Medicare Program; Medicare Advantage and Prescription Drug Benefit Programs: Final Marketing Provisions, 54208-54223 [E8-21674]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 73, Number 182 (Thursday, September 18, 2008)]
[Rules and Regulations]
[Pages 54208-54223]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-21674]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 422 and 423



Medicare Program; Medicare Advantage and Prescription Drug Benefit 
Programs: Final Marketing Provisions; Final Rule

Federal Register / Vol. 73, No. 182 / Thursday, September 18, 2008 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 422 and 423

[CMS 4131-F]
RIN 0938-AP24


Medicare Program; Medicare Advantage and Prescription Drug 
Benefit Programs: Final Marketing Provisions

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule revises the Medicare Advantage (MA) program 
(Part C) and Medicare Prescription Drug Benefit Program (Part D). The 
regulation contains new regulatory provisions regarding marketing 
processes for both programs. The revisions to the Part C and Part D 
programs are based on lessons we have learned since 2006, the initial 
year of the prescription drug program and the revised MA program.

DATES: Effective Date: The provisions of this regulation are effective 
September 18, 2008.

FOR FURTHER INFORMATION CONTACT: Chevell Thomas, 410-786-1387.

SUPPLEMENTARY INFORMATION:

I. Background

A. Overview of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003

    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) (Pub. L. 108-173) was enacted on December 8, 2003. The 
MMA established the Medicare Prescription Drug Benefit Program (Part D) 
and made revisions to the provisions in Medicare Part C, governing what 
is now called the Medicare Advantage (MA) program (formerly 
Medicare+Choice). The MMA directed that important aspects of the new 
Medicare Prescription Drug Benefit Program under Part D be similar to 
and coordinated with regulations for the MA program.
    The MMA also directed implementation of the prescription drug 
benefit program and revised MA program provisions by January 1, 2006. 
The final rules for the MA and Part D prescription drug programs 
appeared in the Federal Register on January 28, 2005 (70 FR 4588 
through 4741 and 70 FR 4194 through 4585, respectively). Many of the 
provisions relating to applications, marketing, contracts, and the new 
bidding process, for the MA program, became effective on March 22, 
2005, 60 days after publication of the rule, so that the requirements 
for both programs could be implemented by January 1, 2006. All of the 
provisions regarding the new Part D prescription drug program became 
effective on March 22, 2005.
    As we have gained more experience with the MA and the Part D 
programs, we are revising areas of both programs. Many of these 
revisions clarify existing policies or codify current guidance for both 
programs. We believe that these changes will help plans understand and 
comply with our policies for both programs and aid MA organizations and 
Part D plan sponsors in implementing their health care and prescription 
drug benefit plans.

B. Relevant Legislative History and Overview

    The Balanced Budget Act of 1997 (BBA), Public Law 105-33, 
established a new ``Part C'' in the Medicare statute (sections 1851 
through 1859 of the Social Security Act (the Act)) which provided for a 
Medicare+Choice (M+C) program. Under section 1851(a)(1) of the Act, 
every individual entitled to Medicare Part A and enrolled under 
Medicare Part B, except for most individuals with end-stage renal 
disease (ESRD), could elect to receive benefits either through the 
Original Medicare program or an M+C plan, if one was offered where he 
or she lived.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA), Public Law 106-111, amended the M+C provisions of the BBA. 
Further amendments were made to the M+C program by the Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554), enacted December 21, 2000.
    As noted above, the MMA was enacted on December 8, 2003. Title I of 
the MMA added a new ``Part D'' to the Medicare statute (sections 1860D-
1 through 1860D-42) creating the Medicare Prescription Drug Benefit 
Program, the most significant change to the Medicare program since its 
inception in 1965.
    Sections 201 through 241 of Title II of the MMA made significant 
changes to the M+C program which was established by the Balanced Budget 
Act of 1997 (BBA) (Pub. L. 105-33). Title II of the MMA renamed the M+C 
program the MA program and included new payment and bidding provisions, 
added authority for new regional MA plans and special needs plans, 
reestablished authority for medical savings account (MSA) plans that 
had been provided in the BBA on a temporary basis, and made other 
changes to the provisions of Part C. Title I of the MMA created 
prescription drug benefits under Medicare Part D, and a new retiree 
drug subsidy program.
    Both the MA and prescription drug benefit regulations were 
published separately, as proposed and final rules, though their 
development and publication were closely coordinated. On August 3, 
2004, we published in the Federal Register proposed rules for the MA 
program (69 FR 46866 through 46977) and the Medicare Prescription Drug 
Benefit Program (69 FR 46632 through 46863). In response to public 
comments on the proposed rules, we made several revisions to the 
proposed policies for both programs. For further discussion of these 
revisions, see the respective final rules (70 FR 4588-4741) and (70 FR 
4194-4585).
    Based on what we learned in program experience subsequent to the 
promulgation of the initial regulations implementing the MMA, on May 
16, 2008, we proposed additional revisions to the Part C and D 
regulations that proposed to incorporate certain existing policies into 
the regulations, and make some revisions to policies based on program 
experience (73 FR 28556). The proposals in this May 16, 2008, notice of 
proposed rulemaking (proposed rule) included proposals addressing the 
marketing of Part C and Part D plans to Medicare beneficiaries. While 
the proposed rule also included a wide range of other proposals, in 
this final rule, we are only finalizing certain proposals in the May 
16, 2008, proposed rule relating to marketing.
    The Medicare Improvements for Patients and Providers Act of 2008 
(MIPPA), Public Law 110-275 was enacted on July 15, 2008, and amended 
titles XVIII and XIX of the Social Security Act to make various 
revisions to the Medicare statute intended to improve the Medicare 
program. Section 103 established new statutory prohibitions and 
limitations for MA plans and Medicare Prescription Drug plans (PDPs) on 
certain sales and marketing activities. Many of these new statutory 
marketing provisions were similar (or identical) to provisions that we 
proposed in our May 16, 2008, proposed rule. For example, MIPPA 
specifically prohibits, while performing marketing activities to 
promote or sell MA plans or PDPs, any unsolicited means of direct 
contact with beneficiaries, cross-selling of non-health related 
products, and providing meals. It also prohibits sales and marketing

