I suppose you can disregard updates 1-3, read on. . .
This started with Rep Pete Stark’s letter to Kerry Weems. Here is the article:
“Rep. Pete Stark (D-CA), chairman of the House Ways and Means Health Subcommittee, called on the” Centers for Medicare & Medicaid Services (CMS) “to cap Medicare Advantage sales commissions after reports that some health plans are paying higher broker commissions in a move he said runs counter to new federal regulations.” As of September, commissions are required to “stay the same over five years.” Rep. Stark contended, however, that “some health plans are offering commissions four times higher than they have in previous years” in a letter to acting CMS Administrator Kerry Weems. By “paying a higher amount in upfront commissions,” he added, a broker “stands to make much more over five years.”
Last night, United HealthCare issued a press release supporting further regulation of broker commissions. Here is the quote from United HealthCare:
“We welcome further action by CMS to regulate broker commissions. Earlier this year we voiced support before the Senate Finance Committee in favor of regulation to levelize broker commissions. We would also welcome regulation that establishes reasonable industry-wide broker commission norms.”
Also, last night Humana weighed in to support capping commissions paid to independent agents:
“Nine months ago, we called for capping commissions and total compensation paid to contracted agents and brokers. Consistent with our position, we support Chairman Stark’s proposal,” said Humana spokesman Tom Noland. “We believe this payment method ensures that agents and brokers are rewarded only when seniors are satisfied with their choices, and penalizes agents and brokers who use marketing tactics that result in beneficiaries signing up for a product they do not fully understand.”
A notice came out later last night from from Abby Block, Director, Center for Drug and Health Plan Choice (CPC) which rescinds the October 8th guidance (which changed the October 1st, guidance).
CMS is aware that there is significant concern about agent/broker commissions for benefit year 2009. As a result, we are rescinding our October 8, 2008 guidance document. We are working on ways to address the concern and expect to take regulatory action next week. We strongly suggest that you keep this in mind as you contemplate making any final arrangements regarding commission structures.
Note from Craig:
Why should CMS stop at regulating broker commissions? I think they should put a CAP on Direct-to-Consumer Ad Spending as well? What if a company spends too much on Advertising directly to the consumer? I think the Federal Government needs to help them out with this decision, too. Apparently, insurance companies aren’t capable of making a business decision on spending to acquire new business from independent agents, what’s to say they know how much money to spend on Advertising to acquire new business directly? I’m tired of those 30 minute infomercials on CNBC, anyway! I could go on. . .
Just finished reading a letter from Rep. Pete Stark to Kerry Weems the acting director for CMS. In his letter Pete Stark requested ” a list of plans that have increased commissions from 2008 to 2009 more than 5% for first time enrollment”. What is Pete going to do; cancel the insurance carriers license to do business, or execute the decision makers at the insurance companies in question? Maybe we should refer to Pete Stark as Pete Stalin. Very scary
Someone had asked in an earlier post, what can an independent agent do to have our voices heard. Well, here are my plans. I have already sent a couple e-mails to Pete Stark, but that was probally a waste of time. Assuming that CMS listens to people out side the government, a letter to Kerry Weems seems warranted.
Kerry Weems
Acting Administrator
Centers for Medicare and Medicaid Services
U.S. Department of Health and Human Services
Room 314-G, Hubert H. Humphrey Building
Washington, DC 20201
I guess a letter just talking about commissions wouldn’t go over to well, but a letter that talks about the quirks that we have to deal with from agent licensing to the sales and marketing process would be useful.
And after reading the letter from Humana, I have decided not to offer their MA products. Which is a same since I have already completed my 2009 CE with them.
C. Landis
Miami, Florida
I have only been in this business 4 years. All these new regulations, of what we can say on the phone and what we can talk about in the house has gone to far, and on top of that now trying to regulate how and what we get paid, this is ridiculous, “Enough is Enough “
Agents should get paid much more for the services that we offer to our clients. I have been sitting in front of my computer for hours taking tests to get certified, in some cases even paid for the test, going in person to training classes (for which I do not get paid) in order to sell these products, for a $50.00 commission for PDP’s and few hundred dollars for a HMO. Do any of these people writing these laws know what they are doing? Do they realize that we’re just your regular Joe and Jane who are trying to support our family by doing honest work in order to earn money? The cost of living is high and for some of us to stay in business is not easy, we all pay taxes, advertising, phone, etc.
