MA Plans
- Thread starter jmhopkins40
- Start date
- 11,997
There are plenty of problems with MA that have nothing to do with lock-in. I have to almost completely disagree with you, unless all you're concerned with is earning a commission. I'm going to assume that's not the case. Not that I agree with they way lock-in is managed, but in concept it makes sense. If your past posts are any indication of your future responses, you won't be able to be reasoned with on this. For anyone else that's reading this here's a nifty little explanation of why lock-in helps keep the whole program stable. I know Rick might have an issue with this too, but we'll see how this goes.
Part of the financial stability of the entire MA program, along with any type of insurance, relies on spreading risk and plans attracting health members so they can over the healthcare costs of those who have many expensive claims (and pay commissions to agents, sales managers, and the administrative cost of the plan such as processing the claims, answering the phones for customer service, building provider networks, etc). One challenge the plans have is to offer benefits competitive enough to attract members to enroll in, without making them so rich they experience adverse selection and end up taking a bath on claims. In the traditional health market this is less of an issue because most companies use underwriters and ask health questions, so it's not as much of a gamble, but since Med Advantage is guaranteed issue they don't have that luxury. Why does any of that matter?
If an agent enrolled Mrs. Jones in a UHC plan because they were an ICA or that was the only company they were contracted with and could write at the time and then Mrs. Jones ends up needing cancer treatments or more likely an inpatient hospitalization for a scheduled surgery, she might remember when the agent explained the plan, that her out of pocket cost on those procedures would be quite expensive, potentially thousands of dollars. So what does Mrs. Jones do? She takes a look at (actual example) an Aetna plan that would cover the hospitalization 100%. If she was in another part of the state and needed $30k/month chemotherapy she could switch to a (actual example) CDPHP plan that would cover it 100%. Regardless of the condition, that is adverse selection in it's prime. With lock-in, seniors have the option of switching health plans every year without any underwriting, so if they had their exams done in Oct/Nov, they're could in theory have a clean bill of health and still have up until March 31st to change into a plan. Really, they're only locked in for 9 months at a time, which from an insurance company finance perspective is fairly lenient. At the end of the day, insurance companies need to have enough money to pay claims and make a couple of bucks. If agents could switch seniors from plan to plan throughout the year it would jeopardize the financial stability of the entire program. How could that happen?
In Whatever County, Some State, let's say there are 5 companies that offer Medicare Advantage Plans. If plans 1 and 2 offer rich benefits, plan 3 is in the middle, and 4 is a less rich and 5 is UHC, offering terrible benefits for anyone that has to use it unless it's for a doctors visit, this is how it could work out and likely would. Let's say that agents helped seniors enroll in the least expensive plan available that at least would cover their doctor visits and testing at reasonable cost shares. As soon as they get diagnosed with any major condition and need treatment, the company that has been getting $800+/month to pay a few doctors visits avoids having to pay any substantial claims because the agent will switch the senior to plans 1 or 2 which may cost more in premiums, but will have the senior enjoy less out of pocket expenses. So the new health plan will receive the $800+/month, but may end up paying (actual reasonable example) $30k/month in claims. That means the plan needs enroll at least 40 new members with virtually no health issues in order to tread water. That's assuming there were no marketing costs in enrolling the new members, which would also mean paying no commissions to anyone, including the agent and w2 company employees, in order to cover those costs it would involve enrolling even more members who don't have health issues. If a plan receives a significant amount of adverse selection such as that, they'll likely pull out of a market or go bankrupt before that happens. Let's say plan 1 received most of the bad risk and runs out of town, then plan 2 will be next in line and receive even more and also pull out of the market or go bankrupt. What will have happened is the companies who had been receiving the majority of the premiums will not be paying out the claims so they'll have enjoyed great profits while everyone else is leaving the market. End result? Seniors have less competition and less rich plans to choose from.
Lock-in does not fix this problem, but helps curtail it from becoming a bigger problem than it has to be.
Plan benefits only change once each year, so if seniors sit down with their agents and review plan changes there really should be no need for them to change plans throughout the year. That is assuming that agents explain to seniors in detail what their coverages are and discuss their options with them.
I could easily list 50 ways to improve the MA healthcare model, but eliminating lock-in without changing anything else would cause more harm in the future than good in the present. If agents are having a problem with seniors needing to change plans because the cost of their healthcare is too expensive, it may be a good idea for agents to explain things in more detail and encourage seniors to enroll in plans with richer benefits, rather than just trying to switch someone based on low premiums.