[[Page 54209]]

activities in health care settings (excluding common areas) and at 
educational events.
    MIPPA also places limits on other marketing activities. 
Specifically, it limits the following: the scope of the discussion 
during an appointment set with a beneficiary to discuss an MA plan or 
PDP to what was agreed upon with the beneficiary in advance; the 
ability to use names and logos of co-branded network providers on plan 
membership and marketing materials; the value of gifts and promotional 
items provided to beneficiaries; and the compensation paid by plans to 
agents for selling MA and Part D products. In addition, it requires the 
training and testing of agents and brokers selling MA and Part D 
products. MIPPA also requires plans and CMS to collaborate and share 
information with the States.
    The above MIPPA provisions enact into statute provisions we 
proposed through our authority to establish marketing rules through 
rulemaking, and thus effectively would supersede our regulatory 
proposals. Pursuant to MIPPA, the marketing prohibitions provisions 
mentioned above apply to the plan year beginning on January 1, 2009. In 
keeping with statutory intent and based on policy concerns related to 
inappropriate marketing activity, we believe that regulations setting 
forth important protections for beneficiaries should be in effect 
before the 2009 plan year marketing campaign begins this fall on 
October 1, 2008. We are finalizing our May 16, 2008 proposals in these 
areas in this final rule so that the marketing rules in question can be 
effective for the 2009 benefit year marketing campaign, beginning 
October 1, 2008. These provisions are set forth in this final rule at 
Sec.  422.2268, Sec.  423.2268, 422.111(b) and 423.128(b).
    Specifically, this final rule finalizes six new marketing 
provisions and modifies the disclosure and dissemination of Part D 
information provisions and the file and use provision set forth in the 
May 16, 2008, proposed rule. The remaining proposals in the proposed 
rule either were superseded by statutory provisions that we will 
reflect in the regulations as part of an interim final rule, or will be 
finalized in a future final regulation in which we will respond to any 
public comments on those proposals in the May 16th proposed rule that 
were not superseded by MIPPA provisions.

II. Provisions of the Proposed Regulations

    Because this final rule finalizes only the recodification and 
modification of existing sections of the marketing regulations at Sec.  
422.80, Sec.  423.50, Sec.  422.111, and Sec.  423.128 and finalizes 
only six of the new provisions from the proposed rule, we shall only 
discuss these aspects of the May 16, 2008 proposed rule here. The 
following table displays how the proposed rule proposed to recodify 
existing marketing provisions, and the bullets that follow the table 
set forth those proposals in the May 16, 2008 proposed rule that we are 
addressing in this final rule.

                        Table 1--Provisions Affecting Both the Part C and Part D Programs
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                                                                 Part 422                              Part 423
              Provision                  Part 422--subpart     CFR section      Part 423 subpart     CFR section
----------------------------------------------------------------------------------------------------------------
Marketing: Definitions..............  Subpart V (all              422.2260  Subpart V (all              423.2260
                                       marketing sections).                  marketing sections).
Review and Distribution of Marketing  .......................     422.2262  .......................     423.2262
 Materials.
Guidelines for CMS Review...........  .......................     422.2264  .......................     423.2264
Deemed Approval.....................  .......................     422.2266  .......................     423.2266
Marketing: Standards for MA/Part D    .......................     422.2268  .......................     423.2268
 marketing.
Marketing: Licensing of marketing     .......................     422.2272  .......................     423.2272
 representatives and confirmation of
 marketing resources.
Marketing: Employer group retiree     .......................     422.2276  .......................     423.2276
 marketing.
Disclosure requirements and           Subpart C..............      422.111  Subpart C..............      423.128
 Dissemination of Part D information.
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     Sec.  422.2262(b) and Sec.  423.2262(b)--we proposed to 
eliminate the file and use eligibility process.
     Sec.  422.2268(b) and Sec.  423.2268(b)--we proposed to 
prohibit the offering of gifts to potential enrollees unless the gifts 
are of nominal value, and prohibit providing meals to beneficiaries 
while conducting marketing activities. We are only finalizing the 
prohibition on meals in this final rule, and thus are separating these 
two prohibitions. The nominal gifts provision will be addressed in a 
separate rule that implements the requirement that new MIPPA rules be 
in place no later than November 15, 2008.
     Sec.  422.2268(d) and Sec.  423.2268(d)--we proposed to 
extend the prohibition against door-to-door solicitation to include 
other instances of unsolicited direct contact including outbound 
telemarketing without the beneficiary initiating contact.
     Sec.  422.2268(f) and Sec.  423.2268(f)--we proposed to 
prohibit the cross-selling of non-health care related products during 
any sales, marketing, or presentation for an MA plan or PDP.
     Sec.  422.2268(k) and Sec.  423.2268(k)--we proposed to 
prohibit conducting sales presentations or distributing and accepting 
plan applications in provider offices or other places where health care 
is delivered.
     Sec.  422.2268(l) and Sec.  423.2268(l)--we proposed to 
prohibit conducting sales activities, distributing, or collecting 
applications at education events.
     Sec.  422.2272(c) and Sec.  423.2272(c)--we proposed that 
plans must appoint and use only State licensed representatives to 
conduct direct marketing activities in accordance with applicable State 
appointment laws.
     Sec.  422.111 and Sec.  423.128--we proposed that plans 
must disclose the information specified in Sec. Sec.  422.111(b) and 
423.128(b) to its members both at the time of enrollment and at least 
annually thereafter, 15 days before the annual coordinated election 
period.

III. Analysis of and Response to Public Comments

    We received a total of 405 timely comments on the May 16, 2008 
proposed rule, and will only address here those comments that pertain 
to the proposals we are finalizing in this final rule. We received 
comments from managed care organizations and other insurance industry 
representatives, pharmacy benefit management firms,

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pharmacies and pharmacy education and practice-related organizations, 
beneficiary advocacy groups, representatives of health care providers, 
States, employers and benefits consulting firms, members of Congress, 
beneficiaries, and others. The comments ranged from general support or 
opposition to the proposed provisions to very specific questions or 
comments regarding the proposed changes.
    Brief summaries of each proposed provision, a summary of the public 
comments we received, and our responses to the comments are set forth 
below.

