Insurance Agent Forum

[GreenSky]

Thought the commissions might be too good to be true. The morons are at it again!

Breaking news! Medicare Advantage 2009 Commission Update (4) - CMS Rescinds October 8th, 2008 Medicare Advantage Commission Guidance, Will Issue new Regulatory Action Next Week (Week of October 27th - 31st) - DEVELOPING « Ritter Insurance Marketing

Breaking news! Medicare Advantage 2009 Commission Update (4) - CMS Rescinds October 8th, 2008 Medicare Advantage Commission Guidance, Will Issue new Regulatory Action Next Week (Week of October 27th - 31st) - DEVELOPING

October 25, 2008 by [COLOR=#265e15]Craig[/COLOR]

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 [COLOR=#265e15]press release[/COLOR] 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).

[FONT=']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.[/font]

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. . .



Rick

[Dave020]

I'm not trying to be difficult, but why exactly should a plan with $0 premium pay ANY commission? At best, maybe $20 per month FYC and $10 per month renewals as a referral fee on a normal, as-earned basis.

Where is the money inside the plan to pay the commission? I wonder how far below the 85% threshold the MA plans fall with these $400, $500, $600 or more commission rates.

There is no way a zero premium private health plan should pay more commission than a traditional supplement. That it does is what is causing all of these problems.

[GreenSky]

Originally Posted by Dave020

I'm not trying to be difficult, but why exactly should a plan with $0 premium pay ANY commission? At best, maybe $20 per month FYC and $10 per month renewals as a referral fee on a normal, as-earned basis.

They are NOT $0 premium. Medicare is paying something around $11,000 per year to the insurance carrier.

That's why they pay a huge commission. However, the more important question is why is the government getting involved in how a private business pays their salesforce. Oh yeah. I remember. Socialism at its best.

Rick

[Dave020]

I know that, but if I put a client onto MediCal (Medicaid), the state pays around $6,000 or more for that and the Feds kick in as well probably another $6,000 ($12,00o total). When I put someone on Healthy Families, the state pays maybe $5,000 for that. Should I not get $700 after three months to sell one of those since they are not really zero premium either??
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Originally Posted by GreenSky

However, the more important question is why is the government getting involved in how a private business pays their salesforce. Oh yeah. I remember. Socialism at its best.

Rick

Because the states, DOIs, NAIC and NAHU refuse to do anything about crooked MA/MAPD agents.
- - - - - - - - - - - - - - - - - -
I've got one right now from July eligibility date, specifically asked the Aetna agent for a Medicare Supplement plan. Were sold an MAPD. Now I get to move him to plan F and put his wife on HIPAA. All in a day's work.

That right there is why they should be severely reduced and be not greater than a supplement commission level and paid monthly, as-earned.

[allhealthandlife]

Originally Posted by Dave020

I'm not trying to be difficult, but why exactly should a plan with $0 premium pay ANY commission? At best, maybe $20 per month FYC and $10 per month renewals as a referral fee on a normal, as-earned basis.

Where is the money inside the plan to pay the commission? I wonder how far below the 85% threshold the MA plans fall with these $400, $500, $600 or more commission rates.

There is no way a zero premium private health plan should pay more commission than a traditional supplement. That it does is what is causing all of these problems.

Medicare Supplements take about 25 minutes to explain and you as an agent can be confident that the customer can't use it wrong even if they don't understand it fully. I have sold over a thousand Medicare Supplements and have had maybe ten customer service issues since 1992. Customers keep their supplements because they work like they are suppose to so you can be fairly confindent that they will renew their coverage. I would say on average a Medicare Supplement commission over the average lifetime of renewels is about 1500.00 but require much much much less time and headaches than MA.

So compare this to what was proposed by the carriers to pay 500.00 over 5 years for MA and the Med Supp pay is really more considering that agents would be lucky if a MA member kept their policy for three years. Total payout about the same as Med Supp without having to be the fall guy for crappy , convaluted and confusing plans.

