FTC warns against deceptive health plan marketing

Photo: Manuel Breva Colmeiro/Getty Images

The Federal Trade Commission is warning companies that market or generate sales leads for health plans not to engage in deceptive practices in an effort to stave off malfeasance in the industry.

In a letter to 21 such companies, the FTC stopped short of any specific accusations, but generally warned against practices such as misrepresenting a health plan's benefits, misrepresenting a plan's costs or inaccurately claiming major or comprehensive coverage.

"It has come to our attention that companies that provide marketing or advertising, including lead generation, related to Affordable Care Act marketplace health insurance and healthcare-related products, such as limited benefit plans or medical discount programs, may be violating the FTC Act and rules enforced by the Commission," the FTC said.

Section 5 of the FTC Act prohibits deceptive claims, including misrepresenting costs or benefits, or falsely claiming that consumers who enroll in a healthcare-related product will receive free offers, cash rewards, rebates or other incentives.

WHAT'S THE IMPACT?

According to the FTC, consumers have also reported receiving unsolicited calls promoting healthcare-related product offers, potentially in violation of the Telemarketing Sales Rule, which prohibits marketers from initiating outbound phone calls that deliver prerecorded messages imploring people to purchase products.

The agency also cited the Rule on Impersonation of Government and Business, which makes it illegal to falsely claim to be a provider of government-sponsored health insurance policies.

Violations of the FTC Act may result in a Federal District Court Injunction, or a penalty of up to $51,744 per violation.

The FTC cited several recent enforcement actions but stopped short of leveling accusations at any of the companies named in the letter, instead suggesting that they complete a comprehensive review to ensure they're not in violation.

"You should conduct a comprehensive review of your marketing and advertising practices – including paid or other online ads, as well as representations made on your websites, on social media, in other promotional materials and communications, and through third-party distributors, marketing affiliates, and sales agents – to ensure that you are not engaging in deceptive or unfair conduct," the FTC wrote.

THE LARGER TREND

Medicare marketing that violates federal rules is an especially prevalent problem among low-income seniors, who are twice as likely to file complaints regarding what they perceive as shady marketing practices, compared to higher-income beneficiaries, according to a 2023 Commonwealth Fund study.

Reports of seeing, reading or receiving advertising information that was later found to be untrue were significantly more common among people with incomes of less than $25,000 than those with incomes above that level.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.