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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
thing.
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
thing.