state's five largest health insurers to submit any materials
they disseminated on the impact of proposed reforms to the MA
program.[Footnote 14] Three of the five organizations provided
Connecticut officials with copies of information on pending health
reform legislation either sent to beneficiaries or posted to their Web
site. On October 29, 2009, Connecticut officials forwarded the replies
to CMS and the congressional delegation from Connecticut.
4. What criteria did CMS use to evaluate whether MA communications on
pending health reform legislation violated any laws, regulations, or
agency guidance?
In responses to congressional correspondence following CMS's September
21, 2009, memorandum, the agency reported that it is required by law
and conforming regulations to ensure that (1) MA beneficiary
communications are accurate and not confusing or misleading, (2) MA
organizations do not use beneficiary information for purposes other
than those agreed to under CMS's data use agreement that all MA
organizations sign, and (3) federal funds are not used for
impermissible activities, such as lobbying. Therefore, CMS explained,
in its examination of MA organizations' documents, the agency sought
to determine whether the MA organization had violated any of the
following:
* CMS's Medicare Marketing Guidelines prohibit MA organizations from
disseminating misleading or confusing information.[Footnote 15] CMS
explained that this covers instances where MA organizations
inappropriately commingle plan and nonplan information in a single
document, such as a member newsletter. In addition, the Medicare
Marketing Guidelines require MA organizations to submit plan marketing
materials--defined as "any informational materials targeted to
Medicare beneficiaries that, among other things, provide information
on plan benefits,"[Footnote 16]--to CMS for review prior to their
distribution.[Footnote 17]
* CMS's Data Use Agreement and related policies, which according to
the agency, bar MA organizations from using Medicare beneficiary
information obtained from CMS's databases for purposes other than the
administration of plan benefits. MA organizations' use of beneficiary
information for health-related communications, such as information on
separate dental and vision policies,[Footnote 18] is consistent with
the Data Use Agreement. However, MA organizations must obtain
permission before using CMS's beneficiary information to send
nonhealth-related information, such as information on life insurance
policies and annuities.[Footnote 19]
* Federal law prohibits the use of federal funds for certain
activities designed to influence legislation or appropriations.
[Footnote 20] Among the activities that cannot be paid for with
federal funds are "grassroots" lobbying efforts aimed at defeating or
supporting pending legislation that expressly urge the public to
contact Congress. Contractors and grantees funded by annual HHS
appropriations acts cannot use federal funds to pay for certain
activities designed to influence legislation or appropriations pending
before Congress.
CMS's September 18, 2009, letter to Humana and September 21, 2009,
memorandum to all MA organizations stated that some MA organizations'
communications on pending health reform legislation had potentially
violated HIPAA. However, the HHS Office for Civil Rights--the office
responsible for enforcing the HIPAA Privacy Rule, which governs the
use of individuals' protected information by health insurers and
others--did not investigate whether MA organizations had violated
HIPAA. According to an official in the Office for Civil Rights,
because CMS was investigating whether MA organizations' communications
violated the agency's Data Use Agreement, which the official stated is
more restrictive than HIPAA on the use of beneficiary information, it
was not necessary for the Office for Civil Rights to explore a
potential HIPAA violation.
5. What did CMS find in its investigation into MA communications on
pending health reform legislation?
CMS's investigation into MA communications found violations by 6 of
the 189 MA organizations under contract with CMS in September 2009.
[Footnote 21] These organizations used various means to communicate
with about 3 million beneficiaries on pending health reform
legislation. The agency concluded that four violated CMS's Medicare
Marketing Guidelines, all six violated CMS's Data Use Agreement, and
three violated the prohibition on using federal funds to lobby members
of Congress on pending legislation.[Footnote 22] (See table 1.)
