Statement of Albert Sochor, - National Association of ...
Statement of Albert Sochor,
Vice President of Old Surety Life Insurance Company
NAIC Public Hearing September 11th, 2007
Good afternoon, my name is Albert Sochor and I am Vice-President of Old Surety Life Insurance Company of Oklahoma. Old Surety Life Insurance has been working with seniors, consumers and independent agents since it’s inception in 1932. For the last 28 years Medicare has been a major focus of our company. We have seen many changes come about in our industry, some good and some not so good.
Personally I have been in the insurance business for over 20 years spending most of those years in the field as an independent insurance agent. Up until 1996 most of my experience was with property, casualty and life insurance. I knew very little about working with seniors and Medicare. Something happened in 1996 that changed my career and has brought me before you today.
In 1996 my mom was turning 65. She had called and asked me what she needed to do about getting enrolled in Medicare. I told her I wasn’t sure and she should call the Social Security office and they would help her. Social Security told my mom that she would receive Part A automatically and that she needed to enroll in her Part B for her medical coverage and would have $42.50 taken out of her Social Security check.
At that time my mom was employed full time, had group insurance and was not planning on retiring any time soon. She had informed Social Security of her current situation, but was told if she didn’t enroll in Part B at that time, she would be penalized 10% for every year she waited to enroll. So she did what anybody would do, she did what they said. Why? Because Social Security should know what they’re talking about.
My mom told me what she had done, but it didn’t make sense to me. Why should she have to sign up and pay a premium for Part B medical coverage when she already had group medical coverage?
After doing some research in a Medicare Guide book I realized she had made a mistake and probably had misunderstood what the Social Security office told her. My mom and I called the Social Security office together to get this straightened out. To my amazement I was told the same thing she had been told, she had to enroll in Part B or be penalized.
I argued a little with the representative based on my knowledge and what the Medicare Guide stated, but to no avail. At that point I asked for a supervisor. Now the supervisor knew exactly what I was talking about and disenrolled my mom from Part B saving her the $42.50 per month. Had I not been there and pushed the issue to get to a supervisor, that misinformation could have cost my mom thousands of dollars over the next several years. My mom was given misinformation from an entity that should have known what they were talking about. My mom finally did retire and enrolled in Part B in 2002. Because of that incident in 1996, I decided that the Medicare field and working with seniors is where I wanted to be.
I am telling this story to make a point. Over the past 12 years I have visited with many seniors who have made the same mistake, my mom almost made, because of the wrong information given them by agents and government entities. I am tired of the misinformation that was given at that time and I am tired of the misinformation that is being given now. Each and every one of us on this panel, I hope, feels the same way.
I don’t believe we would be here today if not for the widespread abuse that has taken place since the launch of Medicare’s Part D Prescription Drug benefit and Medicare’s Part C Medicare Advantage plans. For months we have read articles in newspapers throughout the country and have heard testimony from state insurance commissioners, senior advocacy groups and industry professionals stating that many Medicare beneficiaries have been misinformed or abused by Medicare Advantage and Prescription drug plan companies, agents and even CMS itself. In many of these cases it wasn’t just misinformation or misrepresentation; it was out and out fraud. I personally have worked with hundreds of beneficiaries and agents to help correct the damage that beneficiaries have suffered do to Medicare Advantage and Part D misreprentation, misinformation and abuse. What I have found is that even when beneficiaries have contacted the Medicare Advantage Plans, Prescription Drug Plans or CMS seeking help, many times, they were given inadequate or incorrect information.
I recently had a situation where a beneficiary actually hired an attorney and threatened suit against an agent, who had done no wrong. The basis of the threat was do to conflicting and wrong information given the beneficiary by CMS and the Medicare Advantage company. What happened was the beneficiaries had changed their mind a few days after they had enrolled in a Medicare Advantage plan on the advice of their children. They contacted the company and informed them of their decision to cancel their enrollment. The beneficiaries assumed it was taken care of and didn’t learn that the enrollment wasn’t cancelled until a couple of months later when the spouse incurred a claim. They were then informed that they were not on Medicare and neither Medicare nor their Medicare Supplement would pay the claim. They called the Medicare Advantage company and the company told them they had sent the cancellation to CMS and there was nothing they could do. CMS stated that they had not received any information and they needed it before they could do a retro disenrollment. This went on and on for several weeks until the beneficiaries, out of frustration, hired an attorney. The attorney blamed the agent who had no control whatsoever over the company or CMS. The agent called me and asked for help. It took several phones calls and many e-mails to people who could help to get this incident resolved. The process took several months and many hours of my time, the agent’s time and the time of people who cared.
There are many problems with the current system. From marketing abuse and the complexity and design of Medicare Advantage and Prescription Drug plans to the inadequacy of CMS’s current administrative procedures to handle the problems in a timely manor. The situation we are facing is reminiscent of what happened in the Medicare market with Medicare Supplement policies decades ago. Companies would change benefits and come out with new and unique products every year trying to pull business away from other carriers. Agents were induced to sell those products with high first year commissions, trips and incentive bonuses. Some Medicare beneficiaries would end up with two or more policies. Seniors were confused with all the options and were taken advantage of. When Congress passed the Obra 90 law it stopped most of the abuse and confusion.
