Insurance Agent Forum

[midwestbroker]

I was talking to one of my agents who brought this to my attention (I overlooked it). This is from the CMS release on 10/8/2008:

Agent/Broker compensation – On page 22 of the September 15, 2008, guidance document, we established a process for transitioning to the new compensation structure in the first year in which any movement of a beneficiary in 2009 would result in the agent/broker receiving an initial compensation amount. In 2009, CMS and the plans have insufficient information to reliably designate a beneficiary for an initial or renewal enrollment until our systems can be programmed to provide this information. Since we have become increasingly concerned about the potential incentives for agents/brokers to “churn” beneficiaries in order to receive
The initial compensation amount, we have decided to transition to the new compensation structure by requiring that renewal compensation amounts be paid for all beneficiary enrollments in CY2009. We will consider this the first renewal year for all enrollment changes. Plans that pay the renewal compensation amount for enrollments in 2009 will still be required to pay renewal compensation for four additional renewal years if the agent/broker is still in good standing with the plan and the State, and the beneficiary is still enrolled in the plan. Plans should establish a first year and renewal/replacement compensation structure for 2009 using our rules for calculating the compensation. The plans would not be paying the first year amount and would only pay the renewal/replacement amount. Due to the recent HPMS email that delayed the date on which plans’ compensation structures would be set, and the new guidance provided in this memo, plans are now expected to have their compensation structures in place no later than October 15, 2008. This includes the actual compensation amounts as well as the structure.


So, what this is saying is that all 2009 MA's will be paid only renewals, no initial first year commissions.

Now I am curious as to what the carriers are going to do for agent compensation.

[policy doctor]

Goodness! I confess I just skimmed over the headlines, and have not read the rules in their entirety. Lazy enough to wait for the FMO's to release the commission news.

But this is going to kill any incentives to sell this to existing clientele. And unless the companies provide some leads, agents won't pay the bucks for reply mail for a problematic product.

Well that lays to rest their concern about "churning" existing business.

[patch36]

Is that saying we will be paid half commission for all enrollments in 2009?

[kdover]

Is this not saying that existing clients that we are currently recieving renewals on be "changed" to the new renewal structure? Therefore discouraging the churning? That would make the most sense, if they are wanting discourage the stampede of switching this season.

[AgentBartlett]

One of West Michigan's regional HMOs told me that the commission for 09 is $350 first year "bonus" and $150 each yr. for the next 3 yr. fwiw
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CORRECTION; $300 first year

[midwestbroker]

From what I understand, from the bold section, is that any 2009 enrollment will be considered a renewal.

So, if Mr. Smith turns 65 in January, and he elects a MAPD plan, we will be paid a renewal, rather then a first year commission.

If that is the case, I am sure the carriers are scrambling to do something to keep agents interested.

[patch36]

Originally Posted by midwestbroker

From what I understand, from the bold section, is that any 2009 enrollment will be considered a renewal.

So, if Mr. Smith turns 65 in January, and he elects a MAPD plan, we will be paid a renewal, rather then a first year commission.

If that is the case, I am sure the carriers are scrambling to do something to keep agents interested.

That is half commission according to the rules.

AgentBartlett. That can't be right. It is 5 years of renewals, the question seems to be whether renewal commissions start year 1 or year 2 and last 5 years, not 3.

[Winter]

Originally Posted by midwestbroker

If that is the case, I am sure the carriers are scrambling to do something to keep agents interested.

I would be less than sure.

They will just pump more through telemarketing and create independent, captive whatever designations for agents and then promise them leads and lots of agents will fall for it until they find out it didnt work as planned but once again the carrier got through another enrollment season. They are doing that anyway, they will just it for another season or two as they just react to congressional and cms changes in MA's. The carriers only think from one season to the next and what does it take to hook some agents for a few months before disillusionment sets in. Next season they have something different and it starts all over again.

MA agents are just temp workers/guest workers for the carriers. Maybe the Man will be good to you one season, maybe not. The Man is not thinking about you.

If carriers do anything it will be the basic leads-for-peanuts pitch and then the leads wont be there anyway and by the time everyone reacts to it, it will be a new season and the entire MA game will have changed again.

[insurance0707]

The MAPD plans that I wrote in 2008 only paid $200 1st year commission, $50 second and $0 3rd. It was a great plan but low commission. (It's not that I didn't get a good contract, that's what everyone got). If they want to count 2009 as 2nd year renewal under this levalized system, wouldn't it turn out better for us, I might actually get higher renewals then I were to get under the old system...if they're trying to make things retroactive (i.e. 2009 would be 2nd year) then they should adjust the renewals for plans that we wrote in 2008 also

[scottfree]

I think that the companies will just go level commissions from day one. $300 first and the following 5 years. At least that is what I am kinda hoping the commissions will be. Each company will have their own structure.

I heard from my upline that one company was going level at $330 for a GA. That was before they delayed again until the 15th.

I am going to continue to set appointments and do business as usual. I still believe that I will do well this year and will reevaluate what my plans are for the future in March 09.