And oh yeah did you hear that there is some new marketing regulations that makes selling these HMO's ( High Maintenence Organizations ) even that much more labor intensive.

[GreenSky]

Dave:

Here's the issue. All MA plans are being provided by private insurance carriers. The government should not decide the amount of compensation they are willing to pay.

However, you are correct in that CMS has not done enough to thwart dishonest agents. So, I propose the following that will solve much of the problem:

1) Commissions earned just like every other policy - on a monthly basis. No issue with advances except that if there is a cancellation, there should be a pro-rata charge back.

2) Eliminate lock-in which really created the problem. If a person can get out of the crappy plan that an agent slammed them into, and that agent subsequently gets a chargeback, most of dishonesty from agents can be eliminated.

CMS makes bad rules and instead of correcting the problem, just adds more bad rules.

If Health Net was willing to pay a bonus to agents for placing children into their healthy families program, would that present a problem? It might create unfair competition, but that in itself would not harm the child since they could change plans monthly.

If Anthem decided to pay 35% first year commission and 20% renewal, would you argue as long as it didn't impact on their premiums?

Lastly, if you were closer to Encino, I'd change your mind with quantities of Guinness. I know you're a whore for beer.

Rick

[allhealthandlife]

Originally Posted by Dave020

I'm not trying to be difficult, but why exactly should a plan with $0 premium pay ANY commission? At best, maybe $20 per month FYC and $10 per month renewals as a referral fee on a normal, as-earned basis.

Where is the money inside the plan to pay the commission? I wonder how far below the 85% threshold the MA plans fall with these $400, $500, $600 or more commission rates.

There is no way a zero premium private health plan should pay more commission than a traditional supplement. That it does is what is causing all of these problems.

And one more thing i think you should be able to appreciate is that you are a health insurance agent and you can't even even grasp the concept of privately administered Medicare benefits so how hard do you think it is for us to explain this to little old ladies who have known nothing but using their red , white and blue card for the last 15 years but can't afford their Medicare Supplement premium anymore.

[mking]

It may take 25 minutes to explain a Med. Suppl. Plan...but you sometimes have to explain MEDICARE it self, and how a PDP work, maybe LIS, Medicare Savings program and maybe a state RX program,,,,,if you are doing a good job....YOu are in the house 1 to 2 hrs....We earn the commissions we earn on MA plans........And dont forget about our EXPENSES..Or maybe we should charge consulting fees in stead...That reallt what we do consult.

[scottfree]

Originally Posted by allhealthandlife

Medicare Supplements take about 25 minutes to explain and you as an agent can be confident that the customer can't use it wrong even if they don't understand it fully. I have sold over a thousand Medicare Supplements and have had maybe ten customer service issues since 1992. Customers keep their supplements because they work like they are suppose to so you can be fairly confindent that they will renew their coverage. I would say on average a Medicare Supplement commission over the average lifetime of renewels is about 1500.00 but require much much much less time and headaches than MA.

So compare this to what was proposed by the carriers to pay 500.00 over 5 years for MA and the Med Supp pay is really more considering that agents would be lucky if a MA member kept their policy for three years. Total payout about the same as Med Supp without having to be the fall guy for crappy , convaluted and confusing plans.

And oh yeah did you hear that there is some new marketing regulations that makes selling these HMO's ( High Maintenence Organizations ) even that much more labor intensive.

Originally Posted by GreenSky

Dave:

Here's the issue. All MA plans are being provided by private insurance carriers. The government should not decide the amount of compensation they are willing to pay.

However, you are correct in that CMS has not done enough to thwart dishonest agents. So, I propose the following that will solve much of the problem:

1) Commissions earned just like every other policy - on a monthly basis. No issue with advances except that if there is a cancellation, there should be a pro-rata charge back.