We can’t keep giving agents the biggest share of the blame for these problems. We as companies, policy makers and CMS need to check our own actions and behavior. However, I don’t want us to throw the baby out with the bathwater. We need insurance agents, professional insurance agents that can provide assistance to our Medicare population.
I remember when I was raising my children and teaching them about boundaries, how to behave and the consequences of their actions. If I allowed them to continually behave improperly, they would do so and assume it must be okay. If I failed to discipline them for misbehavior, they would never stop doing what they weren’t supposed to do. I also had to be careful how I behaved. If I kept a double standard and behaved in a way that was inappropriate and then jumped all over their case for doing the same thing, they lost respect and rebelled.
I’m not sure when the last time, if ever, any one on this panel has had to deal directly with agents or what goes on in the field, but if we aren’t careful, agents can become like spoiled children. If we as companies and the government allow an agent to continue to do something wrong without consequences, they won’t be deterred. If we as companies and the government continue dragging our heels, because of politics, and not pay attention to the ongoing problem that Medicare beneficiaries are experiencing, agents won’t care. If we as companies and the government continue to allow carriers to make windfall profits based on OPM (other people’s money) and an already overburdened Medicare budget, agents too will think its okay to take advantage of Medicare beneficiaries.
It is because of these problems and what we have failed to do that we now face our biggest challenges. How do we bring stability back into the market? How do we keep the professional agents that are trying to do it right and discipline those who won’t play by the rules? How do we keep up with everything we need to do and communicate it to each other? How do we help our Medicare beneficiaries regain confidence in CMS, the Medicare program, the companies and the agents?
I know that Abby Block and CMS have worked hard to try and keep up and solve the problems that beneficiaries have been facing. Her “Call Letter” to the Medicare Advantage companies was a good start in trying to educate agents and to hold companies accountable. However, no matter how many tests, classes or books you require agents to complete in order to be certified to sell Medicare Advantage plans, you can’t dictate compliance. One Medicare Advantage/PDP company proved that last year. They had the most stringent training, yet had the most complaints. You have to take away the incentive to cheat.
I have read and review many suggestions as to what needs to be done in addition to what Ms. Block has suggested. I believe the following changes are necessary.
1. We need to put Medicare Advantage plans on an equitable playing field with the Original Medicare program. Financial incentives will continue to contribute to the abuse of these products. The Medicare Advantage companies were the ones who stated they could do it for less and do it better than Original Medicare.
2. We need to standardize both Medicare Advantage and Prescription Drug plans and give beneficiaries the same rights of the NAIC Medigap Model Act and Regulation. It would definitely stop much of the confusion.
3. State insurance departments should be given regulatory authority and plan approval over Medicare Advantage and Prescription drug companies. The state insurance departments have always done a great job in the oversight of insurance companies and agents.
4. We need to levelize the commissions being paid to agents. This will take away the incentive for agents to cheat. They will lose their incentive to churn business for the purpose of commissions. Beneficiaries should only change plans if it is to their benefit.
5. The Lock-In provision needs to be removed. Beneficiaries should have the freedom to make changes in their health care when their needs change or they realize they have made a mistake. If doctors and plans can make changes, then beneficiaries should have that same privilege. This would also alleviate beneficiaries having to rush to make decisions before the enrollment period ends.
6. Mandatory agent certification by CMS. This could be done on a yearly basis just as Continuing Education is required for state insurance licenses. Have CMS and the states have a uniform training and testing program so agents would only have to certify once for all companies. Then product training could be required on a company basis. This would make training more uniform.
7. Keep track of all Medicare Advantage and Prescription Drug plan agents through a central data base that companies, state insurance departments and CMS can have access to, in order to, monitor complaints and disciplinary action taken against agents. All complaints would be forwarded to this entity, such as the National Insurance Producers Registry (NIPR). The NIPR is already used by states insurance departments and insurance companies to appoint agents in a given state. A national number would be given to all MA and PDP agents for ease of gathering information.
8. With a national number CMS and the companies could keep track of agents and their MA or PDP appointments. This would provide information about agents that change companies yearly. This usually means they’re churning business. CMS could also keep track of enrollments submitted by the agent. If an agent is submitting more applications than what the standard is, they may not be explaining the product well enough.
9. Implement fines for confirmed infractions. We receive speeding tickets for breaking the rules, let’s issue citations. Agents and beneficiaries can plead their case to state insurance departments as they do now with consumer complaints. Set up a schedule of fines.
(Point, I know that very little disciplinary action has been done. I myself have turned in agents for breaking or bending the rules to CMS, state insurance departments and even the companies themselves, with no results.)
10. I also feel that CMS representatives who talk with beneficiaries about their health or drug insurance needs should go through the same certification courses that agents have to attend and be certified. They need to be aware of what beneficiaries and agents have to contend with.
These are only a few of my thoughts. As the group works together to discuss the direction Marketing Guidelines need to go, I’m sure there will be many other thoughts to consider.
As I said earlier, if we want agents to act appropriately, we must set the examples and provide the boundaries.
Thank you for your time and have a great day!!!
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