Here is the actual text of the proposed rule:
422.2274 Broker and agent commissions.
If a Medicare Advantage organization markets through independent brokers or agents—
(a)(1) In paying a commission or other compensation (collectively referred to as ‘‘commission’’) to such agent or representative, the commission the agent would receive for selling or servicing the policy in the first year could not exceed the commission the agent receives for selling or servicing the policy in all subsequent years.
(2) The commission must be the same for all plans and plan product types offered by the MA plan’s parent organization.
If a Medicare Advantage organization markets through independent brokers or agents—
(a)(1) In paying a commission or other compensation (collectively referred to as ‘‘commission’’) to such agent or representative, the commission the agent would receive for selling or servicing the policy in the first year could not exceed the commission the agent receives for selling or servicing the policy in all subsequent years.
(2) The commission must be the same for all plans and plan product types offered by the MA plan’s parent organization.
This rule is one of a number of “marketing” changes which CMS is proposing. CMS is looking at this as a way to curb “churning”, so this proposed commission rule change falls under the Marketing umbrella.
Insurance companies have until July 15th to make suggestions before CMS takes all of the information and promulgates its marketing rules for 2009. This one, in particular, could have a big impact on how Insurance Companies distribute their Medicare Advantage products.
There are a number of issues that are unclear at this point, for example, although the wording appears to apply to external agents, CMS is interpreting this to include a companies inside sales force.
America’s Health Insurance Plans (AHIP) will be drafting an industry response, which should be available on it’s website soon. (When I see it, I’ll post.)
Craig,
I have a question that maybe you can answer. I started selling for Medicare Advantage in 2007 or 2008. I was looking at my renewal’s for Coventry for business I wrote in 2008 (specially HMO Silver and PPO Gold). Both of those plans were not nearly as good in 2010 so I switched some of those people over to PPO Silver or to another Medicare Advantage plan like Security Blue. Anyhow, I noticed that despite the fact that these people are not on the books for the 2008 products, I still received a monthly renewal on these clients($12) based on the 2008 contract. Do you know if this had anything to do with MIPPA. I seemed to get paid renewals on 2008 Wellcare business also that got replaced or terminated during 2009.
I thought you might know something about this. Thanks.
COrrect the time….it is 11:30 PM EST
It never ceases to amaze me how when we think of a MA or MAPD as a product that will or should not change…This is managed care and this is a product that must change on a yearly basis to adjust to the climate and readjustment to the subsidies.The thing that most upsets me is how CMS is out there trying to control our future income and our ability to sell and NO ONE PERSON from our elected or appointed officials have addressed the fraud and waste that is constantly occurring within the Medicare system!The one thing that these plans will do is control the Hugh amount of trillions of dollars that medicare looses to this problem and they have no idea on how to curtail. At least if we can get more seniors on a Plan like a PPO with a private insurer we can cut the amount of abuse that constantly happens with in the GOVERMENT RUN SYSTEM. I am not a total advocate of the Part C plans and for 17 years med supps have been my way but I now see that obviously the government does not have any clue in curtailing this abuse,so the baby boomers and the MA plans are their only recourse.What they are trying to do is shift the blame problem…..take the john Q public opinion off them and put it on the MA and the agent.I can speak of stories where clients were accustomed to running to the ER for anything(Even a Fart…sory) and the ER doing no treatment but charging Medicare for the ER service….when they went on a PPO these bills were declined …multiply this scenario by 1 million.There are good and bad but in the long run I do believe with some sort of managed care we will cut our costs and there will be a lot less abuse. If CMS had a way to do this and still give Medicare as the primary and a supplement as the 2nd then ok but I do not see the Govt system being able to function this way. Un know to them they need us and the managed care plans out there.I really think that the fact that commission are paid out from their subsidies is what really gripes them…maybe they prefer a useless phone answering person will solve all the questions that my 80 year old clients have…..press this button.. and press this button…..and if you want… press this button
everybody thanks for the forum (esp. Craig ) to vent at 1:30 AM EST