Medicare Advantage and Prescription Drug Program Marketing Requirements 
(Proposed New Subparts V)

A. General
    In order to implement standards consistent with ``fair marketing'' 
practices in accordance with sections 1851(h) and 1860D-1(b)(1)(B)(vi) 
of the Act, and to ensure beneficiaries receive the necessary 
information to make informed choices during the annual election period, 
we proposed to amend and expand our marketing regulations for both the 
MA and the Part D programs. Moreover, due to the proposed addition of 
new marketing provisions and the need to clarify current marketing 
regulations, we proposed to remove Sec. Sec.  422.80 and 423.50 of 
subpart B, which currently specify the requirements related to the 
approval of marketing materials and instead include this core of our 
marketing requirements in a new subpart V at 42 CFR parts 422 and 423 
specific to the marketing regulations for each program.
    Comment: We received several comments recommending changes to the 
content of the existing requirements contained in Sec.  422.80 and 
Sec.  423.50.
    Response: In the proposed rule we made no changes to the 
requirements in Sec. Sec.  422.80 and 423.50 other than to include them 
in a new subpart V (Sec. Sec.  422.2260 and 423.2260). Because we did 
not propose modifications to the content of this section in the 
proposed rule other than relocating the text to a new subpart, the 
comments are beyond the scope of this regulation. However, there is one 
exception. A commenter requested that we remove the second sentence at 
Sec. Sec.  422.2268(a) and 423.2268(a) because it creates ambiguity 
with respect to the prohibition outlined in the first sentence. We 
agree and are removing the sentence.
    Comment: One commenter expressed concern about the time frame for 
implementing certain provisions prior to the annual election period 
(AEP) and open enrollment period (OEP) and recommended that the 
effective date of any provisions of the final regulations be effective 
after the 2009 AEP and OEP (April 1 or later). Other commenters 
expressed their desire for the provisions to be effective no sooner 
than 2010.
    Response: This final rule contains the six provisions from the May 
2008 proposed rule that we believe should be implemented prior to 
October 1, 2008, the beginning of the marketing period for contract 
year 2009, in order to protect beneficiaries during the annual election 
period. These six provisions are in accordance with requirements 
contained in section 103 of MIPPA that will take effect by operation of 
statute on January 1, 2009. In light of our program experience, we 
believe that the beneficiary protections in these six provisions should 
be put into effect before the 2009 benefit year marketing campaign and 
annual election period. Other provisions from the May 2008 proposed 
rule will be addressed in separate regulations, one will reflect other 
statutory provisions in MIPAA, and one will respond to comments on the 
other provisions in the May 2008 proposed rule that were not addressed 
in MIPAA. We will consider this comment in relation to the latter 
remaining provisions.
    Comment: A few commenters requested clarification of the extent to 
which the proposed marketing requirements apply to cost plans or 
employer group plans; recommending that, if the proposed marketing 
requirements do not apply to cost plans or employer group plans, CMS 
modify the regulations to apply the proposed marketing requirements to 
such plans.
    Response: Cost plans are subject to provisions found in Sec.  
417.28 and the guidance contained in the Medicare Marketing Guidelines 
for: Medicare Advantage Plans, Medicare Advantage Prescription Drug 
Plans, Prescription Drug Plan, 1876 Cost Plans. Employer group plans 
are MA and Part D plans. Additional guidance on employer group plans 
will be forthcoming in chapter 9 of the Medicare Managed Care Manual. 
The statutory provisions that the provisions of this final rule mirror 
only apply to MA plans under Part C and PDPs under Part D.
B. Review and Distribution of Marketing Materials: File and Use (Sec.  
422.2262(b), Sec.  423.2263(b))
    In addition to moving our requirements concerning the approval of 
marketing materials and election forms to Sec. Sec.  422.2262 and 
423.2262 of the Part C and Part D program regulations, respectively, we 
are proposing to modify the ``file and use'' review process.
    While the statute requires the submission of marketing materials to 
CMS for a 45 day period of CMS review, based on years of program 
experience CMS recognized that some MA organizations consistently met 
all marketing standards, and that their marketing materials warranted 
less scrutiny. CMS accordingly established a file and use policy that 
was designed to streamline the marketing materials approval process for 
these MA plans. Under this file and use policy, Medicare health plans 
that demonstrated to the satisfaction of CMS that they continually met 
a particular high standard of performance were able to publish and 
distribute certain marketing materials within 5 days of submission to 
CMS under section 1851(h)(1), without waiting for a response from CMS.
    In effect, these materials were deemed approved by CMS after 5 days 
based on CMS's prior review of earlier materials. The criteria in order 
to be eligible for the original file and use policy were that a 
contracting entity had to have submitted at least eighteen months of 
marketing materials for CMS review, and at least ninety percent of the 
materials submitted within the past six months had to meet applicable 
marketing standards.
    In the regulations implementing the MMA, CMS adopted a separate 
file and use policy that was based on the nature of the marketing 
materials in question, rather than the track record of the MA 
organization or PDP sponsor. Under this policy, an MA organization or 
PDP sponsor certifies that it is using either model language already 
reviewed and approved by CMS, or types of marketing materials that CMS 
has identified as not containing substantive content. As with the 
original policy that focused on the organization, the materials covered 
by this new file and use certification policy could be used 5 days 
after submission, without any explicit approval from CMS. In the case 
of MA organizations, this certification is made at the time of 
submission, while PDP sponsors are permitted to so certify in their 
contracts.
    In order to level the playing field among contractors, eliminate 
redundancies, and focus resources on materials that have content that 
warrants CMS scrutiny, we are proposing to eliminate file and use 
status based on an organization's track record, and apply a uniform 
policy of applying the file and use policy to marketing materials that 
either use model language without substantive modification, or 
materials that are