2) Eliminate lock-in which really created the problem. If a person can get out of the crappy plan that an agent slammed them into, and that agent subsequently gets a chargeback, most of dishonesty from agents can be eliminated.

CMS makes bad rules and instead of correcting the problem, just adds more bad rules.

If Health Net was willing to pay a bonus to agents for placing children into their healthy families program, would that present a problem? It might create unfair competition, but that in itself would not harm the child since they could change plans monthly.

If Anthem decided to pay 35% first year commission and 20% renewal, would you argue as long as it didn't impact on their premiums?

Lastly, if you were closer to Encino, I'd change your mind with quantities of Guinness. I know you're a whore for beer.

Rick

Rick and allhealth, You are right on!

[COLOR=black]I am not going to make any comments to Dave, he obviously doesn’t have any more of a clue what goes on than Rep. Stark. He also has no idea on the amount of time we have to spend with each and every client to help them choose the right plan.[/COLOR]

[COLOR=black]I wish there was a way for us to get a voice in what is going on.[/COLOR]

[COLOR=black]This is just round one, what will happen when we have to help people when PFFS goes and have to explain that they can only have PPO's or an HMO for 2011.[/COLOR]

[COLOR=black]My guess is we should work for free! [/COLOR]

[al3]

Originally Posted by scottfree

[COLOR=black]I am not going to make any comments to Dave, he obviously doesn’t have any more of a clue what goes on than Rep. Stark. He also has no idea on the amount of time we have to spend with each and every client to help them choose the right plan.[/COLOR]

You are making a bad judgment. Dave F. knows this industry better than any one person in this venue. There is no one on this board (or in this industry) who is more respected than Dave is.

You may disagree with him (as I often do,) but believe me... HE HAS A CLUE and he knows what is going on.

[GreenSky]

Originally Posted by al3

You are making a bad judgment. Dave F. knows this industry better than any one person in this venue. There is no one on this board (or in this industry) who is more respected than Dave is.

You may disagree with him (as I often do,) but believe me... HE HAS A CLUE and he knows what is going on.

Hate to agree with the jackass, but he's right.

Rick

[Paradigm]

Originally Posted by Dave020

I'm not trying to be difficult, but why exactly should a plan with $0 premium pay ANY commission? At best, maybe $20 per month FYC and $10 per month renewals as a referral fee on a normal, as-earned basis.

Where is the money inside the plan to pay the commission? I wonder how far below the 85% threshold the MA plans fall with these $400, $500, $600 or more commission rates.

There is no way a zero premium private health plan should pay more commission than a traditional supplement. That it does is what is causing all of these problems.

It isnt really zero premium tho is it since the government is redirecting part B premium to the insurance plan plus what ever else the government is paying for them to cover the part A portion as well

[Joe Moore]

Originally Posted by Dave020

I'm not trying to be difficult, but why exactly should a plan with $0 premium pay ANY commission? At best, maybe $20 per month FYC and $10 per month renewals as a referral fee on a normal, as-earned basis.

Where is the money inside the plan to pay the commission? I wonder how far below the 85% threshold the MA plans fall with these $400, $500, $600 or more commission rates.

There is no way a zero premium private health plan should pay more commission than a traditional supplement. That it does is what is causing all of these problems.

I do not see the premium, or lack of a premium, being the issue here.

The money is already flowing to the plans from Medicare. A reduction in agent commissions will not reduce government spending by one cent.

The companies got guidance and they set commissions at what they felt they could afford to pay. I agree with Craig, cut agent commissions and it will drive companies to spend more on direct marketing. It also could just simply add to the bottom line more:

http://www.sfgate.com/cgi-bin/articl...n=0 15&sc=675

http://pn.psychiatryonline.org/cgi/c.../full/43/15/14

As far as Medicare Supplements, the premium is the only money the company receives. So, they have to set commissions accordingly.

It seems to me a much bigger issue should be a company reducing benefits to clients, while making record profits.

