New Texas bills target deceptive health care marketing

One-in-four calls from brokers and insurers selling health plans to Texans were deemed to be deceptive and merited a report to the Texas Department of Insurance (TDI), according to Rep. Eddie Lucio III. He introduced a bill in the House Insurance Committee this week that aims to reduce these deceptive marketing practices, alongside a similar bill from Rep. Stephanie Klick.

Lucio introduced his bill to the committee:

“Sales of alternative health plans have increased in recent years, and as a result, reports from median researchers about misleading and deceptive sales practices have risen. Consumers are being misled through deceptive information — almost always through telemarketing calls.”

 

 

The sponsor explained that most of these deceptive calls involve individuals selling alternative health plans (health care sharing ministries, association health plans, etc.) using false claims that they provide the same comprehensive coverage as Affordable Care Act (ACA) plans.

“The problem occurs when a sales representative purposely conflates ACA protections with non-ACA coverage to mislead consumers. These documented abuses do not involve local agents but are primarily linked to call centers, telemarketers and sales representatives that will never meet the shopper or consumer in person.”

The bill would require telemarketing representatives to record their calls and make them accessible to TDI. Individuals found to have engaged in deceptive practices will receive an administrative penalty.

Research from the Commonwealth Fund suggests that Trump-era executive actions and relaxations on marketing policies might be part of the reason there is currently such a prevalence of misleading health insurance marketing. 

The same research noted that it’s often hard to address these practices due to how difficult it is to identify what entities or individuals are engaged in a given deceptive marketing practice. In addition, many entities market their plans in multiple states, making it difficult for state agencies to take action.

As Lucio explained, HB 2118’s recording requirement is a potential solution to this issue:

“This bill explicitly prohibits misleading tactics that are known to be in use [and] ensures sales representatives provide a recording of a transaction or sales call to TDI [the Texas Department of Insurance] upon request. We require insurers to file marketing materials with TDI and provide incentives to insurers and entities to ensure their third party sales centers don’t engage in deceptive marketing.”

Blake Hudson, associate director of the American Association of Retired Persons (AARP) of Texas, testified in support of the bill, saying consumers have often ended up on “healthcare.com” instead of the website they intended to go to, “healthcare.gov.” Referring to an Austin woman’s experience with this, Hudson said she was “bombarded” with deceptive marketing calls and tricked into purchasing much more than she intended.

Hudson added that the recording requirement in Lucio’s bill was critical and said it’s difficult for people like the woman in Austin to report fraud because these calls aren’t normally recorded.

Representative Stephanie Klick is sponsoring a bill that would allow the Commissioner of Insurance to investigate and prosecute acts of health care fraud in the private market. Currently, Texas law protects consumers against fraud and abuse under Medicaid, but does not protect individuals who have insurance through the commercial market.

“HB 3235 addresses this discrepancy by applying the same penalties and standards for abuse in the Medicaid program to abuse in the commercial health market.”

Jamie Dudensing, CEO of the Texas Hospital Association, testified in support of the bill. She said fraud is 50% worse in the commercial market than in the private market.

She also highlighted the particular importance of addressing this problem during the pandemic:

“While we’ve been seeing this significantly in Texas, it has been exacerbated by COVID-19. The amount of upcoding, price gouging and abusive action by providers that have happened with COVID-19 testing has been horrendous.”

According to Dudensing, numerous Texans have reportedly ended up with a $10,000 bill following their COVID-19 tests.