[patch36]

Originally Posted by scottfree

I am going to continue to set appointments and do business as usual. I still believe that I will do well this year and will reevaluate what my plans are for the future in March 09.

That is all anyone can do this late in the season.

Medicare was just a diversification strategy for me, not how I make a living, so I am going with the flow. I like the clientele, but like I tell them, I don't like insurance companies and I am going to look after the customer first, me second and the insurance company last. The insurance companies will always look after themselves first.

[midwestbroker]

Winter,

I agree to some degree. I will use KC since this is the market I know:

There are 8 MA carriers on the Missouri side. Coventry, Humana, CIP, Cigna, AARP, Sterling, Wellcare, and Today's Options.

Of these carriers, Humana and Sterling rely on a captive sales force. The others may have a few captive agents, but the majority of their sales comes from the broker community.

With all these options, brokers have their choice of what they are going to offer, and the lowest paid commission will not get it. If Today's Options decides to do $300, and Cigna goes $600, then Cigna will have more agents after it. They can sell 1/2 the amount of plans and get paid just as much.

CIP (Care Improvement Plus) was offering $600 in some counties where it wanted to grow its plan. So, $600 is not too high to think it will not happen.

All we can do now is just wait and see. Maybe the captive market is what this is going to. If that is the case, I will either get my resume out there...or sell something else...just have to wait and see.

[sman]

Originally Posted by policy doctor

But this is going to kill any incentives to sell this to existing clientele.

Not if you want to keep the clientele. I'll gladly take someone's renewal away from them if there is a better plan for the client.

And for what it's worth, I believe the post that midwest originally posted (if CMS keeps it that way) only pertains to those who are already enrolled in an MA plan. For those that aren't on one, we would still get the first year commission. Just my view on it.

[patch36]

Originally Posted by sman

Not if you want to keep the clientele. I'll gladly take someone's renewal away from them if there is a better plan for the client.

And for what it's worth, I believe the post that midwest originally posted (if CMS keeps it that way) only pertains to those who are already enrolled in an MA plan. For those that aren't on one, we would still get the first year commission. Just my view on it.

That would be better but it is not what is written.

In 2009, CMS and the plans have insufficient information to reliably designate a beneficiary for an initial or renewal enrollment until our systems can be programmed to provide this information. Since we have become increasingly concerned about the potential incentives for agents/brokers to “churn” beneficiaries in order to receive the initial compensation amount, we have decided to transition to the new compensation structure by requiring that renewal compensation amounts be paid for all beneficiary enrollments in CY2009.

[theinuranceguy]

Looks like we will be getting paid about $50 per enrollment this year. I would be surprised if a company was offering $100 for 2009. Be sure to also expect a long delay in commissions. 3 months at least.

[patch36]

Just knowing that I am making the world a better place and improving the lives of those I help is more than enough payment.

[GreenSky]

There is nothing that says that a renewal commission could not be equal to a first year. So what if the plans pay a LEVEL commission for all years?

That commission could very well be $300-400, especially on PFFS since all carriers know that their profit center for these plans only have a 2 year (at best) life span.

Rick

[patch36]

Originally Posted by GreenSky

There is nothing that says that a renewal commission could not be equal to a first year. So what if the plans pay a LEVEL commission for all years?

That commission could very well be $300-400, especially on PFFS since all carriers know that their profit center for these plans only have a 2 year (at best) life span.

Rick

It sounds like it will be level, which is fine with me.

[Joe Moore]

Originally Posted by midwestbroker

So, what this is saying is that all 2009 MA's will be paid only renewals, no initial first year commissions.

Now I am curious as to what the carriers are going to do for agent compensation.

[COLOR=blue]Here is what the September 15, 2008 from[/COLOR]

[COLOR=#0000ff][COLOR=red]DATE: September 15, 2008 [/COLOR]
[COLOR=red]TO: Medicare Advantage Organizations [/COLOR]
[COLOR=red]Medicare Advantage-Prescription Drug Organizations [/COLOR]
[COLOR=red]Cost-Based Contractors [/COLOR]
[COLOR=red]Prescription Drug Plan Sponsors [/COLOR]
[COLOR=red]Employer/Union-Sponsored Group Health Plans [/COLOR]
[COLOR=red]FROM: Abby L. Block, Director, Center for Drug and Health Plan Choice (CPC) [/COLOR]