This will be our 4th year dealing with these plans. I have already had good agents telling me they were spooked by the new rules and were leaving the industry, no matter what the commissions were. A pay cut may drive a lot more good agents away and bring on more rookies not understanding what is going on. The good professional agents should be paid, and paid well.

Is this the only industry in the United States where the government is trying to dictate earnings of employees or independent contractors? It may be.

[policy doctor]

Goodness! I can't believe the volatility going on in this CMS commission structure. What we're seeing is the typical behavior of government interference when government money is involved, big amounts or small.

Agents need a higher compensation than med supps because of the amount of time spent explaining this product. Yes, it is more complicated than med supps. You almost have to go line by line with MA's. How much higher should compensation be? Whatever the indiv co is willing to pay for market share. CMS should just designate caps, that is all.

I, for one, am sitting by and watching this debacle. I have only certified with one company and I will hold off taking any credentailing courses till this is resolved. I want to know how much i am getting paid.....I am not a missionary. And Rep Stark and his ilk can teach seniors from his local office on Medicare options. Then they don't have to worry about our commission structure.

Didn't I post somewhere that CMS would TRICK OR TREAT us? Hmmm..look at the date. We thought we got a treat.....here comes the TRICK! UP Yours!!!

[Dave020]

Originally Posted by GreenSky

Lastly, if you were closer to Encino, I'd change your mind with quantities of Guinness. I know you're a whore for beer.

Rick

LOL, I may have to make a visit down there one of these days.



This has been an interesting thread, for sure. And I was playing devil's advocate on this. Obviously there are certain situations in which a private Medicare health plan makes sense, budgetarily as well as health-wise. Certainly each state or geographic area is going to dictate the fit in terms of plans, benefits and most importantly network access.

[thereaper]

Originally Posted by Dave020

I know that, but if I put a client onto MediCal (Medicaid), the state pays around $6,000 or more for that and the Feds kick in as well probably another $6,000 ($12,00o total). When I put someone on Healthy Families, the state pays maybe $5,000 for that. Should I not get $700 after three months to sell one of those since they are not really zero premium either??
- - - - - - - - - - - - - - - - - -


Because the states, DOIs, NAIC and NAHU refuse to do anything about crooked MA/MAPD agents.
- - - - - - - - - - - - - - - - - -
I've got one right now from July eligibility date, specifically asked the Aetna agent for a Medicare Supplement plan. Were sold an MAPD. Now I get to move him to plan F and put his wife on HIPAA. All in a day's work.

That right there is why they should be severely reduced and be not greater than a supplement commission level and paid monthly, as-earned.

When I first started in this business I was told that I was just as much as a professional as a Doctor or an Attorney and my time and knowledge should be compensated as such. Now I've been in this business many, many years and when I'm finished with a client I figure my commission and write it down and if it's not between $500 and $1000 I feel I've lost on the deal. I have found MA plans take longer to sell if you're explaining it right, than a medicare supplement, but then again if you're with a client discussing just a supplement I cannot believe they haven't ever brought up PDP or MAPD and there ya go, you have to explain it. Yes I have sold a med sup in 10 minutes they're simple but not MA's.

[scottfree]

[COLOR=black]

Originally Posted by Dave020

I'm not trying to be difficult, but why exactly should a plan with $0 premium pay ANY commission? At best, maybe $20 per month FYC and $10 per month renewals as a referral fee on a normal, as-earned basis.

[/COLOR]

Originally Posted by Dave020

[COLOR=black]Where is the money inside the plan to pay the commission? I wonder how far below the 85% threshold the MA plans fall with these $400, $500, $600 or more commission rates.[/COLOR]

[COLOR=black]There is no way a zero premium private health plan should pay more commission than a traditional supplement. That it does is what is causing all of these problems.[/COLOR]

[COLOR=black]

Originally Posted by al3

You are making a bad judgment. Dave F. knows this industry better than any one person in this venue. There is no one on this board (or in this industry) who is more respected than Dave is.