Table 1: Results of CMS's Investigation of MA Organizations'
Communications with Beneficiaries on Pending Health Reform
Legislation, 2009:
MA organization: A;
Type of communication: Stand-alone mailing and article in newsletters;
Month of communication: January, June, and September;
Type of violation: CMS's Medicare Marketing Guidelines: [Check];
Type of violation: CMS's Data Use Agreement: [Check];
Type of violation: Legal prohibition on using federal funds for
lobbying: [Empty].
MA organization: B;
Type of communication: Flyer in plan "Welcome Kit;"
Month of communication: February through September;
Type of violation: CMS's Medicare Marketing Guidelines: [Empty];
Type of violation: CMS's Data Use Agreement: [Check];
Type of violation: Legal prohibition on using federal funds for
lobbying: [Empty].
MA organization: C;
Type of communication: Article in newsletters;
Month of communication: March and June;
Type of violation: CMS's Medicare Marketing Guidelines: [Empty];
Type of violation: CMS's Data Use Agreement: [Check];
Type of violation: Legal prohibition on using federal funds for
lobbying: [Check].
MA organization: D;
Type of communication: Article in newsletter;
Month of communication: September;
Type of violation: CMS's Medicare Marketing Guidelines: [Check];
Type of violation: CMS's Data Use Agreement: [Check];
Type of violation: Legal prohibition on using federal funds for
lobbying: [Check].
MA organization: E;
Type of communication: Article in newsletters;
Month of communication: July and August;
Type of violation: CMS's Medicare Marketing Guidelines: [Check];
Type of violation: CMS's Data Use Agreement: [Check];
Type of violation: Legal prohibition on using federal funds for
lobbying: [Check].
MA organization: F;
Type of communication: Stand-alone mailing;
Month of communication: August and September;
Type of violation: CMS's Medicare Marketing Guidelines: [Check];
Type of violation: CMS's Data Use Agreement: [Check];
Type of violation: Legal prohibition on using federal funds for
lobbying: [Empty].
Source: CMS and MA organizations.
Note: According to CMS, notices of noncompliance are considered
confidential and are maintained in CMS's internal compliance tracking
system, but not posted publicly.
[End of table]
All of the organizations cited by CMS had urged beneficiaries to
contact members of Congress about pending health reform legislation
directly or by referring them to the Coalition for Medicare Choices,
[Footnote 23] an organization created by the industry trade
association America's Health Insurance Plans. Four of the six MA
organizations' materials directly stated that if health reform
legislation was enacted, MA beneficiaries could experience reductions
in their benefits. The other two MA organizations' materials did not
directly mention the potential impact of pending health reform on plan
benefits, but referred beneficiaries to the Coalition for Medicare
Choices Web site, which stated that if Congress were to cut MA
funding, "millions of seniors could see their benefits reduced, face
higher out-of-pocket costs, or lose their MA coverage entirely."
In addition, CMS found that three of the six MA organizations had not
submitted their materials for agency review, as required by the
Medicare marketing guidelines. These organizations told us that based
on their interpretation of the guidelines, their communications did
not meet the definition of marketing materials and were therefore
exempt from the review requirement. For example, member newsletters
are typically not subject to CMS review prior to use unless they
convey information on enrollment, disenrollment, benefits or coverage,
operational policies, rules, or procedures.[Footnote 24] One of the
three MA organizations that had submitted their materials for CMS
review told us they did so only as a precaution even though they did
not consider them marketing materials.
6. What specific actions did CMS take after it investigated MA
communications?
After determining that some MA organizations violated federal law,
regulations, or MA program guidance, CMS took several actions. In a
memorandum issued October 16, 2009, CMS provided clarifying guidance
to amplify previous MA guidance on allowable uses of Medicare
beneficiary information obtained from CMS. This guidance reiterated
that the CMS Data Use Agreement--which all MA organizations must sign--
bars organizations from using CMS data for purposes other than the
administration of plan benefits. In addition, the guidance clarified
requirements in CMS's Medicare Marketing Guidelines pertaining to the
use of beneficiary information for health care-related and nonhealth-
care related lines of business. Specifically, the memorandum clarified
that MA organizations are required to obtain prior authorization from
beneficiaries in order to send them materials that are not health
related. The October 16, 2009, guidance also stated that before
distributing materials on pending state or federal legislation or
about joining grassroots advocacy organizations, plans must ensure
that beneficiaries have opted-in to receive such communications.
