Ritter offers insight on CMS changes and AEP prep for Medicare agents

To provide some insight on the fast-approaching Annual Enrollment Period (AEP) running from Oct. 15-Dec. 7, Insurance Forums interviewed noted Medicare blogger Craig Ritter, president and owner of Ritter Insurance Marketing, a Harrisburg, Pa.-based FMO and technology leader in the senior health and life insurance markets that has devoted significant resources to helping prepare its agents for the upcoming AEP.

According to the Centers for Medicare & Medicaid Services (CMS), since the Affordable Care Act was passed in 2010, Medicare Advantage premiums have fallen by 10% and enrollment has increased by 38% to an all-time high of more than 15 million beneficiaries. Today, nearly 30% of Medicare beneficiaries are enrolled in a Medicare Advantage plan. Furthermore, enrollees are benefiting from greater quality as over half of enrollees are now in plans with 4 or more stars, a significant increase from 37% of enrollees in such plans in 2013.

Some ripples were sent through the agent community earlier this summer when the CMS issued guidance on agent compensation requirements for Medicare Advantage and Prescription Drug Plan enrollments for 2015 effective dates.

Chief among the changes is that carriers are not permitted to pay commissions in advance (prior to plan effective year) for enrollments with a Jan. 1, 2015 effective date or after, including commissions for Open Enrollment Period applications received from Oct. 15-Dec. 7.

The rationale is that since a Medicare beneficiary can make multiple elections during AEP, and because only the last election matters, there are situations where carriers would be making large amounts of inaccurate commission payments based on enrollments that may not end up taking effect. By using finalized enrollment information, carriers will have a simpler and more accurate commission process.

Agents will still be paid 12-month advances on the open enrollment business, but now the payments won’t be received until after the policies’ effective date in January. This is a bigger stumbling block for newer, less-established agents, while veteran agents typically are in a better financial position to wait on the commissions.

“It’s going to be tougher and tougher for newer agents because they are going to have to wait until January to get paid,” Ritter says. He adds that newer agents should think about cross-selling other products where they can be paid sooner, including Med Supps, but be careful to follow the CMS rules regarding cross-selling and Scope of Appointment forms.

While the commission delay is creating headaches for some agents, agents escaped another potential setback when it was announced that Medicare Advantage (MA) and Prescription Drug Plan (PDP) can continue to pay 50% on renewals, and not the 35% that CMS was proposing.

“The very good news was that the commissions are staying at 50% for renewals – the bad news was that companies are going to delay payment,” Ritter says. “If I could only get one or the other, I would definitely want the 50% for renewals. It’s better to get your pay delayed than your pay cut.”

Ritter had filed comments with CMS (posted on his blog) regarding its proposed rule that would have reduced the renewal commissions from 50% of the initial commissions to 35%, making the point that reducing the agent’s compensation does nothing to create incentives for agents and brokers to enroll individuals in the MA plan that is intended to best meet their health care needs. It is less than the Fair Market Value that the Fair Market of MCOs and agents dictated as Fair compensation for external agents. It does nothing to improve the value proposition for Medicare beneficiaries (due to minimum MRL). It may harm beneficiaries in reducing their access to agents who can assist them in finding plans to meet their needs. For these reasons, Ritter via his comments asked CMS to reconsider reducing broker compensation on renewals to 35% and instead allow MCOs to pay brokers 50% of their Initial Rates for all years.

Outbound enrollment verification calls nixed

Another significant change effective this AEP, which Ritter says is a positive one, is that CMS is no longer requiring outbound enrollment verification (OEV) calls that newly enrolled Medicare Advantage plan members received shortly after submitting an application. “This has been probably one of the biggest reasons why Medicare beneficiaries will disenroll from a plan. A lot of times that call is very confusing,” Ritter says.

The confusion often comes in when the beneficiary is going to receive a subsidy to offset some or all of the premium associated with the Part D benefits in their MAPD plan. This will either come from the federal government (Low Income Subsidy or Dual Eligible) or the state (State Pharmaceutical Assistance Program or SPAP). However, the person on the phone who is conducting the OEV is saying they are going to be paying a premium – not taking the subsidy the beneficiary will be receiving into account. This creates confusion on the part of the Medicare beneficiary and can result in them wanting to cancel the plan.

“Now CMS is just requiring them to send a letter to the consumer as opposed to making a phone call to the consumer. I think that will be a big help,” Ritter says.

Some carriers including United Healthcare have indicated they will no longer be making the OEV phone calls and will instead send letters.

• What are some of the key things you are doing to be ready to hit the ground at full speed come Oct. 15? What concerns you the most at this point about this year’s AEP? Please chime in on this new thread on Insurance Forums.

Agent preparation for AEP

As CMS does not permit marketing of 2015 plans prior to Oct. 1, 2014, agents must wait until Oct. 1 or later to contact or market/steer toward a 2015 plan (not including outreach to conduct a plan review or schedule an appointment for Oct. 1 or later); obtain a 2015 SOA form; meet with a consumer to discuss/present a Medicare plan; advertise or conduct a marketing/sales event; or complete an enrollment application.

So what should an agent be doing to prepare for a busy AEP? Ritter has several recommendations.

“For an existing agent, the first thing they need to do is take care of their existing book of business. We encourage our agents from Oct. 1-14 to try to do as much service work as possible on their existing book of business,” Ritter says. “We typically don’t encourage our agents to do that many home visits during pre-enrollment.”

He advises agents to do some homework and look for markets where there is some disruption. Are there MA plans that are cutting their benefits substantially? Generally speaking, a beneficiary needs to see an increase of about $20 per month to get them interested in changing plans, Ritter says.

Agents should also be well-versed in 2015 MA products prior to AEP by taking advantage of “sneak peeks” from their FMOs or carriers. At Ritter Insurance Marketing, they built a tool that allows agents to get an early look at the 2015 products from around 15 companies. Ritter says agents should definitely be taking advantage of first-look opportunities.

“If you wait until Oct. 1 to see what you’ll be selling, you may not be able to even sell them until November, and you are missing sales,” Ritter says. “Pick the companies that you want to run with and get certified as soon as possible.”

• What are some of the key things you are doing to be ready to hit the ground at full speed come Oct. 15? What concerns you the most at this point about this year’s AEP? Please chime in on this new thread on Insurance Forums.

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