As the federal government investigates UnitedHealth Group’s Medicare Advantage (MA) plans over alleged overbilling and inflated diagnostic coding concerns, new questions emerge about the marketing tactics used to enroll seniors, including those involving AARP-branded Flex Cards.
UnitedHealth’s Medicare Advantage plans sold through AARP are heavily promoted through the use of Flex Cards. These are prepaid debit cards advertised as providing $1,000 or more that people can use on groceries, gas and other everyday expenses.
Although the businesses pitch these cards as a way to improve care, critics say they mostly exist to entice seniors to enter higher-cost and higher-profit plans called Special Needs Plans (SNPs). About 95% of SNP plans offer these Flex Cards, compared to 48% of non-SNP plans, Milliman reports.
AARP and UnitedHealth currently dominate the SNP market, enrolling over 2.5 million people in the service, according to the Kaiser Family Foundation. That’s over twice as many enrollees as their next-largest competitor.
SNP enrollees are typically patients with more severe medical issues, including the chronically ill, who receive higher federal payments and rebates.
AARP earns a percentage of premiums from every Medicare Advantage plan sold under its brand, meaning the organization profits most when seniors enroll in the most expensive plans.
SNPs generally yield a 7.4% profit margin, over double the average 3.6% profit margin for all Medicare Advantage plans, MedPac reports. SNPs also get, on average, $761 more per enrollee per year in rebates than other Medicare Advantage plans without necessarily producing better health outcomes for seniors, according to MedPac.
“Plans were often able to use the higher payment levels for these individuals to provide even higher rebates and garner higher margins,” a Health Affairs report said. “This paradigm led to the ‘rebates arms race’, whereby aggressive coding practices are not only parlayed into high profits but also escalating rebates to attract more enrollees, leading in turn to even higher profits.”
AARP told The Center Square that all Medicare Advantage products are reviewed before AARP will associate with it.
“Any MA product that may carry the AARP brand does so after our subsidiary, AARP services, Inc., has provided advice and counsel with respect to the use of the brand,” AARP Vice President of External Relations Sarah Lovenheim told The Center Square via email. “AARP does not sell or administer health insurance of any kind. Particularly in the insurance space, AARP makes clear that individuals need to carefully evaluate the features of each plan. Specific questions about particular features of the MA product should be directed to United Healthcare.”
The Centers for Medicare and Medicaid Services (CMS) has expressed concerns about Flex Cards and proposed new rules limiting their use.
“We are proposing to prohibit MA organizations from marketing the dollar value of a supplemental benefit or the method by which a supplemental benefit is administered, such as use of a debit card by the enrollee to provide the plan’s payment to the provider for the covered item or service,” the proposed rule change said.
If the federal investigation into UnitedHealth looks into marketing practices, experts say it could find that AARP has active involvement in these strategies, Fox Business reports. However, it’s unclear if the Flex Card and other marketing tactics will receive any scrutiny in this probe.