Also on October 16, 2009, CMS issued another memorandum reiterating
the prohibition on using federal funds for nonplan-related activities
designed to influence legislation.[Footnote 25] The memorandum stated
that MA and other organizations under contract with CMS may not
include the cost of lobbying activities in their bid or cost reports.
Furthermore, beginning with bids submitted for contract year 2011, if
an agency audit were to determine that lobbying expenses had been paid
with federal funds, the organizations would be required to return
those expenditures to the federal government.
Representatives from the MA organizations that we interviewed stated
that, prior to the October 16, 2009, memoranda, in 1997 CMS issued a
letter responding to an inquiry about a Medicare health maintenance
organization's communications to beneficiaries on pending legislation.
This letter, signed by the Director of the agency's Center for Health
Plans and Providers,[Footnote 26] was, according to CMS, the most
recent guidance issued by the agency on this issue and stated that a
federal prohibition on such communication would violate the basic
freedom of speech or other constitutional rights of Medicare
beneficiaries. In responses to congressional correspondence, the CMS
Acting Administrator noted that since 1997 many new laws and
regulations have taken effect--including those related to data use,
marketing, and health information privacy--that have implications for
MA plans' communications on pending legislation. She pointed out that
MA plans may communicate their views on pending legislation with no
interference from CMS or others in HHS, provided it is done in
accordance with CMS's current guidance.
In addition, the agency issued letters of noncompliance--their lowest
level of compliance action that carries no penalty--to five MA
organizations in October 2009 and a sixth MA organization in June
2010. CMS officials told us they decided to take this action in light
of the somewhat vague guidance on this issue. At the time of CMS's
review, the Marketing Guidelines did not explicitly address plan-to-
beneficiary political communications. Four of these MA organizations
received noncompliance letters for violating both CMS's data use
agreement and marketing guidelines and two organizations received
noncompliance letters for violating CMS's Data Use Agreement.
Finally, CMS stated in correspondence to members of Congress that the
agency had asked several MA organizations that inappropriately used
federal funds to reimburse Medicare for those funds. However,
officials from the three MA organizations that used federal funds to
communicate with beneficiaries on pending health reform legislation
reported that they have not been asked to reimburse Medicare for
federal funds used for such communications. CMS officials confirmed
that, as of June 2010, they have not asked for reimbursement.
7. To what extent were CMS's actions in accordance with agency
policies and procedures, and consistent across MA organizations?
In general, CMS's handling of MA communications on pending health
reform legislation appeared to adhere to the agency's policies and
procedures. For example, consistent with its operating procedures, CMS
handled the inquiry about the Humana mailing in a manner and time
frame typically used for congressional inquiries. CMS standard
operating procedures state that all congressional inquiries are
considered urgent and must be resolved within 10 days. Within a week
of learning of the Humana mailing, CMS took action to address the
matter.
Some members of Congress expressed concern that the lobbying
activities of AARP--an advocacy organization for people age 50 and
older--were overlooked in the CMS investigation because it favored
health reform legislation. However, we found that CMS reviewed all
applicable MA organizations' communications in a consistent manner.
While AARP receives royalties from UnitedHealthcare in exchange for
the use of the AARP brand on some of its MA plans, it is not a
Medicare contractor and maintains its own membership records.
UnitedHealthcare, which offered an MA product co-branded under AARP,
was included in CMS's investigation of health reform communications.
Although CMS's actions generally conformed to its policies and
procedures, the September 21, 2009, memorandum instructing all MA
organizations to discontinue communications on pending legislation
while CMS conducted its investigation was unusual. Officials from the
MA organizations and CMS regional offices that we interviewed told us
they were unaware of CMS ever directing all MA organizations to
immediately stop an activity before CMS had determined whether that
activity violated federal laws, regulations, or MA program guidance.