For my last comment in this post that is sure to offend some, albeit unintentionally, most MA only agents can't sell FE to subsidize their income. Once an agent is in front of a prospect, selling MA should be one of the easiest sales in the business. The mechanics of an FE sale are different and it takes more experience and skill to sell FE than most MA agents have. If an MA agent wants to sell FE they'll usually need some serious sales retraining before they can do it effectively.
- 15,319
Excellent post. Never looked at lock-in from that perspective.
However, if you go back to the 1990's, there was no such thing a lock-in, companies were paid 95% of Medicare costs, threw in the drugs (unlimited) for free, and made a massive profit. This was back in the "old" HMO days.
Why doesn't that work now?
Rick
However, if you go back to the 1990's, there was no such thing a lock-in, companies were paid 95% of Medicare costs, threw in the drugs (unlimited) for free, and made a massive profit. This was back in the "old" HMO days.
Why doesn't that work now?
Rick
- 11,997
Thanks for taking the time to read that and reply.
There's a list of things that have changed and I wont pretend to know them all, but here are a few biggies:
Cost of healthcare: The cost of drugs, medical equipment, "new advanced procedures" all come at a cost. I don't know what the trend was 20 years ago, but conservatively we're looking at at least a 5% increase in the cost of healthcare. The senior population as a whole is "going soft". Not only are their more treatment options available that are more expensive. Seniors, especially the younger ones, are more likely to seek care for things there parents would not have. Think about your older Medicare clients (75-85) and their attitude towards not going to the doctors vs the t-65's that need to make sure their PCP and 3 specialists are in the network because they have a total of literally 12 visits/year even if nothing comes up.
Marketing: I know this is a sore subject, but commissions have gotten out of control. When a year ago an agent could leave the house after writing a husband and wife and end up with over $1k in commissions, that's around 8% of the payments the plan receives from Medicare. Not to mention any other advertising they do or network development. MA wasn't always as competitive and popular of a product. I know folks that we're doing this for $100/app and thought it was a good deal then. I'm not saying that agents shouldn't be compensated for what they're doing, but it's an expense the plans have that absolutely does drive up the cost of administering the plan.
Miscellaneous Malarkey: Along with any of the marketing guidelines, new or old, comes an administrative cost. Compliance Officers, Broker Managers, Certifications, Ride-A-Long Audits, state insurance department audits, CMS investigations, etc all cost plan employees time which costs money. Hiring extra staff to remain compliant, paying lawyers to interpret new guidelines, and agents/brokers expecting more and more support from plans all raise the cost of doing business. While competition is generally a good thing, when a plan with garbage benefits and no doctors will pay an agent $600/application it makes it difficult for a plan with a great network and great benefits (which cost money) to stay competitive when they were only paying a $300/application. At the end of the day, that type of a commission was hurting the consumer because it forced some good plans to let their benefits slide in order to pay higher commissions and remain a viable option for brokers to sell.
The reality is that if they backed down to "95% of Medicare" again, it would probably still financially viable for carriers to compete, but the benefits would get ugly (and agents commissions would probably look worse). I've posted this before, and my apologies if it bores anyone, but the most financially viable and competitive option I've seen or heard of is to have the health plans paid a small monthly admin fee to manage the provider networks, pay claims, and do case management, but let the government be on the hook for the claims. This cuts out the potentially huge profits the health carriers would have, but insulates them from the risk of losing money. Carriers could compete on network and "extras" like vision or other nominal add-ons, but what the government would really be doing is outsourcing the administration of the actual benefits. Ideally there would be an incentive for carriers to contain costs without denying service, but at least then it should be a good deal for everyone. Under that model, I could see eliminating lock-in, but the benefits should really look just about the same under every plan. Drop the $800+/month reimbursement down to an admin cost. Under this model, if a claim had to be paid the money would come from the government, instead of the carrier so there'd be no risk to the health plans. If large employers will self-insure to save money, why can't the federal government with it's 10 million+ MA members?
- 19,648
That's a good point from the company point of view, but, not for the enrollees.
Eliminating lock-in would solve almost every problem with MA plans. If a person was slammed into a plan by an agent that didn't know what he was doing could get out of that plan.