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identified by CMS as not containing substantive content warranting CMS 
review. The same approach to certifying that these types of materials 
are being used would apply for both MA organizations and Part D 
sponsors. We would include the proposed file and use provision in Sec.  
422.2262(b) and Sec.  423.2262(b) of the MA and Part D programs, 
respectively.
    Comment: There were several general comments on the CMS review 
process for marketing materials, including a request for further 
definition of ``substantive content.''
    Response: Over the past 2 years CMS has implemented several 
mechanisms to enhance the consistency of our review process, and we 
will continue to refine our processes. We consider the suggestion to 
make more materials eligible for file and use a good one, and we have 
done so recently and may continue to do so in the future. A list of 
materials CMS has identified as ``not containing substantive content'' 
and eligible for file and use is available in the Health Plan 
Management System (HPMS) marketing module. With respect to shortening 
the review period to 30 days, the statute requires the submission of 
marketing materials to CMS for a 45-day period of review. Materials 
that are not deemed eligible for the 5-day file and use policy must be 
submitted for a 45-day review period. Finally, CMS will take under 
consideration suggestions to clarify the review process for plans that 
operate in more than one geographic area, and to allow such plans to 
submit materials to the lead office only for review.
    Comment: One commenter agrees with the 45-day rule for marketing 
materials, but suggests that CMS attach the civil monetary penalty (per 
enrollee affected) as penalty for violating the certification without 
exceptions.
    Response: CMS may impose a civil monetary penalty (CMP) on an 
organization when the organization's conduct adversely affects or has 
the substantial likelihood of adversely affecting one or more 
enrollees. One of the violations for which a CMP can be assessed is 
that the organization substantially fails to comply with marketing 
requirements (Sec. Sec.  422.510(a)(12) and 423.509(a)(9)). If CMS 
determines an organization's substantial failure to adhere to marketing 
requirements has adversely affected or has the substantial likelihood 
of adversely affecting one or more enrollees, CMS may impose a CMP. It 
is important to note that CMS has other enforcement options, such as 
marketing and enrollment sanctions, for organizations that fail to 
adhere to marketing requirements. Under these sanctions, CMS may 
restrict a plan from marketing during marketing season or from 
accepting new enrollments for a period of time. For example, since 
marketing season begins on October 1st of every year, CMS may decide to 
impose a sanction against a plan for a marketing violation that 
prevents the plan from marketing until a later date, such as October 
15th or November 1st. Similarly, CMS may prohibit a plan from accepting 
new enrollments for several months.
    Comment: We received several comments in support of this rule 
change, and one comment opposing our elimination of the file and use 
policy for marketing materials.
    Response: Section 423.2262 does not eliminate the file and use 
process, it only eliminates the file and use status based on an 
organization's track record. Instead a uniform policy will be applied, 
so that all contractors are eligible to submit any material deemed file 
and use qualified.
    Comment: CMS received one comment that this change will over burden 
CMS and could lead to a negative impact on members. CMS must release 
models in time for document preparation and review time to be allowed.
    Response: The elimination of file and use based on status will not 
increase the number of documents that CMS must review through the 45-
day review process--model documents previously eligible for file and 
use will remain eligible for file and use. In addition, CMS is moving 
towards more standardization of certain model documents, which will 
then increase the number of documents eligible for file and use, 
thereby significantly shortening the amount of time required for CMS 
review. CMS has successfully released several model documents for plan 
review and modification earlier in the year, and will continue towards 
that goal.
    Comment: Several comments suggested that CMS should add a 
requirement that plan sponsors file marketing materials with State 
regulators, so that States will be able to differentiate between CMS-
approved and unapproved material and take action accordingly.
    Response: It is not necessary for plans to file marketing materials 
with State regulators. All CMS approved marketing materials contain a 
unique material identification number. If anyone has a question about 
the legitimacy of plan marketing material, they can report it to CMS 
and it will be verified. If CMS determines that the material was not 
reviewed and approved prior to use, we will initiate a compliance 
action. If CMS determines that the material was appropriately submitted 
and approved, but determines as a result of a complaint that there is a 
problem with the material, it will contact the plan to have the 
material taken out of use.
C. Standards for MA and PDP Marketing (Sec. Sec.  422.2268, 423.2268)
    We proposed making an organizational change for this section, 
consistent with our proposal to create a new subpart V at 42 CFR part 
422 and part 423 specific to marketing regulations. We are 
redesignating Sec. Sec.  422.80 and 423.50 as Sec. Sec.  422.2268 and 
423.2268, respectively.
    Comment: We received several comments requesting that we clarify 
that pharmacies are not obligated to distribute plan information to 
beneficiaries for Part D plans with which they do not have contracts. 
One commenter stated they do not believe that pharmacies should be 
prevented from providing comparative Part D plan information to 
patients if they do not accept and display marketing materials from all 
Part D sponsors. A commenter stated that some pharmacies may not 
contract with some Part D plans, and as a result may not be familiar 
with their terms and conditions nor have ready access to those plans' 
marketing materials. Some commenters also stated that the regulatory 
language in proposed Sec.  422.2268(j) was not consistent with Sec.  
423.2268(j). Commenters stated that the final Part D technical rule 
that published April 15, 2008, (73 FR 20486) modified 42 CFR 423.50(f) 
requiring providers such as a pharmacy provider to display and 
distribute comparative plan marketing materials only from plans with 
which the provider contracts. One commenter recommended that CMS retain 
the recently amended Sec.  423.50(f) and remove the language proposed 
in Sec.  422.2268(j) and Sec.  423.2268(j). There were also some 
commenters that opposed the existing provision.
    Response: We are revising proposed Sec.  423.2268(j) to be 
consistent with Sec.  423.50(f)(v) as published in the Policy and 
Technical Changes to the Medicare Prescription Drug Benefit final rule 
(73 FR 20486) to include `` accept and display materials from MA 
organizations or Part D plan sponsors with which the provider, provider 
group or pharmacy is contracted.'' We are also modifying the regulatory 
language in Sec.  422.2268(j) to be consistent with the language 
provided in Sec.  423.2268(j). With respect to commenters that opposed 
the provision, as opposed to seeking

[[Page 54212]]