When asked about this directive, officials from CMS's central office
stated that, given the degree of potential harm to beneficiaries, the
action was appropriate for the circumstances.
Agency Comments and Our Evaluation:
We obtained written comments on our draft report from HHS, the agency
under which CMS operates, which are reprinted in enclosure I. HHS also
provided technical comments, which we incorporated as appropriate.
Regarding the Medicare Marketing Guidelines, HHS stated that not all
instances of combining plan and nonplan information into a single
document, such as a member newsletter, violate Medicare rules. In
general, newsletters that contain information that qualifies as
marketing material--such as information on benefits and coverage--are
subject to Medicare review. HHS stated that although newsletters that
contain marketing materials would not necessarily be disapproved, in
certain instances CMS requires the separation of plan and nonplan
information in mailings that might otherwise mislead beneficiaries. We
modified language in the report to reflect this clarification.
In addition, HHS expressed concern that our description of the
September 21, 2009, memorandum as "unusual" makes it appear as though
their suspension of all MA organizations' communications on pending
health reform legislation was inappropriate. It noted that directing
an MA organization to immediately stop an activity while the agency
determined whether violations had occurred was infrequent but not
unprecedented. It cited a previous instance where it suspended an MA
reporting requirement while it reassessed its interpretation of
regulations. We believe that the example provided--wherein CMS put its
data collection activities on hold until the agency resolved concerns
with interpretation of its own regulations--is not comparable to CMS
instructing all MA organizations to stop sending information about
health reform proposals to beneficiaries while it investigated
potential violations. Moreover, our characterization of CMS's action
as unusual is based on discussions with MA organizations and CMS
staff. They told us that they could not recall a previous example
where CMS told all plans to stop an activity after a potential
violation was discovered and prior to the completion of an agency
investigation.
As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report for 30 days.
At that time, we will send copies to the CMS Administrator and
interested congressional committees. The report will also be available
at no charge on the GAO Web site at [hyperlink, http://www.gao.gov].
Should you or your staff have any questions on matters discussed in
this report, please contact me at (202) 512-7114 or cosgrovej@gao.gov.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Other key
contributors to this report were Rosamond Katz, Assistant Director;
Hillary Loeffler; Kevin Milne; Elizabeth Morrison; and Kathryn Richter.
Signed by:
James C. Cosgrove:
Director, Health Care:
Enclosure - 1:
[End of section]
Enclosure: Comments from the Department of Health and Human Services:
Department Of Health And Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
August 30, 2010:
James Cosgrove:
Director, Health Care:
U.S. Government Accountability Office:
441 G Street N.W.
Washington, DC 20548:
Dear Mr. Cosgrove:
Attached are comments on the U.S. Government Accountability Office's
(GAO) report entitled: "Medicare Advantage: CMS Actions Regarding
Plans' Health Reform Communications" (GAO-10-953R).
The Department appreciates the opportunity to review this report
before its publication.
Sincerely,
Signed by:
Jim Esquea:
Assistant Secretary for Legislation:
Attachment:
[End of letter]
General Comments Of The Department Of Health And Human Services (HHS)
On The Government Accountability Office'S (GAO) Draft Report Entitled,
"Medicare Advantage: CMS Actions Regarding Plans' Health Reform
Communications" (GAO-10-953R):
The Department appreciates the opportunity to comment on this draft
report. The report provides a summary of the Centers for Medicare and
Medicaid Services (CMS) actions in response to Medicare Advantage (MA)
organization communications to beneficiaries about pending health
reform legislation in the fall of 2009.
