As Medicare open enrollment approaches, questions abound

The word "Medicare" superimposed above the image of a sunrise.

By Doug Bailey

The Medicare open enrollment period is just weeks away and with it comes a vast array of choices, overwhelming confusion, cold calls, TV ads, mailings, and even fraudulent come-ons.

During last year’s Medicare open enrollment period (OEP), 16.3 million Americans signed up for health insurance coverage and that number is expected to rise when the enrollment period begins in October.

While basic Medicare Parts A and B can be relatively straight forward, choosing a Part D or C plan which involves private insurers, can be blisteringly overwhelming. According to research by HSABank, one of the nation’s largest health savings account administrators, 74% of those surveyed said choosing a health plan was too confusing. Meanwhile, 86% said they stay with their current plan during enrollment, likely because changing plans is too darned complicated.

Medicare open enrollment 'complicated'

“There's two core reasons why people feel things are complicated,” said Kevin Robertson, executive managing director and chief revenue officer for HSA bank. “Number one is a lack of familiarity. Typically, most Americans only look at their health benefits once a year and they stop thinking about it the rest of the time. Unless they think about it more long-term, they’re probably going to find themselves misaligned, not optimized; overinsured or underinsured.”

The other reason, Robertson said, is more basic. People don’t like thinking about their own mortality or vulnerability.

“It’s an unwillingness to really take the time to do the math and make selections that are appropriate for your life,” he said.

Robertson said a number of surveys show Americans are overspending on health insurance, not realizing they don’t need some of the coverage they pay for.

Average overpayment found to be almost $2,000

“These studies have quantified the average overpayment in health insurance, and health benefits for the average American is almost $2,000 per year,” he said. “With the average family income in the U.S. right now at $71,000, that means that on average, the majority of Americans are overinsured, and they're probably wasting about 3% of their income on buying too much health insurance.”

Again, confusion and unfamiliarity are to blame along with a feeling of “set it and forget it” when it comes to choosing insurance options.

“We’ve been studying this for years and we have found knowledge gaps with specific insurance terminology like deductibles, coinsurance, out of pocket maximums, you know basic elements that people should understand,” Robertson said. “We asked people if they can identify these terms and the overwhelming majority of Americans cannot accurately identify these things. They're not difficult concepts, but again they don't really spend time looking at it. And because of that, they get confused and they fall into the trap more than likely to just stick with whatever they have.

In the midst of trying to consider options during Medicare open enrollment, consumers are often barraged with relentless advertising for Medicare Advantage plans, and the so-called Part D prescription drug options. Medicare Advantage plans are the private insurance alternative to original Medicare and enrollment in these plans has exploded in recent years. Federal officials estimate that by the end of this year, more than half of the 65 Medicare enrollees will get their health care through an Advantage plan.

Celebrities pitch Medicare Advantage plans

Beginning at the end of this month (Sept. 30), if celebrity pitchmen like William Shatner, Joe Namath, or Jimmy Walker want to sell you a Medicare Advantage plan, they must disclose what specific plan they’re shilling for and they can’t misuse the Medicare logo or card to fool consumers in believing they represent the federal government.

Those stipulations were part of crackdown on what the Centers for Medicare & Medicaid Services (CMS) called “misleading marketing schemes by health insurance companies that offer Medicare Advantage plans.”

Other provisions will prohibit overly general ads about the Medicare Advantage program that often tend to confuse and mislead individuals, CMS said.

The American Association of Retired People (AARP) has long urged the agency to enforce marketing rules on Advantage plans.

“AARP has repeatedly raised concerns about marketing abuses around MA plans and supported greater oversight, enforcement, and regulation of marketing materials and marketing standards for both MA and Part D plans,” AARP said in a letter to CMS back in April when the news regulations were unveiled.

And then there’s fraud. Along with misleading marketing schemes come the rise in crooks deliberately trying to deceive and fleece consumers, or Medicare. The National Health Care Anti-Fraud Association estimates that tens of billions of dollars per year are lost to healthcare fraud, including Medicare fraud. Some of the schemes take advantage of Medicare’s requirement to quickly pay claims, often before they can be flagged for fraud.

Scams are common

Typically, the fraudsters prey upon the disabled and elderly contacting them and offering them free medical devices or equipment such as orthopedic braces for back, shoulder, wrist or knee ailments. Once a person’s Medicare coverage is verified, doctors would sign prescriptions for orthopedic braces -- even if patients didn't need them. Sometimes, doctors sign several orders for braces for the same patient, fraud investigators found. The equipment company would then ship the braces to the patients and bill Medicare.

Another frequent scam involves phone callers who disguise their numbers to appear as legitimate insurance company calls, tricking consumers into believing they are talking to their own insurance company, and convincing the recipient to disclose their Medicare account number and other personal information. Even if the recipient catches on they become reluctant to respond to legitimate calls when they come.

One novel solution to this widespread scheme comes from First Orion Corp., based in Little Rock, Ark., that has developed a “branded calling solution” that can verify legitimate calls made by insurers and intercept bogus ones.

In a survey First Orion found that more than three in four respondents (76%) reported missing a call from their insurance provider because they didn’t recognize the number calling or it was not properly identified as a call from their insurance provider. Almost 20% also reported that missing the call cost them valuable time or had a direct financial impact.

“We knew there was a problem for enterprises being able to identify themselves and getting phone calls answered,” said Josh Whitehurst, director of product management at First Orion. “So we rolled out a suite of products. One of them is branding the phone call, allowing a legitimate enterprise to identify themselves. And the other one is effectively blocking or protecting customers against illicit spoof behavior. So, whenever an originating call is placed, it comes to a partner carrier network that is going to terminate that call, or complete the call to a customer. And we're able to see that in real time.”

Whitehurst said he recently signed up a major insurance company, which he declined to identify, that in its first month of operation the First Orion system identified 5% of their total monthly outbound call volume as fraudulent or elicit, an amount totaling in the thousands.

“Obviously 95% of their calls were legitimate, but 5% were scammers effectively trying to target their customers in some capacity,” he said. “That’s a massive number.”

Founded in 2008, First Orion has already branded and identified more than a billion phone calls from legitimate companies.

“When it comes to the insurance side, I think the concern for protecting consumers goes up because spoofers and scammers target these types of events (OEP) throughout the year,” said Whitehurst. “They're going to target what is hot at the time. We see it during tax season and we see it during [Medicare] open enrollment.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].