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Asclepios
Your Weekly Medicare Consumer Advocacy Update
Medicare Advantage Commissions
October 23, 2008; Volume 8, Issue 43
Recent reports indicate that some of the major national Medicare private health
plans are going to pay independent agents $500-plus per year over five
years—$2,500 in total—for every new enrollee in their "Medicare Advantage"
plans.
The new totals are at least double the top commissions typically paid over the
last couple of years—a period when people with Medicare were regularly
victimized by predatory agents looking to make a quick buck. Older adults and
people with disabilities were bullied or tricked into Medicare private health
plans that no longer allowed them to see their doctors or that stuck them with
high out-of-pocket costs when they fell ill.
These new commissions are an attempt by some of the major plans to undermine
efforts by the Centers for Medicare & Medicaid Services (CMS) to restrain commissions and in particular to eliminate
incentives for agents to "churn"—move customers from plan to plan just to earn
commissions. Many agents believe that these higher commissions actually increase
incentives to churn.
CMS should not allow Medicare Advantage plans to pay these commissions. The
agency has broad authority, under the Medicare Improvements for Patients and
Providers Act, to establish commission guidelines that create "incentives for
agents and brokers to enroll individuals in the Medicare Advantage plan that is
intended to best meet their health care needs."
There should be no incentive to move someone from one Medicare Advantage plan to
another just to earn a higher commission.
There should be no incentive to move someone from a Medigap supplemental plan to
a Medicare Advantage plan just to earn a higher commission.
With those twin goals in mind, CMS should establish a cap on commissions
consistent with existing requirements to pay level commissions over 5 years, starting with the 2009 plan
year. The cap should be set at a level that approximates current renewal rates
for Medicare Advantage enrollments made in 2007 and 2008. And it should
approximate Medigap renewal rates for a healthy 66-year-old, the low-cost
consumer that Medicare Advantage plans target for enrollment.
With those parameters, commissions would be capped at well under half the rates
Medicare Advantage plans are now proposing to pay.
Remember, Medicare Advantage plans are paying these commissions out of subsidies
they receive from taxpayers. It is outrageous that any of these subsidies, which
are supposed to pay for the health care of older adults and people with
disabilities, are diverted to pay commissions to enroll people with Medicare in
plans that cost taxpayers more money—$150 billion over the next ten
years—than it costs to provide care under Original Medicare.
Unfortunately, there is zero chance that the current administration will ban Medicare private health plans from paying
commissions, just as it has opposed any effort by Congress to reduce the
excessive subsidies these plans receive. For that, more comprehensive solution,
we will have to wait until after the election.
Medical Record
"As it is, there will be a frenzy to move all MA [enrollees] to a different
company since the renewals are way higher. If this stands it will make the
problem worse than ever before regarding churning. The incentive to churn in the
future has been increased because if you move someone from another company,
bam...$500. It appears to me that the companies may have kicked a sleeping dog
and the agents will be the ones to get bit. I can't imagine CMS letting this
stand." (Post on Insurance-Forums.net
(http://www.kintera.org/TR.asp?a=gvLVLeMWLmK2LpI&s=ovJVJcP1JqIYJaP4F&m=kuI0LdONL
jK8H&af=y), October 2008)
"A regulatory structure for commissions, together with minimum standards for MA
benefit packages, could align incentives so that producers are compensated more
for selling high-value plans and less for selling low-value plans," (Medicare
White Paper
(http://www.kintera.org/TR.asp?a=9eJHITNuFfJPJ5K&s=ovJVJcP1JqIYJaP4F&m=kuI0LdONL
jK8H&af=y), National Association of Insurance Commissioners, September 2008)
"My husband signed up with a private insurance company as a secondary plan and
Medicare as primary plan. In fact, we find that the private insurance company is
primary. My husband has recently been diagnosed with colon cancer that has
spread to his lymph nodes and into his liver. He has had surgery to remove half
of his colon and lymph nodes. The doctor has referred him to a cancer center
which we find is not in the network, in our area or elsewhere. We have called to
have it switched back to traditional Medicare which the center will accept but
are told we cannot switch till November which is 6 months from now. We have
explained to them that this cannot wait that long—that is half of the time he has been given and they have as much as told us they don't
care if he dies. We feel we have been lied to and now my husband can have no
treatment till November. This really isn't fair to him. (Story submitted to the
Private Health Plan Monitoring Project,
(http://www.kintera.org/TR.asp?a=crKNI2OGLiIWKfJ&s=ovJVJcP1JqIYJaP4F&m=kuI0LdONL
jK8H&af=y) May 2008)
* * * *
Asclepios
Your Weekly Medicare Consumer Advocacy Update
Medicare Advantage Commissions
October 23, 2008; Volume 8, Issue 43
Recent reports indicate that some of the major national Medicare private health
plans are going to pay independent agents $500-plus per year over five
years—$2,500 in total—for every new enrollee in their "Medicare Advantage"
plans.