clarification, these comments are outside the scope of this rulemaking.
    Comment: One commenter contended that this provision does not 
reflect guidance CMS issued October 30, 2006, that allows comparisons 
to be limited to SNPs as long as the remaining MA plans are identified. 
The Commenter recommended having this guidance explicitly recognized in 
the new regulation.
    Response: The guidance released on October 30, 2006, references 
provider affiliation announcements in which SNPs may announce an 
ongoing affiliation or arrangement. This guidance will be included in 
the updated Medicare Marketing Guidelines for: Medicare Advantage 
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug 
Plan, 1876 Cost Plans and other guidance. This guidance requires that 
all affiliated plans be listed on affiliation announcements. In some 
cases, a disclaimer indicating that other plans are available is 
required. Highlighting the affiliated SNP plans within the list of all 
affiliated plans or listing the affiliated SNP plans along with the 
disclaimer is consistent with our guidance.
    Comment: One commenter requested that CMS continue to allow 
providers to use an objective third party to create MA health plan 
benefit comparisons (all or a subset) that are distributed to 
beneficiaries/patients consistent with the Medicare marketing 
guidelines.
    Response: This is still allowed. The Medicare Marketing Guidelines 
for: Medicare Advantage Plans, Medicare Advantage Prescription Drug 
Plans, Prescription Drug Plan, 1876 Cost Plans provides specific 
guidance for materials created by third parties.
D. Employer Group Retiree Marketing (Sec. Sec.  422.2276, 423.2276)
    We proposed an organizational change for this section, consistent 
with our proposal to create a new subpart V at 42 CFR part 422 and part 
423 specific to marketing regulations. We are redesignating Sec.  
422.80(f) as Sec.  422.2276 and, to be consistent, are adding Sec.  
423.2276.
    Comment: We received no comments about the reorganization or the 
addition of Sec.  423.2276. The only comments received expressed a 
concern about employer group marketing materials not being subject to 
prior review and approval.
    Response: We have considered this comment and believe that employer 
group marketing is very different from marketing individual plans. 
Therefore, we are finalizing the provision without modification.
E. Licensing of Marketing Representatives and Confirmation of Marketing 
Resources (Sec. Sec.  422.2272, 423.2272)
    In response to questions from the Part D industry regarding State 
licensure of marketing representatives, we adopted in our Medicare 
Marketing Guidelines for: Medicare Advantage Plans, Medicare Advantage 
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans the 
requirement that MA organizations and Part D sponsors that conduct 
marketing through employees or independent agents use State-licensed, 
certified, or registered individuals to do so, if a State licenses such 
agents. The use of only State-licensed marketing representatives helps 
ensure that the marketing representatives meet minimum standards of 
integrity and professionalism in order to market to Medicare-eligible 
beneficiaries. This Medicare requirement permits Medicare to benefit 
from State efforts to deny licensure to under-educated, unscrupulous or 
otherwise substandard individuals, and helps ensure that Medicare 
beneficiaries are not the victims of substandard or inappropriate 
marketing activities.
    Based on the experience we have gained since the start of the Part 
D program, and continued experience with the Medicare Advantage 
program, we proposed to codify in the regulation our existing 
requirement that MA organizations and Part D sponsors utilize only 
State-licensed marketing representatives to do marketing in the States 
that license such agents.
    We further proposed to add a regulatory requirement to Sec. Sec.  
422.2272 and 423.2272 that MA organizations and PDP sponsors that 
market through agents, not only be required to use licensed agents, but 
would be required to report to States that they are using such agents, 
in a manner consistent with State appointment laws. State appointment 
laws require MA and PDP sponsors to appoint marketing representatives 
before the agent can market a plan's product. Appointment laws may 
require an insurance plan to maintain a registry of marketers who sell 
their plans, including maintaining a list of license numbers, dates the 
individual began selling policies for the insurance company, and 
stopped selling plans for the insurance company. While we previously 
required only that licensed agents be used, and did not require that 
the appointment of such agents be reported to the State agency that 
regulates agents, we believe this latter requirement would enable 
States to monitor the agents' activities in connection with their 
Medicare marketing for the purpose of monitoring the agent's fitness to 
engage in marketing in the State. We believe Medicare beneficiaries 
would benefit from this State monitoring.
    We recognize that, under the preemption provisions in section 
1856(b)(3) of the Act (incorporated for PDPs under section 1860D-
12(g)), States do not have the authority to regulate the marketing of 
Medicare Part C and D plans. However, as noted, any abuses by an agent 
in marketing such plans would have direct relevance to the State's 
oversight of the agent generally, and implications for the agent's 
marketing of products over which the State has jurisdiction, and 
Medicare beneficiaries would benefit from having the agents who engage 
in Medicare marketing subject to this State oversight.
    In the context of the requirement that MA organizations and Part D 
sponsors utilize only State-licensed marketing representatives, and 
report the appointment of such agents to States consistent with the 
procedures under State appointment laws, it is important to discuss the 
activities that would not trigger the need for using State-licensed 
marketing representatives. As standard practice, MA organizations and 
Part D sponsors employ customer service representatives who answer 
questions and accept enrollments on behalf of enrollees who have 
decided to enroll in a particular plan offered by the organization. We 
recognize that plan customer service representatives play an important 
role in disseminating information by answering factual questions posed 
by beneficiaries, and that such an activity is distinguishable from the 
act of steering to a plan (``marketing,'' as defined in the Medicare 
Marketing Guidelines for: Medicare Advantage Plans, Medicare Advantage 
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans).
    Additionally, taking demographic information from someone who has 
decided to enroll in the plan, in order to complete an application, is 
not steering in that the beneficiary has already made a choice to 
enroll in a plan. Accordingly, we believe providing factual 
information, fulfilling a request for materials, and taking demographic 
information in order to complete an enrollment application at the 
initiative of the enrollee by a customer service representative (CSR), 
are legitimate customer service activities that would

[[Page 54213]]

