MEDIA ADVISORY, Thursday, June 27, 2007
CONTACT: Yoni Cohen, Stark (202) 225-3202

WASHINGTON, D.C. -- Rep. Pete Stark (CA-13), Chairman of the Ways and Means Health Subcommittee, today introduced the Medicare Advantage Truth in Advertising Act to prevent Medicare Advantage (MA) plans from charging seniors and people with disabilities more than traditional fee-for-service Medicare for any service.

“Medicare Advantage plans don’t live up to their name,” said Stark. “Though seniors and people with disabilities wouldn’t know it from the never-ending stream of insurance propaganda, Medicare Advantage plans charge more than traditional Medicare for a large number of services – everything from home health care to hospital stays and chemotherapy drugs to durable medical equipment. The Medicare Advantage Truth in Advertising Act protects beneficiaries by ensuring they won’t face higher out of pocket costs in private plans than they do in Medicare.”

The bill would prohibit MA plans from charging higher cost-sharing than Medicare for any service. It would continue to permit flat co-payments – which private plans charge for certain benefits or services in lieu of deductibles or co-insurance in traditional Medicare – but those charges could never exceed Medicare’s charges.

“Despite receiving substantial overpayments, private MA plans can provide inferior health coverage compared to traditional Medicare,” said Barbara Kennelly, President of the National Committee to Preserve Social Security and Medicare. “While MA plans are required to cover everything that Medicare covers, they do not have to cover every benefit in the same way. For example, private plans may create financial barriers to care by imposing higher cost-sharing requirements for benefits that protect the sickest and most vulnerable beneficiaries. Preventing private plans from imposing greater cost-sharing requirements than traditional Medicare would better protect beneficiaries from higher and unexpected out-of-pocket costs.”

Reports of inappropriate – and often illegal – sales techniques make protecting beneficiaries from higher costs all the more important. Marketing agents have been found to lie about MA premiums and physician participation in private plans. They have also taken advantage of individuals with serious language barriers or cognitive impairments and enrolled beneficiaries who thought they were signing up for new Medigap plans in Medicare Advantage.

“Medicare Advantage plans, particularly Private Fee-For-Service Plans, have new and very confusing arrays of co-payments and deductibles,” said Bill Vaughan, Senior Policy Analyst at Consumers Union. “Press reports confirm that a number of beneficiaries have joined such plans with little or no understanding that their out-f-pocket expenses may actually be higher, rather than lower compared to traditional Medicare. By setting a limit on these extra costs equal to the extra costs in traditional Medicare, [the Medicare Advantage Truth in Advertising Act] will help ensure that beneficiaries – particularly those most in need of services – are not surprised and economically hurt by the confusing array of options before them.”

“The Medicare Advantage Truth in Advertising Act will protect beneficiaries against unscrupulous marketing tactics and against Medicare Advantage plans that impose cost sharing in excess of traditional Medicare,” said Judith Stein, Executive Director of the Center for Medicare Advocacy.

The National Committee to Preserve Social Security and Medicare, Consumers Union, the Center for Medicare Advocacy, the Medicare Rights Center, California Health Advocates, the Alliance for Retired Americans, the National Senior Citizens Law Center and Families USA have endorsed the Medicare Advantage Truth in Advertising Act.

A chart detailing sample higher out of pocket costs in Medicare Advantage is available here.