MA haters may threaten our renewals

Dec 4, 2008

  1. allhealthandlife

    allhealthandlife Guest

    Your Weekly Medicare Consumer Advocacy Update

    Turn Off the Spigot

    December 4, 2008; Volume 8, Issue 48

    The Centers for Medicare & Medicaid Services (CMS) has now issued three
    successive sets of regulations on the commissions that Medicare private health
    plans pay their agents.

    The result: Major insurance companies will be paying $500 or more for each new
    Medicare Advantage enrollee in 2009, followed by five years of renewal
    commissions worth at least $250 per year.

    That means about half the average annual overpayment a Medicare Advantage plan
    receives per enrollee—the amount taxpayers pay in excess of what it would cost
    to provide care under Original Medicare—will be paid out to agents for each
    enrollment they secure. In 2008, the excess payment per enrollee is estimated at
    $986. In the past two years, it has topped $1,000.

    To recap: Taxpayers are paying more in subsidies to insurance companies--$8.5 billion in 2008—so that insurance companies can pay agents
    commissions to enroll more people with Medicare in private plans that cost
    taxpayers more money.

    Make sense?

    CMS' efforts to restrain agent commissions and regulate marketing practices are
    akin to trying to fix a broken pipe without first turning off the water.

    It doesn't work and you make a big mess.

    Next year Congress needs to eliminate the excessive subsidies paid to Medicare
    Advantage plans. President-elect Barack Obama has already targeted these excess
    payments as waste that needs to be cut.

    Congress and the new administration also need to decide how much of the
    subsidies paid to insurance companies should go to marketing and how much should
    go to medical care.

    One way to address that question is to require companies to use a minimum
    percentage of the subsidies they receive for medical benefits.

    CMS can also set an overall cap on the amount that Medicare Advantage plans spend on marketing. Plans that have a poor record in improving
    health outcomes, for example, should not be devoting taxpayer dollars toward
    enticing more people into plans that provide lousy care.

    CMS needs to set minimum benefit standards for plans, including mandating that
    all plans provide a comprehensive out-of-pocket limit on medical expenses. Right
    now, agents can earn more commission selling plans that do not offer such
    protection, or that set a high limit and exclude key services, than for selling
    plans with a low, comprehensive out-of-pocket limit. That creates perverse
    incentives to sell low-quality plans, even for agents who want to do the right
  2. Joe Moore

    Joe Moore Guru

    Likes Received:
    There is no doubt, the MA industry has many problems that need fixing, but.

    I find this latest slam on hard working insurance agents very interesting and hard to take while keeping my mouth shut. There are some super success stories in this sales arena for agents working 80-100 hours a week during the AEP and OEP. The most success I am aware of is an agent making somewhere in the $300,000 range. This agent has been in the right place, at the right time, with the right set of circumstances, the right products, and a work ethic that is unbelievable.

    The $300,000 is very small potatoes compared to company income and company profits, CEO compensation, and money wasted. I would venture to say this $300,000 may have added $1.5 million to the companies bottom line. This sounds like a great investment from the companies standpoint. Just smart business.

    With the above example being the extreme, we probably have had 100 or so agents making probably an average of less than $5000 per year marketing these plans. The figures I have seen show an average of less than 3% commissions to agents compared to company cash flow.

    If agents were not fairly compensated, it would simply add to the companies bottom line if they were able to maintain their current level of sales. The problem is the sales and understanding of these plans would not be there without agents and the most companies seem to realize that.

    I wonder if the person writing this latest slur toward us is a failed insurance agent, or simply someone who has one on for anyone having an opportunity to make an honest respectable living. Seems their latest agenda has nothing to do with the real problems that may need a lot more attention than this subject does.

    I have seen this forum quoted a few times in their writings, maybe they will comment on this.

    2007 Executive Compensation at Publicly Traded Managed Care Firms

    [SIZE=+3]Company Intelligence[/SIZE]
    Reprinted from the May 12, 2008, issue of HEALTH PLAN WEEK (formerly Managed Care Week), the industry's leading source of business, financial and regulatory news of health plans, PPOs, and POS plans.

    2007 Executive Compensation at Publicly Traded Managed Care Firms*
    Annual Salary
    Stock Awards1
    Option Awards1
    Other Annual Compensation​
    Stephen Hemsley, President/CEO
    UnitedHealth Group
    George L. Mikan III, Executive Vice President (EVP), Chief Financial Officer (CFO)
    Angela Braly, President/CEO
    WellPoint, Inc.
    Wayne S. DeVeydt, CFO/EVP
    H. Edward Hanway, Chairman/CEO
    CIGNA Corp.
    Michael Bell, EVP/CFO
    Ronald Williams, Chairman/ CEO
    Aetna Inc.
    Mark Bertolini, President (as of May 2007)
    Jay Gellert, President/CEO
    Health Net, Inc.
    James Woys, EVP/Chief Operating Officer (COO)
    Michael Neidorff, Chairman/CEO
    Centene Corp.
    William Scheffel, EVP, Specialty Business Unit
    Michael McCallister, President/CEO
    Humana Inc.
    James Murray, COO
    Dale Wolf, CEO
    Coventry Health Care, Inc.
    Thomas McDonough, President
    Robert Pollock, President/CEO
    Assurant, Inc.
    Michael J. Peninger, EVP/ Interim CFO
    J. Mario Molina, M.D., President/CEO
    Molina Healthcare, Inc.
    John Molina, CFO
    James Carlson, President/ CEO
    Jeffrey McWaters, Chairman/ former CEO
    Herbert Fritch, President/CEO
    HealthSpring, Inc.
    Gerald Coil, EVP/ COO
    Ramón M. Ruiz-Comas, President/CEO
    Triple-S Management Corp.
    Socorro Rivas-Rodríguez, President, Triple-S, Inc.
    Editor’s note: WellCare Health Plans, Inc. was omitted from this table because it has delayed reporting full financial and operating data for 2007 in light of an ongoing investigation by federal and state agencies.
    *The table includes both the top-ranked executive and the second-highest-paid health plan executive for each company, on the basis of salary.
    1Reflects the company’s estimated fair value related to options and awards granted in 2007 and prior years.
    2Includes non-equity incentive plan compensation.
    SOURCE AND METHODOLOGY: Compiled by Atlantic Information Services, Inc. from company proxy statements.
  3. MedSuppPro

    MedSuppPro Guru

    Likes Received:
    This is old pre CMS revision #4 news:

    The result: Major insurance companies will be paying $500 or more for each new Medicare Advantage enrollee in 2009, followed by five years of renewal commissions worth at least $250 per year.

    It’s simply false outdated information. I know of no street agents getting these commissions. It is five years total. First year and or renewal will total five years. There is no followed by five years. And we all doubt we will get to year five with the same carrier and or plan. Especially with the PFFS or COST plans.

    “$500 for all sales followed by 5 years of renewals…” This is another example of a lazy reporter who has failed to identify the true victim of this mess, the consumer. We all would like the old definition for the word “RENEWAL” back, but, times have changed. CMS has changed the definition of what a RENEWAL is –- is!

    Rent-A-Agent: A term limited agent who gets the limited opportunity to serve their client for up to 5 years and then CMS will notify the carrier that you are no longer eligible to receive a commission for your client recommendations. Also known as the CMS consumer friendly, pull the rug out from underneath the long-term client relationship rule.
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