not trigger the need for using State-licensed marketing 
representatives.
    Comment: Many commenters agreed with the requirement that MA 
organizations and Part D sponsors that conduct marketing through agents 
must use State-licensed, certified, or registered individuals.
    One commenter urged that the proposed rule on licensed agents 
include clarifying language similar to the language in the preamble, 
and in the Medicare Marketing Guidelines for: Medicare Advantage Plans, 
Medicare Advantage Prescription Drug Plans, Prescription Drug Plan, 
1876 Cost Plans.
    Response: We have considered this comment and have determined that 
the proposed provision should be finalized without modification. The 
Medicare Marketing Guidelines for: Medicare Advantage Plans, Medicare 
Advantage Prescription Drug Plans, Prescription Drug Plan, 1876 Cost 
Plans provide the clarification requested and we believe that the 
guidelines are the appropriate vehicle to do this.
    Comment: A few commenters asked if the appointment of agents/
brokers was warranted for stand-alone prescription drug plans (PDPs), 
because the marketing of these plans differs significantly from MA and 
MA-PD marketing.
    Response: We believe that while the marketing of MA plans may 
differ from PDPs, in accordance with provisions in section 103 of MIPPA 
that will take effect on January 1, 2009, we are, in this final rule, 
requiring effective October 1, 2008, that MA organizations and PDP 
sponsors appoint their marketing representatives before the agents can 
begin to market a plan's product.
    Comment: A few commenters would like the requirement for the 
licensing and appointment of independent agents/brokers to be effective 
on January 1, 2010 or later.
    Response: As we have learned from our experience over the past 
several years and in order to better protect Medicare beneficiaries 
from practices that could mislead or confuse them, we believe that this 
requirement must be implemented before the fall 2008 marketing period 
during which plans for 2009 are marketed. These provisions would take 
effect by operation of MIPAA effective January 1, 2009, even if we had 
not acted to finalize these provisions of the proposed rule in this 
regulation. Therefore, we will proceed with implementing these rules as 
final and effective October 1, 2008.
    Comment: Many commenters suggested that all MA and PDP enrollment 
applications should include the National Insurance Producer Registry 
(NIPR) license number. A few commenters urged more expansive CMS 
oversight and greater investment of resources in enforcement.
    Response: We believe that States currently provide appropriate 
oversight, and have the necessary reporting mechanisms in place to 
track and monitor agent activity. The intent of this requirement is to 
strengthen our ability to collaborate with States in addressing 
fraudulent and inappropriate marketing practices.
    Comment: A number of commenters requested that CMS develop guidance 
specifying the information that Plans must provide to States and 
establish a streamlined process for data submission.
    Response: We believe States currently provide appropriate oversight 
and have the necessary reporting mechanisms in place to track and 
monitor agent activity. The intent of this requirement is to provide 
support to States as they exercise their oversight authority and we 
note that the requirement we are finalizing is generally in accordance 
with the Medicare Improvements for Patients and Providers Act (MIPPA). 
We will consider this comment when updating marketing guidance in the 
future.
    Comment: Many commenters noted that our proposed regulatory 
language did not clearly state that CMS is requiring action that 
parallels information requirements under State appointment laws, 
because the regulation did not require compliance with all aspects of 
the State appointment process. By preventing the application of any 
State fees pursuant to the State appointment process, and requiring 
plans only to report to States that they are acting ``consistent with 
the appointment process'' may undermine States' ability to enforce 
their own appointment laws.
    A few commenters believed CMS should revise this section to clarify 
that State agent appointment laws are enforceable against MA and Part D 
plan sponsors.
    Response: We have considered these comments. Section 103 of MIPPA 
requires that plans pay fees to States under appointment laws, 
effective January 1, 2009.
    Comment: A commenter questioned if CSRs who respond to 
beneficiaries' requests for a meeting with an agent need to be 
licensed.
    Response: As discussed in the preamble, we recognize that CSRs play 
an important role disseminating information by performing activities 
like answering factual questions posed by beneficiaries. These 
activities are activities that we distinguish from activities that 
could result in steering a beneficiary to a particular plan. In keeping 
with that context, Customer Service Representatives (CSRs) scheduling 
agent appointments in response to a beneficiary request is not an 
activity that would require a licensed agent to fulfill.
    Comment: A commenter asked if a CSR could answer questions about 
plans offered by a sponsor.
    Response: Section 422.2272 permits CSRs to answer factual questions 
posed by beneficiaries.
    Comment: A few commenters asked whether employees of external 
agents and brokers who perform ``customer service'' functions, but are 
not involved in the actual selling of plan products, could also do so 
without being State-licensed or appointed.
    Response: Individuals performing customer service functions such as 
providing factual information, fulfilling a request for material, and 
taking demographic information are considered CSRs. When performing 
these functions, they do not need to be State-licensed or appointed.
E. Standards for MA/Part D Marketing (Sec. Sec.  422.2268 and 423.2268)
    In addition, we also proposed to clarify in Sec. Sec.  422.2268 and 
423.2268 several standards for MA and PDP marketing. In Sec. Sec.  
422.2268(d) and 423.2268(d) we clarify that the prohibition on door-to-
door solicitation includes other instances of unsolicited direct 
contact, such as outbound calling without the beneficiary initiating 
contact, calling to confirm that the beneficiary is in receipt of 
mailed information, and accepting appointments made by third parties or 
independent agents without the beneficiary initiating contact; but does 
not include calling existing members. Although, plans may not contact 
former members who have disenrolled or are in the process of 
disenrolling. We believe this clarification would help prevent 
inappropriate conduct on the part of agents in aggressively pursuing 
the marketing of MA plans and PDPs to beneficiaries outside of approved 
common areas that may be used for marketing displays and presentations 
(for example, approaching beneficiaries directly in parking lots).
    We also proposed to clarify in Sec. Sec.  422.2268(l) and 
423.2268(l) that plans may not engage in sales or marketing activities, 
including the distribution or collection of plan applications, at 
educational events. These events may be sponsored by plans or by 
outside entities, and are events

[[Page 54214]]

that are promoted to be educational in nature and have multiple 
vendors, such as health information fairs, conference expositions, 
State-or community-sponsored events, etc. In Sec. Sec.  422.2268(k) and 
423.2268(k) we clarified that sales and marketing activities, including 
the distribution or collection of plan applications, are only permitted 
in common areas of health care settings (for example, hospital 
cafeterias or conference rooms), and would be prohibited in areas where 
patients primarily intend to receive health care services (for example, 
waiting rooms and pharmacy counter areas). The term ``health care 
setting'' refers to all settings where providers operate, including but 
not limited to pharmacies, physicians' offices, hospitals, and long-
term care facilities. In the proposed rule, we added Sec.  423.2268(i) 
to be consistent with Sec.  422.2268(i). We received no comments on 
this change.
    We further proposed a regulatory requirement in Sec. Sec.  422.2268 
and 423.2268, providing additional protections to ensure beneficiaries 
are not the victims of inappropriate marketing techniques. In 
Sec. Sec.  422.2268(f) and (b) and Sec.  423.2268(f) and (b), we 
proposed to prohibit in any MA or Part D sales activity or 
presentation, the provision of meals or the cross-selling of non-health 
care related products to a prospective enrollee.
    Comment: Commenters that supported the unsolicited contact 
prohibition requested that CMS further define cold calls by clarifying 
if calls are permissible to the following: (1) Existing membership and 
beneficiaries that have an existing relationship with a producer, (2) 
business reply cards, and (3) follow-up calls on plan mailings.
    Response: These clarifications will be updated in the Medicare 
Marketing Guidelines for: Medicare Advantage Plans, Medicare Advantage 
Prescription Drug Plans, Prescription Drug Plan, and 1876 Cost Plans 
and other guidance. 
    Comment: Many of the comments were not wholly opposed to the 
prohibition on meals, and instead were requesting clarification on the 
definition of meals.
    Response: Comments received will be taken under consideration when 
updating the Medicare Marketing Guidelines for: Medicare Advantage 
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug 
Plan, and 1876 Cost Plans and other guidance. 
    Comment: Several commenters opposed the provision prohibiting 
outbound calls. Some stated that it is too restrictive, minimizes 
growth in the program, and is inconsistent with common marketing 
practices. Commenters stated that restricting calls will prevent 
beneficiaries from learning about their full range of healthcare 
options and is considered discriminatory since it creates an imbalance 
with Medigap plans. Some commenters stated this provision impacts low-
income and non-English speaking populations where communication through 
mailings has been less effective, specifically beneficiaries with 
Medicare and Medicaid. Commenters also stated that the current CMS 
rules in the Medicare Marketing Guidelines for: Medicare Advantage 
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug 
Plan, 1876 Cost Plans provides adequate protection. Commenters that 
supported the provision on unsolicited contacts recommended that CMS 
implement reporting requirements to identify and prevent unsolicited 
door-to-door sales and require documentation on how an invitation was 
secured for an in-home presentation.
    Response: We believe that this change is necessary to ensure the 
protection of beneficiaries from inappropriate or fraudulent marketing 
activities such as high-pressure sales tactics or inappropriate use of 
beneficiary information. Section 103 of MIPPA prohibits unsolicited 
means of direct contact including door-to-door solicitation or any 
outbound telemarketing, and therefore we will proceed without 
modification in the final regulation. The Medicare Marketing Guidelines 
for: Medicare Advantage Plans, Medicare Advantage Prescription Drug 
Plans, Prescription Drug Plan, 1876 Cost Plans and other guidance are 
also in the process of being updated and will set forth in detail 
requirements for outbound calls to existing membership and plan 
mailings.
    In response to the comment regarding reporting requirements for 
door-to-door solicitation and in-home appointments, we will consider 
including detailed guidance in the Medicare Marketing Guidelines for: 
Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, 
Prescription Drug Plan, 1876 Cost Plans and other guidance. However, 
organizations should have internal reporting requirements established 
to maintain appropriate oversight of these and all marketing 
activities.
    Comment: Some commenters opposed the provision that prohibits sales 
activities at educational events. One commenter suggested that CMS 
require agents and brokers to register with their carrier and CMS at 
seminars and group sales events. Enrollments should be allowed to take 
place as a result of the seminar at the end or at a later date. Many 
commenters stated that enrollment materials should be available for 
distribution only. Commenters supporting the provision also suggested 
that there should be a disclaimer provided at education events that 
states, ``This is an education event only and no sales activity will be 
conducted, including distribution or collection of plan applications.'' 
Many commenters requested additional clarification on the difference 
between sales events and education events. Commenters also stated they 
are concerned with CMS' ability to enforce this provision.
    Response: We believe the sole purpose of an education event is to 
provide objective information about the Medicare program, not steering 
an enrollee towards a specific plan or limited number of plans. When a 
beneficiary receives informational materials used to promote an 
organization or materials that include enrollment information for an 
organization, this is considered a marketing activity. Additionally, 
section 103 of MIPPA prohibits sales or marketing activities for 
enrollment in MA plans in the healthcare setting or at educational 
events except in common areas of healthcare settings. Therefore, we are 
finalizing the provision as proposed. We will also further clarify here 
that sales activities or sales events are marketing activities that 
steer or attempt to steer, an undecided potential enrollee towards a 
plan, or limited number of plans, including an effort that involves 
compensation directly or indirectly to the party conducting the effort 
if it may lead to enrollment in a plan. In response to the disclaimer 
requirement for education events, we will consider this requirement 
when updating the Medicare Marketing Guidelines for: Medicare Advantage 
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug 
Plan, 1876 Cost Plans and other guidance. 
    Comment: One commenter suggested that CMS develop easy to 
understand educational materials and require plans to distribute those 
materials to beneficiaries, regarding the disenrollment options 
available to beneficiaries who may have erroneously or inappropriately 
enrolled in an MA-PD or a Private-Fee-for-Service Plan.
    Response: We will consider additional methods for ensuring 
beneficiaries are aware of their options to disenroll if the 
beneficiary has been erroneously or inappropriately enrolled in an MA-
PD or a Private-Fee-for-Service Plan. However, CMS currently provides 
several resources that