If companies were hurt by losing customers because they did the right thing, then that company wasn't strong enough to have been offering plans.
Most of my MA clients are 100% LIS or full dual medi/medi as it stands now. They don't have lock-in and they, nor the companies, have experienced the "sky is falling" stuff that you write about.
There is no lock-in for med sups and they haven't experienced those dire consequences either.
Some have bought into the idea of lock-in hook, line and sinker. I happen to be one of those that hasn't. Of course, I don't try to recruit agents to sell MA plans. Coincidence?
Eliminating lock-in would solve almost every problem with MA plans. If a person was slammed into a plan by an agent that didn't know what he was doing could get out of that plan.
If companies were hurt by losing customers because they did the right thing, then that company wasn't strong enough to have been offering plans.
Most of my MA clients are 100% LIS or full dual medi/medi as it stands now. They don't have lock-in and they, nor the companies, have experienced the "sky is falling" stuff that you write about.
There is no lock-in for med sups and they haven't experienced those dire consequences either.
Some have bought into the idea of lock-in hook, line and sinker. I happen to be one of those that hasn't. Of course, I don't try to recruit agents to sell MA plans. Coincidence?
- 11,997
That's a good point from the company point of view, but, not for the enrollees.
Eliminating lock-in would solve almost every problem with MA plans. If a person was slammed into a plan by an agent that didn't know what he was doing could get out of that plan.
If companies were hurt by losing customers because they did the right thing, then that company wasn't strong enough to have been offering plans.
Most of my MA clients are 100% LIS or full dual medi/medi as it stands now. They don't have lock-in and they, nor the companies, have experienced the "sky is falling" stuff that you write about.
There is no lock-in for med sups and they haven't experienced those dire consequences either.
Some have bought into the idea of lock-in hook, line and sinker. I happen to be one of those that hasn't. Of course, I don't try to recruit agents to sell MA plans. Coincidence?
You're completely missing the point and being intentionally ignorant. What your suggesting would add more problems to an already troubled program. Like I said in the previous post, if the government wanted to self insure the risk and only have the health carriers administer the plan the same way ASO plans work in the group health arena, an open enrollment would be fine. On the off chance that you are still actually interested in learning something, here's why the med supp and dual eligible markets are different.
First, the duals are a whole different breed of critter. Most dual eligibles enroll in an MA plan for a few extra perks, not to have $30k-$240k/year worth of claims paid. Having folks enroll because they want to go to a particular doctor or get a pair of glasses is nowhere near the same.
Med supps are a whole different ballpark. In some states they are health undewritten, so if someone wanted to enroll in a supp to pay for their knee replacement surgery and up to 3 months of SNF benefit, or 10 day inpatient hospitlization, the insurance carrier would decline the app so they wont experience the adverse selection. If the person does get their policy issued, they're more likely to keep it than drop it because they know their age and health can affect the premium and they might not be accepted again if they need it. In a GI state like mine, the carriers have huge amounts of premium on the books already so when they have adverse selection it helps absorb the cost. The premiums are also pretty high, a plan F can cost up to $260/month here. The other thing is that if folks have a med supp, they usually keep it for years and years and years so that helps mitigate the loss ratio. So whether supps are health underwritten or GI there are reasons why the adverse selection isn't as problematic.
Again, I'm not a fan of lock-in, especially the way it's done now, but attributing every problem in the MA program to it is just ignorant. If you really think that would fix 20% of the problems with MA, you're missing most of the pieces of the puzzle. I could be biased because I've actually seen the numbers and see the bigger picture here, but if you force health insurance companies that offer great benefits to take huge losses on members they never insured until they had a major health issue the companies wont be able to offer the same benefits and seniors down the road wont have access to richer plan. Maybe a better solution would be for Medicare to not give out contracts and approve plans that offer such horrible benefits. There are dozens of ways to fix the problems the MA program has now, but elminating lock-in is not the silver bullet.
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Not for nothing, but if the carriers were mandated to only use captive agents who went through a training program and could be held more accountable, the whole thing would be a dead issue.
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- 19,648
I'm ignorant because I don't agree with your the sky is falling BS? On top of that, you , with the comprehension problem, shouldn't call anyone "ignorant".
But, let's just say that you are so smart, why doen't all these dire things happen to the plans and enrollees that don't have lock in? Why don't all these terrible things happen to med sup companies and their policy holders?
