Health insurance agents' lack of disclosure can affect Medicare plan choices

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A convoluted selection process and a lack of transparency surrounding health insurance agents could be affecting how informed Medicare beneficiaries are regarding their plan options, according to a new report.

The Commonwealth Fund report found that, while beneficiaries often turn to licensed agents for help in finding suitable plans, agents are not required to represent all available plans. Agents also do not have to disclose whether there are other suitable plans outside of their representation. This can limit options presented to beneficiaries, unbeknownst to them. 

According to the report, 96% of Medicare Advantage and Part D plans contract with agents.

For beneficiaries looking for an agent to help with the selection process, there is no easy way to evaluate agents. While the Centers for Medicare and Medicaid Services revises its Medicare Marketing Guidelines annually, the carriers are responsible for overseeing agents.

Agents are also paid per enrollee, meaning "that carriers' and agents' incentives for growth are perfectly aligned," the report said.

Researchers studied five markets of three national, online-agent plan-selection tools. On average, those agents included less than half (43%) of Medicare Advantage plans and less than two-thirds (65%) of Part D prescription drug plans in their area. 

Researchers also assessed the quality of offered plans by reviewing star ratings. The online agent tools reviewed in the study did not offer all top-rated plans available. In Miami-Dade County, Florida, online agents offered less than half of the 10 five-starred Medicare Advantage plans. The surveyed agents in Summit County, Ohio, and Harris County, Texas, did not offer any. 

WHY THIS MATTERS

While Medicare plan choices have grown, many beneficiaries find the selection process confusing and overwhelming. 

Between agent contracts, online-agent plan-selection tools and Google search results, beneficiaries are unlikely to find a comprehensive list of the plans available to them. 

Any beneficiary turning to a Google search for information will also find results dominated by commercial organizations. More than one-third (36%) of results from the first results page led to agent or health insurer websites, according to the report. 

The authors call for a deeper policy look.

"By taking a comprehensive look at the existing model, policymakers may conclude that strengthening regulations of the agent marketplace may not only help consumers make more effective choices but also serve the agents well by creating greater transparency and enabling high-performing agents to better distinguish themselves from their competitors," the authors said.

This year Medicare beneficiaries will have an average of 33 Medicare Advantage plans and 30 stand-alone Part D prescription drug plans available to them, according to the report. 

This is where agents come in. 

The report notes that agents are often multilingual and located in the communities they serve.

"Given their local roots, agents can help plans reach a broader spectrum of beneficiaries, including racial and ethnic minorities and nonnative English speakers. Yet beneficiaries have limited ability to gauge the caliber of their agent, as there is no systematic or transparent way either for them or plans to avoid a bad actor," the report said. 

THE LARGER TREND

The demographic group for Medicare and Medicare Advantage plans is growing as more baby boomers reach the age of 65. 

In 2019, CMS modernized its Medicare Plan Finder – its most popular tool – to help users evaluate Medicare Advantage and Part D plans. 

Authors of the Commonwealth Fund's "How Agents Influence Medicare Beneficiaries' Plan Choices" see CMS' continued investment in Medicare.gov as an important solution for educating beneficiaries.

The authors also recommended increased transparency, beneficiary access to high-quality agents and support of educational efforts that go beyond Medicare plan selection.

ON THE RECORD

"During the past several years, CMS has made significant strides to improve the beneficiary experience and the breadth of resources and tools available to understand Medicare and beneficiaries' options. These efforts, with continued and direct patient and user feedback, should continue as more beneficiaries rely on online tools for information and guidance," according to the report. 

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