CMS
Says Insurers Can Communicate about Healthcare Reform

Having been shut out of the reform debate for the better
part of a month, private health insurers contracting with the Centers for
Medicare & Medicaid Services (CMS) to administer Medicare health plans were
informed in mid-October that they could once again communicate with
beneficiaries about healthcare reform legislation and other issues not
specifically related to beneficiaries’ health plans. A pair of memoranda issued
to insurers clarified the use of beneficiary information obtained from CMS and
the prohibition on using federal funds for non–plan-related activities designed
to influence state or federal legislation or appropriations. CMS said plan
sponsors are permitted to send current members information about health-related
issues as long as federal funds are not used and the materials include
instructions describing how the recipients may opt out of receiving such
communications.

Humana began sending letters to Medicare plan beneficiaries
in August and September stating that proposed funding cuts for Medicare
Advantage as well as spending reductions for traditional Medicare and Medicaid
programs included in healthcare reform drafts could result in a reduction of
benefits. In September, CMS’ Medicare Drug and Health Plan Contract
Administration Group informed Humana that CMS was investigating their
communications and instructing them to end all mailings to beneficiaries and
remove any related materials from their Web site. Humana agreed to discontinue
the mailings, and other Medicare providers were instructed to refrain from
disseminating similar materials or posting them on the Web.

At the time, Jonathan Blum, acting director of CMS,
expressed concerns that materials sent by Humana may have violated Medicare
rules by appearing to contain Medicare Advantage and prescription drug benefit
information, which must be submitted to CMS for review. CMS asked all other
Medicare plan sponsors to refrain from mailing similar materials and began an
investigation into whether a potential violation had occurred.

The investigation into the Humana letter was prompted by a
request from Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee,
who accused Humana of misleading seniors. When the gag order was issued, the
proposed legislation receiving the most attention was Sen. Baucus’ Chairman’s
Mark: America’s Healthy Future Act, which was undergoing voting and markup in
the Senate Finance Committee. Republicans in Congress had threatened to hold up
the confirmation process for nominees to federal health posts if the gag order
and investigation were not discontinued. At press time, the House had just
passed HR 3962, the Affordable Health Care for America Act, and the process of
merging House and Senate bills was under way.

The memorandum rescinding the CMS gag order was written by Teresa
DeCaro, acting director, Medicare Drug and Health Plan Contract Administration
Group. It was sent to all Medicare Advantage organizations, Part D sponsors,
1876 and 1833 cost contractors, Program of All-Inclusive Care for the Elderly
(PACE), and Medicare Advantage Demonstrations and clarified rules governing the
use of beneficiary information obtained from CMS. The clarified guidance
restates existing law and regulation that affirms Medicare Advantage and
prescription drug plans have the right to communicate with seniors about
legislation.

“While we feel it is important to protect Medicare
beneficiaries from potentially unwelcome marketing and other communications, we
also recognize plans’ interest in contacting their enrollees on issues
unrelated to the specific plan benefit that they contract with CMS to provide
to those enrollees,” Ms. DeCaro wrote. She added that prior guidance on the
topic is superseded by the policy outlined in the memorandum and said CMS
intends to enforce the guidance on a prospective basis. The current Medicare
marketing guidelines can be found at http://www.cms.hhs.gov/ManagedCareMarketing.

Following the reversal of the gag order, Senate Minority
Leader Mitch McConnell (R-KY) welcomed the decision and made the following
remarks on the Senate floor: “By lifting its prior ban on communicating the
impact of Democrat plans for healthcare, the administration was admitting that
this ban amounted to a gag rule—a gag rule that had no place in a society that
prizes free speech and open debate.”

Sen. McConnell added that the information sent in the Humana
mailer is not only protected speech, but was in line with government agency
projections. “The fact is, what health plans were telling seniors is precisely
what the Congressional Budget Office has also said; namely, that Democrat
healthcare plans could cause seniors with Medicare Advantage to lose benefits,”
he said. “Americans believe strongly in the importance of the First Amendment.
I’m glad to see the administration has recognized the error of its ways and
rescinded this gag rule in the midst of such an important national debate.”