[[Page 54215]]

organizations can access to provide educational information on the 
Medicare Program. For example, plans may refer to the CMS partnership 
Web site for general outreach and education information at https://
www.cms.hhs.gov/partnerships. Also beneficiaries may be referred to 1-
800-MEDICARE if they have been inappropriately enrolled in a health 
plan.
    Comment: We received several comments stating that the provision 
for plan sales activities in a healthcare setting is inconsistent with 
the Medicare Marketing Guidelines for: Medicare Advantage Plans, 
Medicare Advantage Prescription Drug Plans, Prescription Drug Plan, 
1876 Cost Plans and is overly restrictive. Commenters requested 
clarification on the phrase ``other places where healthcare is 
delivered'', and suggested instead to prohibit such activities in 
``provider offices, other places where a healthcare provider delivers 
healthcare services to a Medicare beneficiary''. One commenter 
suggested that CMS model the language included in the recently passed 
Medicare bill (MIPPA). Some commenters stated that sales activities and 
applications should be prohibited at pharmacies and any part of a 
retail store in which a pharmacy is located.
    Response: We have reviewed this comment and will revise Sec. Sec.  
422.2268(k) and 423.2268(k) to include the following language from 
section 103 of MIPPA ``areas where health care is delivered to 
individuals, except in the case where such activities are conducted in 
common areas in health care settings.''
    Comment: Commenters recommended that CMS amend the rule to clarify 
that marketing may not take place in areas within healthcare settings 
where individuals receive care, rather than in the entire building.
    Response: We have considered the comment; however, we will retain 
the provision as proposed. Clarification is provided in the Medicare 
Marketing Guidelines for: Medicare Advantage Plans, Medicare Advantage 
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans where 
we state ``Common areas, where marketing activities are allowed, 
include areas such as hospital or nursing home cafeterias, community or 
recreational rooms and conference rooms. If a pharmacy counter is 
located within a retail store, common areas would include the space 
outside of where patients wait for services or interact with pharmacy 
providers and obtain medications.''
    Comment: Commenters stated that CMS did not address in the preamble 
or proposed regulation sales activities in hospitals or skilled nursing 
facilities. Some commenters stated that the provisions will impact 
seniors who are hospitalized or living in long-term care facilities, 
and that a waiver should be signed to allow marketing in any section 
that is available. Commenters also stated that this provision would 
impact beneficiaries that receive care from dialysis facilities where 
they lack common areas such as lobbies or patient-accessible areas.
    Response: In response to the first comment, the Medicare Marketing 
Guidelines for: Medicare Advantage Plans, Medicare Advantage 
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans 
clarifies that upon request by the beneficiary, plans are permitted to 
schedule appointments with beneficiaries residing in long-term care 
facilities just as with other individuals living in a private 
residence. In response to the comments regarding marketing to patients 
that are hospitalized or receiving care in a dialysis center, these are 
areas where patients receive care primarily and therefore are 
prohibited areas. The preamble provides clarification on activities 
that can be permitted in common areas and activities that would be 
prohibited. Furthermore, the Medicare Marketing Guidelines for: 
Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, 
Prescription Drug Plan, 1876 Cost Plans also provide detail on the 
requirements for plan activities in a healthcare setting.
    Comment: One commenter recommended that CMS provide clarification 
as to whether providers could provide printed materials in waiting 
rooms regarding MA or Part D plans, which do not compare or contrast 
different health plans but focus instead on a single health plan.
    Response: The clarification is provided in the Medicare Marketing 
Guidelines for: Medicare Advantage Plans, Medicare Advantage 
Prescription Drug Plans, Prescription Drug Plan, 1876 Cost Plans where 
it is stated that ``providers are permitted to make available and/or 
distribute plan marketing materials for all plans with which the 
provider participates.'' Therefore, if a provider is only contracted 
with one health plan they are only obligated to display materials for 
that plan. Otherwise, the provider must display information from all 
plans with which the provider contracts.
    Comment: CMS received many comments on the prohibition on providing 
meals at marketing events, both in favor and opposed. Commenters in 
favor of the prohibition expressed that the inclusion of meals as a 
prohibited item would help protect beneficiaries by preventing mass 
enrollments without personal attention to the appropriateness of the 
plan. Comments opposed to the provision on meals were varied. Some 
stated it is overly restrictive, while others stated that there is no 
relationship between offering meals at an enrollment event and 
inappropriate sales tactics, and that meal settings can allow 
beneficiaries to feel more comfortable and less pressured than an in-
home visit. Commenters stated that hosting meal events is a key 
marketing strategy, and the provision will have a significant impact on 
beneficiary attendance in marketing seminars. Several commenters stated 
that the current marketing guidance is sufficient. Some comments 
requested clarification on the term meals and the limitation--for 
example, is it acceptable if the beneficiary purchases their own meal 
or if a volunteer association arranges the meals, or if the meals are 
provided at an event where no enrollment forms are distributed or 
collected. One commenter stated that limiting food to snacks would be 
difficult to enforce. Several organizations made recommendations on 
different strategies of implementation, including the suggestions that 
organizations should be prohibited from advertising that a meal will be 
provided at a plan sponsored event, that meals be allowed at events 
where applications are not accepted, that a disclaimer be required that 
the meal is not a contingency for signing up for a plan, or that 
organizations should be prohibited from spending a dollar limit per 
person on all food and beverage items at a given event. Comments were 
received that this provision would deny restaurants an important source 
of revenue, and that beneficiaries also benefit from the opportunity to 
get free meals.
    Response: Based on oversight activities, we believe it is important 
to protect the integrity of the sales and marketing process by moving 
forward with this prohibition. Furthermore, MIPPA prohibits meals at 
marketing events. Therefore, we adopt the prohibition on meals as 
proposed. The Medicare Marketing Guidelines for: Medicare Advantage 
Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug 
Plan, 1876 Cost Plans and other guidance will provide more detail on 
this requirement. As, noted, the issue of gifts will be addressed 
separately.
    Comment: One commenter argued that cross-selling of all non-
Medicare