[COLOR=red]RE: Guidance for regulations in CMS 4131-F and CMS 4138-IFC [/COLOR]
[/COLOR]
[COLOR=blue]statement says about commissions:[/COLOR]

http://www.cms.hhs.gov/HealthPlansGe...91208Final.pdf

M. Agent/Broker Compensation
42 CFR 422.2274(a) and 423.2274(a) -- CMS 4138-IFC

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Effective date: September 18, 2008
MIPPA required that we establish limits on agent and broker compensation that ensure that agents and brokers enroll individuals in the Medicare Advantage plan or Medicare Prescription Drug plan that is intended to best meet their health care needs. The limits in 42 CFR 422.2274(a) and 423.2274(a) implement this requirement. These limits apply to Medicare Advantage organizations and Part D sponsors that market through brokers or agents, including agents and brokers employed by the MAO or sponsor. These compensation rules are designed to eliminate inappropriate moves of beneficiaries from plan-to-plan. CMS expects that plans will set compensation at levels that are reasonable, and reflect fair market value for services performed. CMS encourages plans to keep compensation as level as possible across plan types, and among agents providing similar services. All parties remain responsible, however, for compliance with fraud and abuse laws, including the anti-kickback statute. Depending on the circumstances, agent and broker relationships can be problematic under the anti-kickback statute if they involve, by way of example only, compensation in excess of fair market value, compensation structures tied to the health status of the beneficiary (for example, cherry-picking), or compensation that varies based on the attainment of certain enrollment targets. We note that the Office of the Inspector General (OIG) advisory opinion process is available to parties seeking OIG’s opinion as to the legality of a particular arrangement. Information about this process is available on the OIG’s web site at Not Found (404) | Office of Inspector General.
Compensation Structure
Medicare plans are not required to compensate brokers or agents for selling Medicare products. However, if they do compensate their brokers and agents, under our regulations implementing MIPPA, they must pay compensation for the initial year and each of five subsequent renewal years (creating a six-year compensation cycle), provided the member remains enrolled with the MAO or PDP. The first year of this cycle, for purposes of determining the compensation paid to an agent, is 2009 - provided that the beneficiary makes an enrollment change effective in 2009. The next move of this beneficiary after 2009 would be paid as a renewal commission. For beneficiaries who do not make an enrollment change in 2009, the first year of the six-year compensation cycle would start the year the beneficiary makes his or her first enrollment change after 2009.
For any movement of a beneficiary in 2009, an agent would be paid an initial compensation amount. Prior to 2010, CMS will develop system capabilities as part of the enrollment transaction to track the cycle by beneficiary and direct plans as to whether a first year or renewal compensation should be paid. In addition, CMS will provide further guidance on how commissions will be paid for subsequent years.

The compensation structure requirements are:

1. The definition of compensation includes pecuniary or non-pecuniary remuneration of any kind relating to the sale or renewal of the policy (for example, commissions, bonuses, gifts, prizes, awards, and finders’ fees). Salary or other benefits related to employment

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are excluded from this definition (except if related to volume of sales). The payment of fees to comply with State appointment laws, training and testing, certification, reimbursement for mileage to and from appointments with beneficiaries and reimbursement for actual costs associated with beneficiary sales appointments such as venue rent and snacks, are also not considered compensation.
• An agent’s aggregate first year compensation can not exceed 200 percent of the aggregate compensation in each individual subsequent renewal year, of which there must be a total of five renewal years. (This creates a six-year cycle.) This means that in the first year, the compensation paid can be no more than 200 percent of the compensation paid in the second year or any individual subsequent renewal year up to a total of five renewal years (six year total compensation cycle). The agent will receive renewal compensation for the five year renewal period (years two through six) as long as the member remains enrolled in the plan or enrolled by the agent in a like replacement plan.
• Compensation is earned in months 4 through 12 of the enrollment year as long as the member is active with the plan. If an enrollee leaves the plan prior to month 4, no compensation is earned. If an enrollee leaves the plan after month 3, compensation is paid on a pro-rated basis for the months in which the enrollee actually was a member of the plan.
• After the 2009 baseline year, no entity may provide, and no agent or broker may receive, compensation greater than the renewal compensation payable by the replacing plan on renewal policies if an existing policy is replaced with a like plan type during the first year and 5 renewal years. "Like plan type" refers to PDP, MA or MA-PD, or Cost plan. Examples of replacements with like plan type are—PDP replace with another PDP, MA or MA-PD replaced with another MA or MA-PD, and cost plan replaced with another cost plan. If a PDP is added to an MA-only plan, then a new commission is paid for enrollment in the PDP.
• Plans must establish a compensation structure for new and replacement enrollments and renewals effective in a given plan year. Plans may not alter the compensation structure during the given plan year. Compensation structures must be in place by the beginning of the plan year marketing period, October 1, and must be available upon CMS request including for audits, investigations, and to resolve complaints.

[COLOR=blue]From this September 15th statement, it appears there is conflict with their later statements. The way I am reading this, if a beneficiary does not make a change in 2009 but does change later, it appears a new 1st year commission is triggered. [/COLOR]

[COLOR=blue]October 1 has come and gone with no guidance in place. The conflicting statements are probably what is holding up the announcements.[/COLOR]

[COLOR=blue]We may know what agents are getting paid, if anything, when they get their commission statements.[/COLOR]

[midwestbroker]

The new date I think is the 15th or 18th, I am too lazy to check, but I have been told by 2 carriers that I would still be pleased with the compensation.

We'll see if their version of pleased is the same as mine.