[/COLOR]

Originally Posted by al3

[COLOR=black]You may disagree with him (as I often do,) but believe me... HE HAS A CLUE and he knows what is going on.[/COLOR]

[COLOR=black]I may have been off a bit in saying he does not have a clue. It looks like I have been wrong in that assumption.[/COLOR]

[COLOR=black]The statement that may have set me off was "why exactly should a plan with $0 premium pay ANY commission?" That statement made me think of bad agents that tell clients that this is a free plan. I have a client that I saw on Friday that moved here from Germany and has to pay for her Part A and of course her Part B. She has to pay over $500 a month to get the right to get this "$0 premium plan". She can't afford a supplement and she is going to get an MA and a separate PDP. She even called her friend up while I was there and had him come over to see the different options they had for 09. This ended up being a 3 hour appointment and I am still going to have to go back and see them to pick up their apps and do verifications. [/COLOR]

[COLOR=black]So in this case she is paying $443 + 96.40 = $539.40. I know that the insurance MAPD company actually is getting more than this a month but just to go with the idea that Dave is suggesting "maybe $20 per month FYC and $10 per month renewals" this is totally off. I also need to add the PDP that fit her best which is $22.10 + above amount = $561.50 x 20%(commission on a supp)112.3 x 12 months= $1,347.60. So if you want to look at what we get paid as a percentage of what we get in commission, we are getting under paid.[/COLOR]

[COLOR=black]One more comment on CMS wanting to get just renewal commission in the following years. That's fine if the plan stays the same but when it goes to hell and you have to start the whole process over again and help them switch to a new plan is it fair to just get the renewal? The renewal is fine if you can meet with them for 30 min. and tell them about a few changes. If you have to go through the whole process and help them pick a new plan and than get just the renewal that you would have gotten anyway, is that fair? [/COLOR]

[COLOR=black]I sell supps also and call them to say their supp is going up $10 or whatever send also send a Bday card and holiday card. That's it and I get a renewal. No service calls hardly ever.[/COLOR]

[COLOR=black]So I made a heated statement that Dave didn't have a clue, but maybe what I have written explains why I may have felt that way.[/COLOR]

[COLOR=black]Rick, hate to say you were right but it looks like CMS is going to pull a TRICK on us this year. I sure wish I could drive to Cal or Washington and talk to this ass Stark or "Acting Administrator Weems". What a couple of jerks that have no "CLUE"[/COLOR]

[COLOR=black]Had to get that off my chest...[/COLOR]

[COLOR=black]Have a nice day..really[/COLOR]

[COLOR=black]Scott[/COLOR]

[The Rabbi]

IMHO sups are overinsuring when I can get a MAPD PPO for zero premium.

Why don't you call your P & C agent and have your deductible zeroed?

Of course, if you are in an area where MA's aren't prevelent, then there is no choice.

In my area, sups run over $200 plus a D plan. A couple can easily spend 5k-6k a year and the premiums are escalating as high as 14%. This coming from people who made the change to MAPD PPO.

As far as CMS, they are as dumb as the insurance companies. They're throwing money at the problem of churning. From what I've seen so far, changing a clients plan won't be rewarded. It is only done in the interest of the client, the way it should be.

[Dave020]

Sigh, this forum is a crack up. Especially this time or year.

I posted just to yank Rick's chain for fun. He knows I am not serious, it was kind of a private joke since I refer all my MA/MAPD to him.

Lighten up, I was just having some fun with Rick.

[policy doctor]

IMHO sups are overinsuring when I can get a MAPD PPO for zero premium.

Why don't you call your P & C agent and have your deductible zeroed?

Well Rabbi...Zero premium doesn't mean zero liability. And an argument could be made for dropping homeowners ins since how often do you have claims? (house must be mtg free).