[[Page 54216]]

products should be prohibited, not just non-healthcare related 
products. In this commenter's view, a prohibition on all non-Medicare 
products would ensure that beneficiaries focus on Medicare related 
products. Several commenters were in agreement with prohibiting the 
marketing of non-health care related products during a sale of Medicare 
Products, but similarly recommended that regulations governing cross-
selling be expanded to bar the cross-selling of all non-Medicare 
related products. One commenter recommended that plans be permitted to 
cross sell health related items on inbound calls when a beneficiary has 
initiated the call. Some commenters requested clarification on what is 
considered health related products for the purposes of Medicare cross-
selling requirements. A commenter believed that the agent oversight 
would be a huge administrative burden, and that the prohibition of 
cross selling would be inconvenient for potential members who are 
seeking to purchase other products.
    Response: We welcome the support for banning the marketing of non-
health care related products. We are not changing this language to 
refer to non-Medicare related products however, for two reasons. First, 
non-Medicare health care coverage is subject to Medigap restrictions, 
and we would not expect MA organizations or PDP sponsors to attempt to 
sell non-Medicare health care products. Also, Congress has addressed 
the issue of cross-selling in a new section 1851(j)(2) that, effective 
January 1, 2009, prohibits the sale of ``non-health care related 
products (such as annuities and life insurance).'' We believe that our 
final rule should track the statute in this area.
F. Disclosure of Plan Information (Sec. Sec.  422.111 and 423.128)
    We are finalizing our proposal in our May 16, 2008 proposed rule to 
specify in Sec. Sec.  422.111(a)(3) and 423.128(a)(3) that plans must 
disclose the information specified in Sec. Sec.  422.111(b) and 
423.128(b) of the MA and Part D program regulations, respectively, both 
at the time of enrollment and at least annually thereafter, 15 days 
before the annual coordinated election period. This is essential to 
ensuring that current enrollees receive comprehensive information 
necessary for making an informed decision regarding their health care 
options prior to the annual coordinated election period. Note that 
MIPPA made a related change affecting special needs plans disclosure 
requirements which we will discuss in a regulation to be published at 
or about the same time as this final rule.
    Comment: A commenter suggested that new enrollees receive 
comprehensive information about their benefit package prior to their 
purchase rather than after the sale. The commenter stated that more 
comprehensive information is essential for the consumer and the agent 
to know ahead of time in order to determine if a product is suitable 
for a particular individual.
    Response: We agree that disclosure of plan information continues to 
be an important feature that allows beneficiaries to make an informed 
decision about their healthcare options. MA plans and PDPs are 
obligated to provide details on benefits and rules prior to enrollment 
through pre-enrollment materials including the Summary of Benefits. The 
Summary of Benefits provides comparative information of Original 
Medicare and the benefits of the MA plan or PDP. We also believe that 
the Medicare & You Handbook along with other information channels such 
as the State Health Insurance Assistance Programs (SHIPs) and 1-800-
MEDICARE provides an opportunity for Medicare beneficiaries to receive 
comprehensive information prior to enrollment on the choices available 
to them. Therefore, we will continue to allow plans the option of 
providing the Annual Notice of Change/Evidence of Coverage (ANOC/EOC) 
prior to enrollment and upon beneficiary request.
    Comment: Several commenters suggested that CMS articulate penalties 
for plans that do not adhere to the disclosure requirement for the 
ANOC/EOC, since there have been plans that have made these disclosures 
far too late in each of the past 3 years.
    Response: Pursuant to Sec. Sec.  422.752(c) and 423.752(c), CMS may 
impose CMPs on an organization for any of the determinations at Sec.  
422.510(a) (except Sec. Sec.  422.510(a)(4)) or 423.509(a) (except 
Sec.  423.509(a)(4)) if CMS determines that the organization's conduct 
has adversely affected or has the substantial likelihood of adversely 
affecting one or more enrollees. Determinations that would justify the 
imposition of CMPs include the MA organization or Part D sponsor 
failing substantially to carry out the terms of its contract with CMS, 
the MA organization or Part D sponsor carrying out its contract with 
CMS in a manner that is inconsistent with the effective and efficient 
implementation of this part, and the MA organization substantially 
failing to comply with the marketing requirements at Sec.  422.80 or 
the Part D sponsor substantially failing to comply with the 
dissemination of information requirements at Sec.  423.128. Therefore, 
if CMS determines an organization's failure to comply with marketing 
disclosure requirement