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Marketers of prescription drug coverage told to play by the rules

WASHINGTON—Sales pitches at senior centers. Annoying marketing calls at the dinner hour and even free gifts for attending promotional events.

Welcome to the world of the elderly over the next few months as private insurers begin an all-out advertising and promotional blitz to spur enrollment in the new Medicare prescription drug benefit.

In addition to a wave of print, radio and television ads, look for mailboxes bulging with fliers, displays at local pharmacies and confused looks on the faces of older Americans trying to figure out which plan is right for them.

More than 30 million people are expected to get the drug coverage, which is provided by private insurers on behalf of Medicare. Those insurers want to sign up as many plan members as possible when open enrollment begins on Nov. 15. The coverage begins in 2006.

Plans that recruit the most new members are more likely to get a mix of healthy and sick patients, which is crucial in balancing the cost of coverage, said Brad Ellis, an insurance ratings group director at Fitch Ratings of Chicago. Healthy enrollees who use fewer drugs offset the cost of sicker patients who use more.

"You want to get as many people into the program as you can to help spread the risk," Ellis said. "This a huge opportunity to get up to scale right away, and those companies that are successful in drawing people to their drug plan will be much better off."

Hilary Dalin, Medicare director at the Health Assistance Partnership, a consumer health group, outlined some of the main do's and don'ts that plans must adhere to in advertising and marketing.

They can't solicit door to door, so seniors are advised not to open the door for people claiming to represent a Medicare prescription drug plan.

But plans can make cold calls to home and cell phones of Medicare beneficiaries—unless those numbers are on the national Do-Not-Call registry.

During cold calls, marketers can't ask for personal or financial information, nor can they enroll a person in a plan, Dalin said in a recent conference call with state Medicare counselors from across the country. Enrollment "can only be done through an inbound call" from a beneficiary, Dalin added.

To avoid some of the fraudulent marketing that occurred with the Medicare prescription drug cards last year, Medicare met with drug plan representatives to make sure they understood the rules. Law enforcement and local consumer protection agencies will also be watching for reports of fraudulent activity, said Medicare Administrator Mark McClellan.

The agency has hired private firms to help it police the activity and will fine and penalize violators. McClellan said the drug plans also would help identify bad players among them.

"If they're following the rules, they don't want to see other companies get away with bending or breaking them," McClellan said Friday. "We're gonna be on top of this."

In ads, a company can say it's contracting with the federal government to offer coverage, but it can't say that "Medicare endorses" or "wants you to join" its plan. And it can't use doctors or other health care workers to urge people to enroll in a certain plan.

Companies can use Medicare beneficiaries for testimonials, but they can't use actors posing as Medicare beneficiaries. And if they pay a beneficiary to appear in a testimonial, they must make the financial arrangement clear in the ad, Dalin said. In addition, plans can't use negative testimonials to criticize other plans.

They also can't offer or give money to induce a referral of someone into a plan. "Not even if it's a charitable contribution," Dalin said. They can give a nominal gift—no more than $15 in value—to those who attend promotional events, but only if the gifts are given to everyone in attendance and with no other obligations.

"It must be clearly articulated by the plan that there's no obligation to either give your name for further marketing purposes or to enroll," Dalin said.

Plans are allowed to do presentations and distribute literature in common areas of health care settings, such as a conference room at a hospital or nursing home. "But it can't take place in a doctor's waiting rooms, exam rooms or at a pharmacy counter," Dalin said. "You can't have a sales pitch going on, where people normally intend to directly receive their health care services."

Health care providers also have constraints. Doctors, pharmacists, nursing home administrators and hospital managers can give the names of plans in which they participate, but they can't say which plan a person can join.

"They're not supposed to direct, urge, attempt to persuade or offer anything of value," Dalin said.

For more information about the marketing guidelines for the Medicare prescription drug benefit, go to http://www.cms.hhs.gov/media/press/release.asp?Counter=1535

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(c) 2005, Knight Ridder/Tribune Information Services.

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