Final Part D Marketing Rules Hit on Eve of ’09 Selling Season; New Entrants Face Hurdles
AIS’s Drug Benefit News - September 23, 2008 - Washington, DC

Medicare Part D sponsors may continue using direct mail to entice potential enrollees, but will be prohibited from making unsolicited follow-up calls, according to CMS’s new Part D marketing regulations that aim to crack down on deceptive and high-pressure sales tactics. Part D plans now are scrambling to implement the rules by the start of the Oct. 1 selling season. And some industry observers assert that the regulations could make it harder for new entrants into the market to attract members, Drug Benefit News (DBN) reports.

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Under the final rule issued Sept. 15, stand-alone Part D Prescription Drug Plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs) are prohibited from making cold calls, selling plans in doctors’ offices and providing meals to potential beneficiaries. Plans also are banned from cross-selling non-health care-related products during any sales or marketing effort for an MA plan or PDP. In addition, a separate rule eliminates incentives in the commission structure for agents to switch beneficiaries from plan to plan each year.

Whether the new marketing rules will change the competitive landscape, or affect sales, renewals or general churn of customers, remains to be seen, Avalere Health’s Bonnie Washington tells DBN. “Everyone is operating on this new, even playing field,” she says. Still, she adds, the final rules emphasize previous relationships and name recognition. “It may make it difficult for a lesser known entity to come into the market and get market share.”

Other Part D observers point out that the final rule does contain some big changes from the proposed rule. Gorman Health Group’s Jean LeMasurier tells DBN that the biggest change involves the agent commission structure. “That was a sea change from what was included in the proposed rule,” But this change is one that was recommended by the industry, LeMasurier adds.

“It’s very similar to the compensation arrangement used in the Medigap arrangement today that has been tried and tested for many years,” she says. “It gets at some of the same issues.”

This is an excerpt from AIS’s Drug Benefit News. To read the full story, visit

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Contact: Neal Learner Managing Editor, Drug Benefit News Atlantic Information Services, Inc. 202-775-9008, ext. 3056

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