What else do they want from us BLOOD. Time is running out and no one knows what the commissions are for next year!!! And we have a group of non-qualified personnel putting our life line together; we pay our government salaries with our taxes, how would they like it if we decided to control how much they get paid!!!!! We should all unite and hire an attorney to fight for our rights. I live in Miami, Florida, as we all know Dade County is one of the main cities in the USA responsible for Medicare Fraud, but even so the percentage committing this act is very low, why should we pay for those agents without scruples? If the Government would have been doing their job none of this would had happen! I also think that all this is happening because of big companies running thousand and thousand of dollars on TV and News Papers Ads, and have also managed to @($#%& agents out of fair pay commissions (and we all know who this companies are).
I smell a class action suit against CMS, they are playing with our lively hood and limiting our income potential. This is un American and an injustice to our seniors who truly do depend on the agent for assistance. With the economy not doing well and prices going up for the essentials the senior population is struggling to keep up. Most companies do change benefit copays every year as well as change the formulary which could make a Tier2 medication now a Tier 3 and that means more out of pocket for the senior. So what is in the best interst of the client to do nothing and let them pay or find out when they go to the pharmacy. With all these new rules and regs I find it difficult to really serve the medicare population correctly. How about agents that sell annuities or other financial products do they need a scope of appointment signed before meeting with the prospect? I don’t think so.
C:
I don’t mind regulation and oversight, however, there comes a point when too much is too much. Once it starts to inconvenience the customer, then it becomes a problem
For example, CMS has banned all cross selling of non-health related products. That’s fine, I agree with that. But if you are getting rid of cross selling, why do you then require a member to sign a letter ahead of time agreeing to what medicare products you will talk about? The only two choices are MA plans and PDP plans. Is a customer really going to send a letter back asking only to talk about MA plans. I highly doubt it. Most are going to want to hear about all of their options so they will check both boxes.
Another example, If a prospect wants to meet with you today, it is very hard to do as you have to get a signed letter in advance of the meeting. The regulations are preventing the senior from meeting when they want.
The regulation and oversight should be ramped up on those who are abusing the system.
C – If Medicare has been selling to beneficiaries for 24+ years and it’s all been great then why didn’t Medicare offer a Part D plan direct from Original Medicare? Some of the changes in distribution has to do with the massive number of beneficiaries that will need help in the future, computer challenges to track it all and escalating health & med costs. If Part D wasn’t added, did that mean that Medicare would have continued serving the beneficiaries well? Speaking to actual beneficiaries it seems that there were many things that could be improved but Medicare was just a fact and how it was, so you may not have heard of the many hardships out there for those on fixed incomes. I’ve been paying into Medicare my entire career, will it continue to work well when I retire or even be there? I think change was/is emminent.
Medicare plus a Med Supp has served fine but so many beneficiaries could not continue to afford the escalating premiums and were seeking additional benefits and other options and/or just lapsing their policy and having just original Medicare. If the Medicare Advantage product was like when you buy a car and when it had air conditioning it continued to have it every year, that would be one thing, but it’s not. The benefits and payments change every year. Agents aren’t the ones who decided this. I would much prefer my parents get professional guidance on the massive amount of options out there then to just obtain the plan with the warmest and fuzziest advertising commerical or insert.
Medicare and the Insurance Companies are mistaken if they feel that the Medicare Beneficiaries are all hooked up to the internet and love nothing more than to spend their day, surfing the web and going through massive amounts of mail received on their options. The Medicare & You handbook is one of the best publications out there for guidance (the fact that it’s printed in larger type is a big plus) but do you know how many people don’t even open that? I obtain it every year to be sure I am up on the material, and this year I couldn’t get it through ordering channels at Medicare, I had to download and print out the colorful and lengthy PDF file. This is great for me and my generation, but the current generation is not downloading and printing PDFs. So many people tell us (they’ve been on Medicare for years) that they don’t even know what Medicare covers.
As far as the problems that arose when the products were put out to the FMO and broker community, could it possibly also be that CMS was not equipped to handle the changes that were put in place (Soc Sec deductions), tracking of plans, knowing the regulations which are always last minute and not fully communicated. Why isn’t there more consumer education direct from Medicare? Do the 800 #’s and Medicare know the local areas and local concerns, local provider hospitals and doctors and can they assist in helping a beneficiary find out if their plan will be accepted?
And as for churning, that is when an agent enrolls a client only to create a better commission. Do you know how many changes are made where an agent makes less? Do you know that what is made on a PDP plan hardly even covers the expense to assist and visit with the client on Part D. Yet I do alot of just Part D. I also help people get to plans I don’t represent and don’t get anything for if that is what they request. I think you are hearing from the agents that these options are a reality put in place by politics and feedback from beneficiaries to their politicians. We are serving the public with professional guidance on their insurance needs whatever that current scenario may be. I would love to see the results of a poll on the average time spent on each appt by the agents. Why is everything an agent issue? Currently, because it’s a political thing that works for both the government and the politician. There are some bad agents, just as there are some bad doctors and some bad government servants. I am all for simplifying the process. But surf out to the Medicare Website and see how many manuals and docs it takes for that method that has been working fine for 24+ years.