Why is a recruiter talking pie in the sky to a producer? As far as you "dual" argument goes, you don't have a clue as to what your talking about. How in the world could possibly educate me on it? The LIS people chose an MA plan for the very reason that non LIS people chose one.
I was the top MA producer in this region in '08 and '09 for two carriers and top 5 for a third. I was also certified by CMS to train MA agents. I have seen the problems first hand. And, again, I will say that "almost", not every for the reading challenged recruiters, all the MA problems would be solved by eliminating lock-in. People could get out of poor plans that were not explained to them by agents hired on the fly just for AEP by recruiters trying to make a quick buck.
Without lock-in and agents paid as earned, most of the plans would be offered and presented by full time, trained agents. Those agents would have to a better job of making sure that the plan was understood so that the enrollee would keep the plan.
I see agents out there all the time peddling MA plans that don't even know what the Medicare and You booklet is or that it even exists. I run into people everyday while doing FE that are on MA plans and don't have a clue as to what they have or how it works. I've helped full LIS people get out of bad plans in the last 3 weeks. Since I don't sell MA plans anymore, I referred to someone that does and that knows what he is doing.
You can talk a good game to the people that haven't been there and done it. That, of course, is a large part of the problem.
- 11,997
You're ignorant because you're not bothering to understand things. I explained some of the mechanics of why med supps don't have the same issues MA would have without lock-in, but it appears you're not interested enough to read it. The way the premiums behind the two programs work and the way they insure the risk are different, so they're going to have different challenges.
The duals I was referring to were the full benefit duals with Medicare and full state Medicaid assistance, also known as LIS 1. The LIS you're talking about is a different group which is a drug subsidy and allows them to enroll in some extra plans, in addition to the plans available to those who do not have a subsidy.
I'm not just a recruiter, I'm an agent that could make a living writing business behind you. I've also spent years working for MA carriers working with the marketing end of things and been able to learn more about the finance and administration end of things than most agents bother themselves with. The Medicare and You handbook is a great reference and sales tool, but when you learn more about the way carriers are getting reimbursed, how they pay providers, why they use the formularies they do and why the benefits are structured the way they are you get a much better picture of what's going on.
I completely understand that you used the word "almost" because I took the time to read your post, a courtesy that wasn't returned. My reply was that less than 20% of the problem is lock-in and I'm saying that to be generous. One point that you and I both agree on is that there are too many agents out there trying to make a quick buck off of a program that should be taken seriously. Taking flunky agents that couldn't make a buck selling vacuum cleaners, cars, roofing, life insurance or anything else and then letting them sell MA after taking a short training period is dangerous. Especially when not every company is requiring financial background checks (or sometimes any type of a background check) on agents to make sure they're not pressuring seniors into plans so the agent can have money to make rent.
I've been working with MA plans since before Part D and Lock-in and the reality is I think some of the changes have been terrible, but you're arguing the wrong point. To make things as clear as possible, here's a list of problems with MA that eliminating lock-in wont fix:
-Medicare gives out MA contracts to plans that can easily be argued as worse than original Medicare. Although the test of a MA plan being approved is that it has to offer the same or better benefits than Original Medicare, it's actuarially speaking, not necessarily actually speaking.
-Medicare has limited marketing to the point where I can't even talk to my neighbor about his MA plan unless he brings it up, signs a Scope Of Appointment form (permission slip), and then we talk again at least 48 hours later.
-The MA program has become so complicated that even well educated seniors and their caretakers have a difficult time understanding the nuances of the plans. How are they supposed to know that if they get cancer the chemotherapy is going to be 20% of medicare allowable subject to an out of pocket max, or even know to look for an out of pocket max?
-Plan reimbursement levels are a per member per month, instead of an admin plus cost, since health insurers can't health underwrite members and are mandated to to accept everyone with part a, part b, live in the service area and don't have ESRD they have to find creative ways of "underwriting" by eliminating drugs from their formulary that patients with certain expensive health conditions would use, or make benefits such as DME, part B covered drugs, and inpatient hospitalization unattractive to members who are thinking they may need them.
-The programs have become overfunded and carriers have had the luxury of wasting reimbursement dollars in administration and (actual example) extras like vision, dental, otc, gym membership, hearing and more, sometimes all in the same plan. Going back to Rick's earlier question of why can't carriers offer competitive plans at lower rates, with that kind of excess and paying FMO's up to $800+/app the answer is they can absolutely do a better job, they just haven't had to.