CMS took the actions described in this draft report under clear
statutory and regulatory authority based on three underlying concerns
regarding what CMS saw as potentially misleading or confusing plan
mailings. First, under the statute and implementing regulations, CMS
is required to ensure that communications from MA organizations to
their MA plan enrollees about the MA plan are submitted to CMS for
approval, and are accurate, and not confusing or misleading. Second,
CMS must ensure that plans do not misuse beneficiary information for
purposes inconsistent with the contractual and legal restrictions they
have agreed to that pertain to the use of such information. Finally,
CMS is required to ensure that Federal funds paid to contracting
entities, including MA plans, are not used for impermissible purposes
such as lobbying. Contracted organizations that sponsor Medicare
Advantage and Part D plans may communicate their views on pending
legislation without interference from CMS, but they must also comply
with all relevant statutory, regulatory, and subregulatory
requirements.
While we agree that CMS' authority to prohibit plan sponsors from
disseminating misleading or confusing information extends to instances
in which MA organizations inappropriately co-mingle plan and non-plan
information, we wish to clarify that MA organizations are not
necessarily prohibited in all cases from combining plan and non-plan
information in a single document, for example, a newsletter.
Newsletters are not subject to Medicare review unless they contain
information that meets the definition of marketing material (e.g.,
information on enrollment, disenrollment, benefits or coverage). While
inclusion of benefit-specific information would subject a newsletter
to our marketing material review requirements, this does not
necessarily mean the newsletter would be disapproved. However, there
are various instances in the Medicare Marketing Guidelines where we
require the separation of plan and non-plan information in mailings,
including newsletters; on websites; and in advertisements with the
express purpose of not misleading beneficiaries. In addition, our
Guidelines require plan sponsors to pro-rate mailing costs when plan
and non-plan information are co-mingled in a mailing to ensure the
costs of non-Medicare materials were not included as "plan-related"
costs in the plan sponsor's bid to CMS.
In addition, we are concerned that the GAO's finding that our
September 21, 2009 memorandum instructing all MA organizations to
discontinue communications on pending legislation while CMS conducted
its investigation was "unusual" makes it appear as though our actions
were inappropriate. Given the potential for beneficiary confusion, we
believed it was imperative to act quickly to avoid beneficiary
confusion, particularly with the annual coordinated open enrollment
period approaching. While infrequent, it is not unprecedented that CMS
would direct MA organizations and Part D sponsors to immediately stop
an activity while we determined whether actions were in violation of
regulations or program guidance. For example, in July 2009, we asked
MA organizations and Part D sponsors to suspend their submission of
updated agent and broker commission fee information for contract year
2010 enrollments (per a June 2009 instruction) while we considered
whether we had appropriately interpreted our regulations with respect
to compensation for initial enrollments. We subsequently (in August
2009) reissued our policy and our request for resubmission of
compensation amounts consistent with our regulatory authority.
[End of section]
Footnotes:
[1] The MA program is an alternative to the original Medicare fee-for-
service program. The MA program provides health care coverage to
Medicare beneficiaries through private insurance plans, referred to as
MA plans. MA plans must provide all Medicare-covered services (except
hospice care) and may offer additional benefits and lower costs. As of
December 2009, nearly 11 million--one in four--Medicare beneficiaries
were enrolled in approximately 4,700 plans offered by 188 MA
organizations.
[2] Specifically, the benefits and services cited in the Humana
mailing were low premiums, low deductibles and copayments, wellness
and enhanced preventive benefits, and coordinated care and disease
assistance programs.
[3] The letter also invited beneficiaries and others to join a special
Humana program--Partner--to receive information about proposed changes
to Medicare and advocate for Medicare benefits and related issues.
[4] CMS is the agency within the Department of Health and Human
Services (HHS) that administers the Medicare program.
[5] MA organizations may sponsor several MA plans with different
benefits, cost-sharing requirements, and premiums.
[6] See CMS, Medicare Managed Care Manual, Chapter 3 (Revised Aug. 7,
2009).
[7] On September 21, 2009, the Senate Committee on Finance issued a
press release stating that the Committee Chairman had requested that
CMS investigate the Humana mailing.
