Ritter Insurance Marketing, Craig Ritter

CMS Proposed Rulemaking would Impact Agent’s MA and PDP Commissions in 2015

Edit 1/10/14:  I added my notes on the proposed rulemaking here.

I still need to take some time to review, but here is the latest rulemaking from CMS, which includes proposals to change the way agents are compensated for Medicare Advantage and Medicare Part D plans.  The document was posted on Monday, January 6th and I believe will become a part of the Federal Register this Friday.

This 678-page document covers quite a bit of material, however, my first order of business is to review the parts affecting agent compensation.  The executive summary is found on page 28 and there is more detailed buried further in the document (around page 70, I believe).

I will post again once I have a chance to digest this.  NAHU is aware and reviewing these proposals as well and I’m going to provide feedback to them as well.

Posted by filed under CMS .

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  • Neill

    I’m not sure why we are discussing a 6 year commission payout.
    if 6 years was Temporary guidance and that guidance was given in 2013,
    that doesnt seem to make sense?

    I was told I’d be paid commissions for 10 years on MA Plans I wrote in 2012.
    and for 2013 Humana and UHC announced Lifetime commissions.

    and again….in 2012, I was never told that my commissions decrease in year 7.
    it was a straight line for 10 years. and in 2013, straight $213 for Life.

    I’m in Florida, but I dont think the ratcheting would have been a difference initiated in only certain states…..

    am I missing something?

  • Anonymous

    I’ve been a Medicare insurance sales agt. for over 40 years. In 1992 I started selling Part C type plans. I’ve watch CMS cut our commissions, burden us with ridiculous guidelines and we’ve done nothing about it. They never take into consideration all the time we take ( at least the good, caring agts.) going back and servicing ours clients, after we get paid, or, all the time we spend going on calls and don’t sell anything. Many times it’s because we’re honest and tell them to stay where they’re at, because it’s the best thing for them. How can we band together and fight this crap..?

  • Anonymous

    God Bless you for even attempting to read this! Only the Feds can take a mundane topic and turn it in to 678 pages…..snooze and we usually lose. I believe that they want to push agents out of the biz and simply have the customer go to 800-Medicare. Big Bro baby!

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  • K

    This is a head scratcher. On one hand they are suggesting cutting pay but on the other they are talking long term on MA”s. The question is where do the agent fits in.

  • Anonymous

    I think the Big Players want the individual agent out of the market. Independents get paid so little incomparison to captive employee agents.
    Employees get slararies of 25-55k per year car allowance cell phone allowance company paid marketing health& dental benfits 401k’s and bonuses(ie Humana) this past year AND the agents get paid commissions
    up to as much as $ 650 per app!!

    How are we paid TOO MUCH???

    I will stop writing this market altogether if they reduce our pay enrollment fees this much. I am not a go’vt social worker.

    • I guess if the captives make so much more, why would they want the independent out of the picture as a distribution channel? You’d think they’d want the cheaper method of distributing the product without the loaded salary & overhead attached? Maybe they prefer to have total control over the sales force? I don’t know . . . doesn’t seem to make sense.

      But, the control issue may be it, considering the onerous regulatory & compliance environment. The carriers may decide that it’s “safer” to just have their own ‘in-house’ staff do their bidding, since they can totally control everything they do & say, where an independent force may not be as consistent on compliance issues and it’s impossible to actually have adequate oversight.

      Anyway, I’m with you – I’m not a government social worker. I do feel bad for the client though – they need our services now more than ever, and it seems that they may eventually lose the services of the independent agent in this marketplace.

  • So, After a cursory review it appears CMS want to reduce renewal commissions from 50% to 35%, with the caveat that renewals could be paid beyond year 6.
    I was under the impression that the renewals beyond year 6 was already established but maybe this is just a clarification. (Maybe someone can comment on this)
    I found it interesting that in the proposed rules CMS believes paying commissions properly will be easier under the new proposal rather than based on existing guidelines. I guess they don’t now how a computer program can be used and that these commissions are not processed manually…

    • Joe:

      CMS considered their guidance that companies could pay renewal commissions after year 6 to be temporary guidance. I think that’s why the assumed the 25% figure, for what it’s worth. In reality, virtually all carriers who pay agents are paying the 50% renewal for the life of the policy and virtually all carriers who pay agents are paying the CMS maximum FMV.

      I’m working with my friends at NAHU on this.

  • Right now, all of the plans I carry pay about the same amount – I have no incentive to “roll” a client & have never done that. I, personally, will put a client in a plan that is the right one for the client, even if it pays me less. I will also walk away from a sale or recommend a product I do not carry, if that’s truly the right answer for the client & I cannot provide anything that will fulfill the need. If they begin to pay us any less on Part D, I’m afraid that no agent will be willing to assist with that. I do it as a convenience for my clients who buy other products from me, and often run drugs for them & recommend plans I do not carry – since for the $$ involved, it is not even worth my time to go through the trouble to certify & train for all of these different programs. I simply carry 2-3 that work for most people, and then direct people to others that I don’t carry if they need them.

    It’s becoming a losing proposition to sell anything in the MAPD or Part D market. Now, Obamacare is taking the individual market in this same direction – the writing is on the wall . . . .too bad. Some of us love what we do. I’m going to be figuring out how to expand by picking up other lines & expanding the still profitable segments of my existing business, while trying to accept that I can’t count on these vehicles for profit anymore.

    The clients who need assistance with understanding these products will now have to go directly to carriers one at a time for information, or be savvy enough to do comparisons on their own. Good luck to them. I find most of my clients need my help with that and rely on me throughout the year to answer questions on how their current plan works as they go to get medical services. Someone in CMS should appreciate that – but I don’t really think any of this is about the client, or their protection.

    • Renee:

      Thanks for the post. I agree that Part D commissions are already below FMV for the work done by the agent and anything less will leave a void where consumers cannot find a professional agent to help them with. Even at current levels, many agents refer the Part D to 800-MEDICARE.

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