The new totals are at least double the top commissions typically paid over the
last couple of years—a period when people with Medicare were regularly
victimized by predatory agents looking to make a quick buck. Older adults and
people with disabilities were bullied or tricked into Medicare private health
plans that no longer allowed them to see their doctors or that stuck them with
high out-of-pocket costs when they fell ill.
These new commissions are an attempt by some of the major plans to undermine
efforts by the Centers for Medicare & Medicaid Services (CMS) to restrain commissions and in particular to eliminate
incentives for agents to "churn"—move customers from plan to plan just to earn
commissions. Many agents believe that these higher commissions actually increase
incentives to churn.
CMS should not allow Medicare Advantage plans to pay these commissions. The
agency has broad authority, under the Medicare Improvements for Patients and
Providers Act, to establish commission guidelines that create "incentives for
agents and brokers to enroll individuals in the Medicare Advantage plan that is
intended to best meet their health care needs."
There should be no incentive to move someone from one Medicare Advantage plan to
another just to earn a higher commission.
There should be no incentive to move someone from a Medigap supplemental plan to
a Medicare Advantage plan just to earn a higher commission.
With those twin goals in mind, CMS should establish a cap on commissions
consistent with existing requirements to pay level commissions over 5 years, starting with the 2009 plan
year. The cap should be set at a level that approximates current renewal rates
for Medicare Advantage enrollments made in 2007 and 2008. And it should
approximate Medigap renewal rates for a healthy 66-year-old, the low-cost
consumer that Medicare Advantage plans target for enrollment.
With those parameters, commissions would be capped at well under half the rates
Medicare Advantage plans are now proposing to pay.
Remember, Medicare Advantage plans are paying these commissions out of subsidies
they receive from taxpayers. It is outrageous that any of these subsidies, which
are supposed to pay for the health care of older adults and people with
disabilities, are diverted to pay commissions to enroll people with Medicare in
plans that cost taxpayers more money—$150 billion over the next ten
years—than it costs to provide care under Original Medicare.
Unfortunately, there is zero chance that the current administration will ban Medicare private health plans from paying
commissions, just as it has opposed any effort by Congress to reduce the
excessive subsidies these plans receive. For that, more comprehensive solution,
we will have to wait until after the election.
Medical Record
"As it is, there will be a frenzy to move all MA [enrollees] to a different
company since the renewals are way higher. If this stands it will make the
problem worse than ever before regarding churning. The incentive to churn in the
future has been increased because if you move someone from another company,
bam...$500. It appears to me that the companies may have kicked a sleeping dog
and the agents will be the ones to get bit. I can't imagine CMS letting this
stand." (Post on Insurance-Forums.net
(http://www.kintera.org/TR.asp?a=gvLVLeMWLmK2LpI&s=ovJVJcP1JqIYJaP4F&m=kuI0LdONL
jK8H&af=y), October 2008)
"A regulatory structure for commissions, together with minimum standards for MA
benefit packages, could align incentives so that producers are compensated more
for selling high-value plans and less for selling low-value plans," (Medicare
White Paper
(http://www.kintera.org/TR.asp?a=9eJHITNuFfJPJ5K&s=ovJVJcP1JqIYJaP4F&m=kuI0LdONL
jK8H&af=y), National Association of Insurance Commissioners, September 2008)
"My husband signed up with a private insurance company as a secondary plan and
Medicare as primary plan. In fact, we find that the private insurance company is
primary. My husband has recently been diagnosed with colon cancer that has
spread to his lymph nodes and into his liver. He has had surgery to remove half
of his colon and lymph nodes. The doctor has referred him to a cancer center
which we find is not in the network, in our area or elsewhere. We have called to
have it switched back to traditional Medicare which the center will accept but
are told we cannot switch till November which is 6 months from now. We have
explained to them that this cannot wait that long—that is half of the time he has been given and they have as much as told us they don't
care if he dies. We feel we have been lied to and now my husband can have no
treatment till November. This really isn't fair to him. (Story submitted to the
Private Health Plan Monitoring Project,
(http://www.kintera.org/TR.asp?a=crKNI2OGLiIWKfJ&s=ovJVJcP1JqIYJaP4F&m=kuI0LdONL
jK8H&af=y) May 2008)
* * * *