[8] The Health Insurance Portability and Accountability Act of 1996
(HIPAA) required the Secretary of HHS to issue regulations governing
individually identifiable health information if Congress did not enact
privacy legislation within 3 years of HIPAA's enactment. A final
regulation implementing standards for the use and disclosure of
certain health information, the "Privacy Rule," was published December
28, 2000. Modifications to the Privacy Rule were published in final
form August 14, 2002. See Pub. L. No. 104-191, §§ 261-264, and 45 CFR
Parts 160 and 164, Subparts A and E.
[9] According to CMS, between September 24, 2009, and October 13,
2009, HHS and the agency received several inquiries signed by members
of Congress.
[10] The Senate Finance Committee began public debate of its health
reform bill on September 22, 2009.
[11] See Social Security Act § 1851(d)(2).
[12] CMS requires MA organizations to submit all plan marketing
materials to CMS prior to use. MA organizations can submit materials
for CMS review under (1) the 45-day standard review process for
material that does not contain, or contains modified, CMS model
language; (2) the 10-day model review process for materials that use
CMS model language without modification; or (3) the "file and use"
process for marketing materials that have unmodified CMS model
language and are submitted to CMS at least 5 days before distribution.
MA organizations must certify that all plan materials submitted under
file and use are in compliance with MA marketing requirements.
[13] CMS conducts quarterly retrospective reviews of a sample of
marketing materials submitted under the file and use process to ensure
compliance with CMS marketing guidelines. This examination of
marketing materials was not a part of a formal retrospective review
that CMS conducts quarterly.
[14] The five companies were Aetna, ConnectiCare, Anthem Health Plans
of Connecticut, HealthNet of Connecticut, and UnitedHealth Group.
[15] CMS, Medicare Managed Care Manual, Chapter 3, Section 40.5
(Revised Aug. 7, 2009).
[16] 42 CFR 422.2260; 423.2260.
[17] CMS, Medicare Managed Care Manual, Chapter 3, Section 90 (Revised
Aug. 7, 2009).
[18] CMS, Medicare Managed Care Manual, Chapter 3, Section 40.14.1
(Revised Aug. 7, 2009).
[19] CMS, Medicare Managed Care Manual, Chapter 3, Section 40.14.5
(Revised Aug. 7, 2009).
[20] See, e.g., 18 U.S.C. § 1913; Departments of Labor, Health and
Human Services, and Education, and Related Agencies Appropriation Act,
2009, Pub. L. 111-8, 123, div. F, title V, § 503.
[21] CMS identified an additional four organizations that had
potentially violated federal laws, regulations, or MA program guidance
on communications on pending health reform legislation. Agency
officials told us that, prior to its investigation into MA
communications, two organizations had asked regional office staff to
review their materials and were advised not to disseminate the
materials. During CMS's investigation, regional office staff
determined that one MA organization developed newsletters that
contained an article on health reform, and submitted them under the
file and use process, but the organization told CMS it did not
distribute them to beneficiaries; and another MA organization posted
information on pending health reform legislation on a company Web site
but not on its Medicare-specific Web site, and thus the communication
was not deemed to be in violation of any federal laws, regulations, or
MA program guidance.
[22] CMS identified one of the six MA organizations from materials
received from the Connecticut Attorney General's Office. CMS did not
identify this organization during its own review because the
organization did not submit its marketing material for CMS review.
[23] The Coalition for Medicare Choices' Web site is available at:
[hyperlink, http://www.medicarechoices.org].
[24] CMS, Medicare Managed Care Manual, Chapter 3, Section 90.20
(Revised Aug. 7, 2009).
[25] The clarifying information in the October 16, 2009, memoranda was
subsequently incorporated into CMS's Medicare Marketing Guidelines.
See CMS, Medicare Managed Care Manual, Chapter 3, Sections 160 and 170
(Revised June 4, 2010).
[26] In 1997, CMS was referred to as the Health Care Financing
Administration. The Center for Health Plans and Providers is now
referred to as the Medicare Drug and Health Plan Contract
Administration Group.
[End of section]
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