1. Audits Allegations Secret Shops Corrective Actions

2. Audits An audit is an examination and evaluation of an organization to make sure that their records are accurate, and that the company and their contracted partners are adhering to the requirements of the contract. Audits are in place to confirm that all plans and any of their downlines that provide services for Medicare Advantage or Prescription drug coverage are following CMS (The Center for Medicare and Medicaid) regulations. Audits can be requested at any time from a carrier, CMS directly, or event from the FMO to our agencies. Western Asset always responds to audit requests within a timely manner to show our partnership to the carrier, and our commitment to compliance. CMS regulations only apply to Medicare Advantage or Prescription Drug Coverage sales, not Medicare Supplement, Indemnity, or final expense services. Western Asset Protection is often randomly audited by our carriers in several areas of service:  Scope / Application audits  Commissions  Materials / Marketing  Training / Education  Communications - Standards of conduct /Code of ethics  OIG/SAM (we are required to run each of our employees monthly to make sure that they are not excluded from working in the health industry)  Website Review  Compliance effectiveness

3. Member Allegations Allegations are known as “grievances/complaints” that can be made by beneficiaries to the plan, to CMS (1-800-Medicare), or to their broker. At the carrier level, the member is the only party that has the right to file a grievance, unless they have completed an “appointment of representative” form that would authorize another party to grieve on their behalf. CMS regulations will only allow a Medicare beneficiary to file a grievance within 60 days of an event. (event can be defined in many ways, i.e.: a claim, a bill, a service date, an appointment date etc.) Carriers are under strict time regulations – for “expedited” requests for grievance, the plan must have the ability to respond within 24 hours of the request. For “standard” grievances the plan must respond within 30 calendar days from the date of the request. All plan grievances must be reviewed through the carrier’s compliance committee to confirm that all areas of the complaint have been addressed. At the plan level, the compliance committee is an “interdisciplinary” committee that usually consists of a supervisor, manager or director from each department. The compliance committee is responsible for weighing the evidence of each case, and determine whether the complaint is “substantiated” or “unsubstantiated”.

4. Member Allegations If a member calls into the member services department for the carrier or to 1-800-Medicare and complains of a misunderstanding of their benefits, or anything that may involve a broker, the plan will distribute the allegation to the FMO. When a member calls into 1-800-Medicare, it is first distributed to the plan through a system called HPMS (Health Plan Management System). The plan signs into a area of the HPMS system called CTM ( Complaint Tracking Module). Each CTM received by Medicare can affect a plan’s annual “Star” rating. When an allegation is received, this can be very sensitive for a broker to endure, most brokers take it as a question of their integrity, and often respond with personal feeling rather than fact. Western Asset works with the broker, making them feel supported through this process, and assist them in documenting the facts of the appointment/sales event and responding appropriately. We will always follow an allegation through to resolution with the carrier for the broker. We investigate the allegation with the broker in question, if it requires a written response, we will obtain the response within 24-48 hours and reply to the carrier. Once the allegation is completed through the process we previously mentioned, the carrier will notify us if the case was considered “substantiated” or “unsubstantiated”. If the case is unsubstantiated, usually no further action is required. If the case is “substantiated, it may obtain a request for corrective action.

5. Broker Allegations Western Asset protection experiences a high level of brokers making complaints against other brokers, or reporting them for what they feel might be unethical behavior. As part of our standard of conduct, we request that our brokers submit their complaint to our compliance department. Brokers should not contact another agent, nor should they go directly to the plan, or to CMS. We take these complaints very seriously and do a thorough investigation. While we are not able to report the specifics to the broker that brought this to our attention, we are able to let them know if we have self-disclosed this to the carrier for further investigation. Not all alleged “accusations” are substantiated and need to be reported to the carrier. Brokers are busy running appointments and do not have the opportunity to investigate the facts of the case. The ongoing humor to this is, if we never make it in Medicare, we have plenty of dialogue for a “reality show”, and we will call it “Broker Wars”.

6. Secret Shops Both CMS and carriers are mandated by regulation to monitor contracted brokers that are selling Medicare Advantage or Prescription drug plans by using a method called “secret shopping”. Some plans will use internal employees to carry out these requirements, while others may hire a service to perform them. CMS uses a third party for their auditing and surveillance processes. Any agent could be “shopped” at any time. We like to educate our broker to “act” ethically in every sale, and every event. Imagine as though every sales event is being shopped. An agent must obtain a high percentage on their secret shop, or they may be subject to corrective action.

7. Corrective Actions A corrective action plan (CAP) is a step by step plan of action that is developed to achieve targeted outcomes for resolution of identified errors in an effort to:  Identify the most cost-effective actions that can be implemented to correct error causes  Develop and implement a plan of action to improve processes or methods so that outcomes are more effective and efficient  Achieve measureable improvement in the highest priority areas  Eliminate repeated deficient practices Corrective action plans (CAPS) may be requested by CMS, the carrier, or the FMO for any deficiencies they may identify in processes. Corrective actions can include – verbal /written warnings, requests for re-training with attestation, suspension of sales, sanctions or fines and possible termination. In a very severe cases, corrective action can lead up to and include incarceration. Western Asset works closely with the carrier and the agent to create, deliver and implement duties required by the corrective action request. WE BELIEVE THAT:

8. Please do not ever hesitate to contact compliance for any questions or concerns. COMPLIANCE IS EVERYONE’s RESPONSIBILITY! Jean A. Lentsch Compliance Officer Western Asset Protection 602-955-5353 X 295 jean@westernasset-us.comjean@westernasset-us.com / compliance@westernasset-us.comcompliance@westernasset-us.com