I do not know what the perfect answer is. I agree with the things that Craig says above and feel that there are alot of assumptions out there. I am up for whatever is decided as fair but let the agents voice be heard and for goodness sake, ask Medicare beneficiaries. I am highly reasonable and a good agent. If I can continue to put food on my table, I will continue to serve as such. If I become a charity point person as much as I would love to do it to serve my clients as they continually tell us how much they appreciate our services and having someone locally to assist them.
C:
I agree with a lot of what you’re saying here. I don’t think it’s attacking CMS and Companies to say I disagree with this. I’m a capitalist, so I think that free markets are the best method of setting prices, but that the government has a role when markets aren’t functioning properly (monopolies, price fixing, etc.)
There’s a couple of assumptions here:
1. The more we pay agents, the worse this will be for Medicare Beneficiaries. I don’t think that has to be true. I think you can crack down hard on the bad apples. I support that 100%. I don’t think CMS appreciates the good work that agents do for their clients.
2. Changing plans is bad (if an agent is involved). The reality is that most Medicare Beneficiaries can improve their plans by switching (likely 50 – 90%). If an agent assists a Medicare Beneficiary in getting better coverage, it’s called churning? As many have stated, CMS encourages Medicare Beneficiaries to review their plans annually.
I clearly understand that the role of CMS is to protect the beneficiary and the role of the insurance company is to make money. Neither CMS, nor Insurance Companies are obligated to put food on my table.
I exist to the extent I can help agents help beneficiaries get better coverage and help insurance companies increase their membership and profits. Insurance companies exist by providing desireable products. Agents exist to serve their clients. If I can do this well, I can help CMS, Medicare Beneficiaries, Insurance Companies and Agents and still make money.
That’s the basis of our economic system, in my opinion.
Now I have to go back to work!
I to have been a licensed agent for 29 years & do the best possible job for the client. I have already had many calls from existing clients saying that their MA is going up in price & the benefits are decreasing such as Hospital Stays doubling in cost/copays. They want me to look for a better alternative that would be more affordable, so do I say to this person I can’t help you. I am licensed with several companies to do the best possible job for the client, and yet to do this I sit for hours upon hours taking tests to get certified (for which I do not get paid) in order to sell these products. One key point I think is we have to send these preappointment letters back & forth to get the appontment, when we have only approximately 6 weeks (all during the holidays) when it is difficult to get together to help these people. Now on top of trying to to agood job for the clients I have to jump thru hoops to get certified then do the same just to get to sit down with these people within the 6 holiday weeks to do business and then you think we make to much. Stark has no idea what it is to be in the insurance business. When the goverment gets involved, it always gets screwed up. Wake up agents, this is what we will see with national health care.
Wow Craig and Team… I find it very interesting on the attack of the payor (health plan and CMS) who provides you income and food on your plate.
Unfortunately because some organizations are desperate for enrollment that the commissions schedules came out like they did because the product they offered did not support the market competitive demands. If the OIG or CMS did not step in who would for the senior? When you look at the fraud, door knocking, robo calling, multiple attempts to convert someone when they stated clearly no, lack of looking at continuity of care… You have to ask the question. If people do not like regulation or oversight they should get out of this type business.
In reality Medicare plans have been selling to beneficiaries for 24+ years and when the expansion of PFFS and Humana, Aetna and United (Secure Horizons) expanded their distribution to the FMO’s or Broker channel the problems started to arise….
If anything you all should be complaining about the people out there who represent themselves as professional licensed agents.
I hate to say it but I think it is time to let MA MA-PD and PDP go. It was a little hard to do business last year with the regulations but this year is a joke and they want to cut the pay, UNCLE. I just got a referral so I send them an appointment request form (approved by CMS). I will call him one time to set an appointment and at that point he will sign and note the appointment then send it back to me. Now if something comes up I can’t make it, he has to cancel we do it all over again. So, we have the appointment to discuss a PDP and a MA or MA-PD. The appointment ends with no enrollment and he says he will call me after he thinks about it. I can’t call to follow up and I have to keep the appointment request form for ten years. Am I the only one that hears this loud sucking sound? I think this entire move from CMS was to get brokers out of the MA MA-PD PDP business so they can start phase one of national health care. This my last year with MA MA-PD and PDP unless something changes.
I blame the INSURANCE COMPANIES. They are the ones who “blew the whistle” to Stark with their comments like”we welcome further action by CMS to regulate broker commissions”. Let’s be honest. The carriers protect their own interests by raising premiums, denying claims, and reducing commissions.