Aetna/Coventry Deciding Whether or Not to Pay Agents for Small Group

Jul 14, 2015

  1. cadylou

    cadylou Guru

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    I'm sure many of you received the following from Aetna & Coventry today regarding "guidance" from CMS that will allow the insurer to potentially exclude agent commissions for MLR purposes. I've copied the text for you if you haven't had a chance to see it.

    Producer Service Fee CMS guidance for Aetna Small Group 2-100 new business and renewals in Kansas
    On May 27, 2015, CMS issued CCIIO Technical Guidance (CCIIO 2015 - 0001): Questions and Answers Regarding the Medical Loss Ratio (MLR) Reporting and Rebate Requirements. To quote in part: "The purpose of this bulletin is to provide guidance regarding: the limited circumstances in which a health insurance issuer may, for MLR reporting purposes, exclude agent and broker fees or commissions from earned premium under 45 CFR Section 158.130..."
    We are still interpreting this guidance, but it raises questions that we're in the process of working through. Rather than asking you and your clients to wait while we evaluate the effect of the new guidance in numerous states, we're making a proactive decision to address the issue. Starting with January 1, 2016 effective dates, we will begin to revert from Producer Service Fee (PSF) to commission for Small Group new business and renewals. This decision only applies to Small Group (2-100) and does not impact our PSF strategy in other segments. No Small Group plan sponsor should be on PSF after December 1, 2016. Revised commission schedules are being developed and you will be alerted when they become available.

    We're making every effort to be thoughtful as we navigate this new course. Our mission is to be mindful of your time, your effort and your financial investment. As we continue to work within this guidance, we will communicate with you and do our best to keep you informed.

    If you have additional questions, please contact your local Aetna representative.
    cadylou, Jul 14, 2015
  2. AllenChicago

    AllenChicago Guru

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    Very strangly worded letter. Aetna says it's taking a proactive approach because the company doesn't want clients/agents to wait while they "work through" the CMS guidance. Yet, the new commissions schedule won't be released until later in the year, and won't go into effect until Jan 1, 2016. PSF method of compensation won't be phased out totally until 12/1/2016.

    Yet this is a "proactive approach"? It's like the company is totally confused regarding compensation. What type of compensation would you group producers prefer...PSF, % of premium, $$ per head?
    Last edited: Jul 14, 2015
  3. Duaine

    Duaine Guru

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    Starting with January 1, 2016 effective dates, we will begin to revert from Producer Service Fee (PSF) to commission for Small Group new business and renewals.

    Looks like separate agreements will go away and a new commission schedule will be released :err:.
    Duaine, Jul 14, 2015
  4. Ann H

    Ann H Guru

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    Yes, that is what it is. Aetna had recently decided that Small Group would be like Large Group where the agent and client sign a Producer Service Fee agreement. Then the client's bill would include the producer's "fee" in the premium (not separated out at all). It was meant to circumvent the MLR. Apparently CMS didn't like that.
    Ann H, Jul 14, 2015