The day after CMS lifted the gag order, President Obama used
his weekly radio address to criticize health insurers for their participation
in debate over healthcare reform. “They’re filling the airwaves with deceptive
and dishonest ads. They’re flooding Capitol Hill with lobbyists and campaign
contributions. And they’re funding studies designed to mislead the American
people,” he said.

The memorandum lifting the gag order came with an attachment
providing detailed instructions for when prior authorization is required for
use of Medicare Beneficiary Information obtained from CMS, followed by how
prior authorization may be obtained. Health-related information can be sent to
beneficiaries unless or until they opt out. Prior to sending beneficiaries any
non-plan or non–health-related information, however, insurers must receive
opt-in authorization from individuals, and plans are advised by CMS to keep
evidence of this authorization for audit purposes. The guidance on allowable
data use states that opt-in authorization is required for plans to disseminate
information on pending state or federal legislation to their members.

Organizations and sponsors may send, at their own expense,
written requests to enrollees to obtain the beneficiary’s authorization for the
organization or sponsor to contact them for purposes unrelated to plan benefits
administration or CMS contract execution. The beneficiary must sign and return
the request before the plan can send non–plan-related materials or information.
Authorization may also be obtained online provided the link from the plan’s
Medicare product Web site informs beneficiaries that they are leaving the
Medicare product Web site and going to the non-Medicare product Web site.

Beneficiaries can complete authorization in person at
marketing events or health fairs, or during a beneficiary-initiated inbound
telephone call as long as the call is recorded. Authorizations via e-mail are
also allowed provided that the authorization includes an electronic signature.

The US Department of Health and Human Services (HHS) has
previously maintained that CMS should not prevent any health plan “from
informing its members of proposed legislation and exhorting them to express
their opinions.” A letter sent to health plans in 1997 by HHS’ Center for
Health Plans and Providers (CHPP), the agency that is now CMS, stated that
“prohibiting such information would violate basic freedom of speech and other
constitutional rights of the Medicare beneficiary as a citizen.”

The CHPP letter also stated that any materials sent by
health plans to members discussing proposed legislation must contain the
following statement: “Neither the Health Care Financing Administration nor the
Medicare program has reviewed the statement below for accuracy or
misinterpretation.” The latest memorandum on allowable use of Medicare
beneficiary information obtained from CMS supersedes the prior guidance.

In its new guidance on the use of federal funds for
non–plan-related activities, which also supersedes past guidance, Ms. DeCaro
states that HHS’ annual appropriations acts very specifically provide that no
appropriated funds may be used to pay the “salary or expenses of any grant or
contract recipient, or agent acting for such recipient, related to any activity
designed to influence legislation or appropriations pending before the Congress
or any state legislature.”

CMS clarified that Medicare Advantage and PACE
organizations, Part D sponsors, and 1876 and 1833 cost contractors that engage
in lobbying activities must not include such costs in their government bids or
cost reports. In addition, if an audit identifies that lobbying expenses have
been paid with federal funds, entities will be required to return to the
federal government an amount equal to these expenditures.

Reacting to CMS backing away from what he called an
“inappropriate and unconstitutional gag order on all Medicare Advantage and
prescription drug plans,” Rep. Dave Camp (R-MI), the senior Republican of the
House Ways and Means Committee, stated that he was “relieved that the
administration is no longer misusing its regulatory authority to prohibit plans
from communicating to seniors factual information about the Medicare cuts in
healthcare reform.”

Rep. Camp said he remains “concerned that CMS overstepped in
issuing its gag order as a result of undue political pressure to penalize
anyone who dare speak out against the Democrats’ healthcare bill.” He added
that, “We still need to get the answers to how and why this gag order was
issued.” He also noted CMS is no longer challenging the accuracy of the
statement that “millions of seniors and disabled individuals could lose many of
the important benefits and services that make Medicare Advantage health plans
so valuable.”—Charles Boersig