-Agent's get into this business for the wrong reasons. There is nothing wrong with trying to earn a living selling these plans, but it's not a get rich quick scheme the way some recruiters make it out to be. The problem with captive agents is they're biased and can only really rep for one plan, the problem with indy's is that they have had a financial incentive to sell one plan over another. Overall I think the new commission changes are helping with that, but that had nothing to do with lock-in.
I could go on, but hopefully you get the point. Lock-in is not the biggest problem with MA and if it were eliminated it wouldn't fix even half the problems. Maybe it'd fix most of the problems you see and work with, but there's a whole side of MA you apparently don't even know exists.
If you've done as much production in the past as you claim you have, why are you referring your clients out and giving your commissions to another agent?
Whether you disagree with my points or not, it's difficult to take someone seriously who isn't even reading through short posts before replying.
Rick, any thoughts/opinions on any of this?
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- 19,648
I have read every word of your postings. I don't agree with you. I think you are just throwing up a smokescreen so that you can keep recruiting.
Why do keep insisting that I'm not reading your posts simply because I don't them to as educational as you seem to thin they are. In fact, they are downright unintelligible. They are the company line, not reality.
The clients I'm referring out are not my MA clients. If you had taken time to read, you would know that I said I no longer do MA plans. Most of the reasons have been detailed in this thread. Also, all we have here is PFFS. Two of the best plans here are going out of that arena with nothing to replace them. I refuse to sell Humana or anything associated with AARP, so that leaves out UHC. Pyramid's MA only plan costs $69/mo here and people can get a med sup for around $100/mo. Who in their right mind would try to justify a $30/mo savings to a person in a PFFS plan?
There is a regional HMO here that is expanding. They want me to rep. that. I going Wed. to see what they have to see if it's a good fit to move some of my Wellcare and Coventry clients to when they lose their current plans. They told me they have free leads. I told them I don't want any leads as I'm not going to prospect for them or try to get new enrollees.
The MA market has been being slowly killed by the carriers because of their greed. They hire newly certified agents, mostly thru FMO's with the same greed, to go out and just enroll everyone with a pulse. The agents do not understand the plans, nor do most of the FMO's. They do not understand CMS rules and the carriers wink at violations as long as they are getting enrollments.
I chose to not be a part of that circus anymore.
- 15,319
I tend to agree with both of you as your reasoning is correct on either side of the aisle. Much like my feelings about democrats and republicans except they both suck while you two have logical arguments.
While I understand the reasons for lock-in, my gut feeling is that along with advanced commisisons has caused much of the problems with the MA program. I've called for the end of lock-in and pay as earned for many years.
The MA program needs to be sold by professional agents, not the jackasses hired by Humana or recruited by FMOs. Restricting commissions as to how much a company can pay is not the way. Pay as earned gives good agents an incentive to service their clients. This is how IFP works and believe me, I take care of my clients. (There are no IFP advances in CA and somehow new agents can still pay their rent).
I get the idea that year round open enrollment might have people jumping plans. However that was not an issue in the 1990s and should not be an issue today. I don't know that movement between carriers during the year because of a new medical condition will really be an issue because there would be such a small percentage.
The last thing is that the MA plan is supposed to be a benefit for seniors. Lock-in benefits companies lock-in harms the very people these plans are suppsed to help.
Rick
While I understand the reasons for lock-in, my gut feeling is that along with advanced commisisons has caused much of the problems with the MA program. I've called for the end of lock-in and pay as earned for many years.
The MA program needs to be sold by professional agents, not the jackasses hired by Humana or recruited by FMOs. Restricting commissions as to how much a company can pay is not the way. Pay as earned gives good agents an incentive to service their clients. This is how IFP works and believe me, I take care of my clients. (There are no IFP advances in CA and somehow new agents can still pay their rent).
I get the idea that year round open enrollment might have people jumping plans. However that was not an issue in the 1990s and should not be an issue today. I don't know that movement between carriers during the year because of a new medical condition will really be an issue because there would be such a small percentage.
The last thing is that the MA plan is supposed to be a benefit for seniors. Lock-in benefits companies lock-in harms the very people these plans are suppsed to help.
Rick
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