CMS Rescinds October 8th MA Commission Guidance

Oct 25, 2008

  1. GreenSky
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    GreenSky Guru

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    Thought the commissions might be too good to be true. The morons are at it again!

    Breaking news! Medicare Advantage 2009 Commission Update (4) - CMS Rescinds October 8th, 2008 Medicare Advantage Commission Guidance, Will Issue new Regulatory Action Next Week (Week of October 27th - 31st) - DEVELOPING « Ritter Insurance Marketing

    Breaking news! Medicare Advantage 2009 Commission Update (4) - CMS Rescinds October 8th, 2008 Medicare Advantage Commission Guidance, Will Issue new Regulatory Action Next Week (Week of October 27th - 31st) - DEVELOPING

    October 25, 2008 by Craig

    I suppose you can disregard updates 1-3, read on. . .
    This started with Rep Pete Stark’s letter to Kerry Weems. Here is the article:

    “Rep. Pete Stark (D-CA), chairman of the House Ways and Means Health Subcommittee, called on the” Centers for Medicare & Medicaid Services (CMS) “to cap Medicare Advantage sales commissions after reports that some health plans are paying higher broker commissions in a move he said runs counter to new federal regulations.” As of September, commissions are required to “stay the same over five years.” Rep. Stark contended, however, that “some health plans are offering commissions four times higher than they have in previous years” in a letter to acting CMS Administrator Kerry Weems. By “paying a higher amount in upfront commissions,” he added, a broker “stands to make much more over five years.”

    Last night, United HealthCare issued a press release supporting further regulation of broker commissions. Here is the quote from United HealthCare:
    “We welcome further action by CMS to regulate broker commissions. Earlier this year we voiced support before the Senate Finance Committee in favor of regulation to levelize broker commissions. We would also welcome regulation that establishes reasonable industry-wide broker commission norms.”

    Also, last night Humana weighed in to support capping commissions paid to independent agents:

    “Nine months ago, we called for capping commissions and total compensation paid to contracted agents and brokers. Consistent with our position, we support Chairman Stark’s proposal,” said Humana spokesman Tom Noland. “We believe this payment method ensures that agents and brokers are rewarded only when seniors are satisfied with their choices, and penalizes agents and brokers who use marketing tactics that result in beneficiaries signing up for a product they do not fully understand.”

    A notice came out later last night from from Abby Block, Director, Center for Drug and Health Plan Choice (CPC) which rescinds the October 8th guidance (which changed the October 1st, guidance).

    [FONT=']CMS is aware that there is significant concern about agent/broker commissions for benefit year 2009. As a result, we are rescinding our October 8, 2008 guidance document. We are working on ways to address the concern and expect to take regulatory action next week. We strongly suggest that you keep this in mind as you contemplate making any final arrangements regarding commission structures.[/FONT]

    Note from Craig:
    Why should CMS stop at regulating broker commissions? I think they should put a CAP on Direct-to-Consumer Ad Spending as well? What if a company spends too much on Advertising directly to the consumer? I think the Federal Government needs to help them out with this decision, too. Apparently, insurance companies aren’t capable of making a business decision on spending to acquire new business from independent agents, what’s to say they know how much money to spend on Advertising to acquire new business directly? I’m tired of those 30 minute infomercials on CNBC, anyway! I could go on. . .



    Rick
     
    GreenSky, Oct 25, 2008
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  2. Dave020
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    Dave020 Super Moderator Moderator

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    I'm not trying to be difficult, but why exactly should a plan with $0 premium pay ANY commission? At best, maybe $20 per month FYC and $10 per month renewals as a referral fee on a normal, as-earned basis.

    Where is the money inside the plan to pay the commission? I wonder how far below the 85% threshold the MA plans fall with these $400, $500, $600 or more commission rates.

    There is no way a zero premium private health plan should pay more commission than a traditional supplement. That it does is what is causing all of these problems.
     
    Dave020, Oct 25, 2008
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  3. GreenSky
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    GreenSky Guru

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    They are NOT $0 premium. Medicare is paying something around $11,000 per year to the insurance carrier.

    That's why they pay a huge commission. However, the more important question is why is the government getting involved in how a private business pays their salesforce. Oh yeah. I remember. Socialism at its best.

