Gag Order on Medicare Providers Rescinded

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 https://www.cms.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