    Rick
     
    GreenSky, Oct 25, 2008
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  4. Dave020
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    Dave020 Super Moderator Moderator

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    I know that, but if I put a client onto MediCal (Medicaid), the state pays around $6,000 or more for that and the Feds kick in as well probably another $6,000 ($12,00o total). When I put someone on Healthy Families, the state pays maybe $5,000 for that. Should I not get $700 after three months to sell one of those since they are not really zero premium either??
    - - - - - - - - - - - - - - - - - -
    Because the states, DOIs, NAIC and NAHU refuse to do anything about crooked MA/MAPD agents.
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    I've got one right now from July eligibility date, specifically asked the Aetna agent for a Medicare Supplement plan. Were sold an MAPD. Now I get to move him to plan F and put his wife on HIPAA. All in a day's work.

    That right there is why they should be severely reduced and be not greater than a supplement commission level and paid monthly, as-earned.
     
    Last edited: Oct 25, 2008
    Dave020, Oct 25, 2008
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  5. allhealthandlife
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    allhealthandlife Guest

    Medicare Supplements take about 25 minutes to explain and you as an agent can be confident that the customer can't use it wrong even if they don't understand it fully. I have sold over a thousand Medicare Supplements and have had maybe ten customer service issues since 1992. Customers keep their supplements because they work like they are suppose to so you can be fairly confindent that they will renew their coverage. I would say on average a Medicare Supplement commission over the average lifetime of renewels is about 1500.00 but require much much much less time and headaches than MA.

    So compare this to what was proposed by the carriers to pay 500.00 over 5 years for MA and the Med Supp pay is really more considering that agents would be lucky if a MA member kept their policy for three years. Total payout about the same as Med Supp without having to be the fall guy for crappy , convaluted and confusing plans.

    And oh yeah did you hear that there is some new marketing regulations that makes selling these HMO's ( High Maintenence Organizations ) even that much more labor intensive.
     
  6. GreenSky
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    Dave:

    Here's the issue. All MA plans are being provided by private insurance carriers. The government should not decide the amount of compensation they are willing to pay.

    However, you are correct in that CMS has not done enough to thwart dishonest agents. So, I propose the following that will solve much of the problem:

    1) Commissions earned just like every other policy - on a monthly basis. No issue with advances except that if there is a cancellation, there should be a pro-rata charge back.

    2) Eliminate lock-in which really created the problem. If a person can get out of the crappy plan that an agent slammed them into, and that agent subsequently gets a chargeback, most of dishonesty from agents can be eliminated.

    CMS makes bad rules and instead of correcting the problem, just adds more bad rules.

    If Health Net was willing to pay a bonus to agents for placing children into their healthy families program, would that present a problem? It might create unfair competition, but that in itself would not harm the child since they could change plans monthly.

    If Anthem decided to pay 35% first year commission and 20% renewal, would you argue as long as it didn't impact on their premiums?

    Lastly, if you were closer to Encino, I'd change your mind with quantities of Guinness. I know you're a whore for beer.

    Rick
     
    Last edited: Oct 25, 2008
    GreenSky, Oct 25, 2008
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  7. allhealthandlife
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    allhealthandlife Guest


    And one more thing i think you should be able to appreciate is that you are a health insurance agent and you can't even even grasp the concept of privately administered Medicare benefits so how hard do you think it is for us to explain this to little old ladies who have known nothing but using their red , white and blue card for the last 15 years but can't afford their Medicare Supplement premium anymore.
     
  8. mking
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    mking New Member

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    It may take 25 minutes to explain a Med. Suppl. Plan...but you sometimes have to explain MEDICARE it self, and how a PDP work, maybe LIS, Medicare Savings program and maybe a state RX program,,,,,if you are doing a good job....YOu are in the house 1 to 2 hrs....We earn the commissions we earn on MA plans........And dont forget about our EXPENSES..Or maybe we should charge consulting fees in stead...That reallt what we do consult.
     
    mking, Oct 25, 2008
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  9. scottfree
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    scottfree Super Genius

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    Rick and allhealth, You are right on!

    I am not going to make any comments to Dave, he obviously doesn’t have any more of a clue what goes on than Rep. Stark. He also has no idea on the amount of time we have to spend with each and every client to help them choose the right plan.

    I wish there was a way for us to get a voice in what is going on.

    This is just round one, what will happen when we have to help people when PFFS goes and have to explain that they can only have PPO's or an HMO for 2011.

    My guess is we should work for free! :wacko:
     
  10. Guest
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    Guest Guest

    You are making a bad judgment. Dave F. knows this industry better than any one person in this venue. There is no one on this board (or in this industry) who is more respected than Dave is.

    You may disagree with him (as I often do,) but believe me... HE HAS A CLUE and he knows what is going on.
     
    Guest, Oct 25, 2008
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