New CMS Mandated Pro-rated Commission Rules

[wehotex]

I've received notices from Aetna & Healthspring that they will now pay on a calendar year format (jan o1- dec 31), no matter what the actual effective date of the enrollee. Ex: $200 replacement business Mb enrolls for July o1 effective and will pay out only $100 instead of the full $200 that is "paid forward" now. When jan o1 of the next year comes, 1/12 renewals start coming. I've already noticed on my Healthspring statements that I'm only getting piddling amounts for business that I just wrote. I will be waiting longer to receive commissions.
According to Aetna's policy, they will pay FULL amount for new to Medicare business regardless of the effective date and then renewals will start on the following Jan o1, the one bright spot. The only time of the year where we would be able to make full commission would be AEP since those are jan o1 effectives. Of course, it benefits the carriers since they can hold on to their $$ longer. Looks like the era of "fast money" might be coming to a close.

 

[amazinagent]

The title to this thread indicated that this change was CMS mandated. Is this change actually coming down from CMS? I haven't heard of commission changes (yet) with any of my carriers.

 

[wehotex]

The title to this thread indicated that this change was CMS mandated. Is this change actually coming down from CMS? I haven't heard of commission Ichanges (yet) with any of my carriers.

Yes, that thought occurred to me too. Healthspring already started doing it and Aetna will start in 2014 per the memo. Both memos blame CMS for it- lol


Here is the memo for Aetna Individual Medicare

Changes implemented for Aetna Individual Medicare commission payments effective January 1, 2014

Based on CMS guidelines, we’re updating the way we pay new business commission for Aetna Individual Medicare plans (MA, MAPD, PDP) and pro-rate commission for rapid disenrollments.
Here’s what you need to know:
For the purposes of paying commission, a member’s first policy year ends December 31, regardless of the policy effective date. The second policy year begins January 1.

Renewal commission begins in January of the renewal year, and is paid at a rate of 1/12 of the annual renewal commission amount each month.

For all new business (i.e., those who are newly eligible for Medicare), we pay the full new business commission amount.

For replacement business (i.e., plan changes) effective after January 1, we pay partial-year commissions based on the number of months the member will be enrolled for the year.
Overview of our commission payment process
Important note: The commission amounts shown below are for example purposes only. Please see our 2014 commission flyer for the specific commission rates for your state.
New business
For new business members – those who are newly eligible for Medicare – we pay commissions in advance for the first policy year after CMS validates that the member is new to Medicare.
We initially pay 50% of the new business commission amount based on the expected months of enrollment for new business HMO/PPO and PDP plans. After CMS confirms the enrolling member is new to Medicare, we pay the full new business amount. (On your commission statement, you’ll see a deduction for the initial 50% commission payment and then a payment for the full new business amount.)
For example:
For new business effective January 1, we initially pay $212.50. After CMS validates that the member is new to Medicare, an additional $212.50 is paid to net the full new business amount of $425.

For new business effective March 1, we initially pay the pro-rated amount of $177.08. After CMS validates that the member is new to Medicare, we pay the additional $247.92 to net the full new business amount of $425.
Replacement business
For “replacement business” – that is, for beneficiaries enrolling with Aetna for the first time but who were previously enrolled in a Medicare plan elsewhere – we pay renewal commission in advance for the expected months of enrollment for the year.
For example:
For replacement business effective January 1, we initially pay $212.50, which is 50% of the new business commission amount. CMS confirms the enrolling member is not new to Medicare. Since the full-year renewal commission amount, $212.50, has already been paid, no additional commission is sent.

For replacement business effective after January 1: A producer enrolls a beneficiary during a Special Election Period for a February 1 effective date. Renewal commission is calculated and paid in advance for the expected months of enrollment for the year. In this case, the producer will be paid in advance for 11 months of enrollment, at the renewal commission rate.

($212.50 full-year renewal commission ÷ 12 months) x 11 months of enrollment
=$194.79 net advanced commission
Rapid disenrollments
If a new business or replacement member disenrolls during their first plan year within three months of coverage, this is considered a rapid disenrollment. We will charge back for 100% of the commissions paid for this policy.
For example:
For new business effective June 1, we initially pay $212.50. After CMS validates that the member is new to Medicare, an additional $212.50 is paid to net the full new business amount of $425. The member disenrolls effective August 1. This is considered a rapid disenrollment. We will charge back $425.
If a beneficiary enrolls in a new plan October - December and then disenrolls after three months, this is not a rapid disenrollment because the member is no longer in their first plan year; a new policy year begins January 1. (This is new.)
For example:
For new business effective November 1, we initially pay $35.42. After CMS validates that the member is new to Medicare, an additional $389.58 is paid to net the full new business amount of $425. The member disenrolls effective February 1.

This is not a rapid disenrollment (since the member is no longer in their first plan year; a new policy year started January 1), so we will not charge back for commissions. However, the monthly renewal commission payments, which began on January 1, will stop. The net renewal commission will be one month renewal commission, or $17.71.

($212.50 full-year renewal commission ÷ 12 months) x 1 month of enrollment
=$17.71 net renewal commission
Pro-rated disenrollments
If a member on a new business or replacement plan disenrolls after three months, we will charge back the amount paid for months the member is not enrolled.
For example:
For new business effective January 1, we initially pay $212.50. After CMS validates that the member is new to Medicare, an additional $212.50 is paid to net the full new business commission rate of $425. The member disenrolls effective September 1. We charge back $106.25 for the four months the member is not enrolled. So the net commission amount for this member for the year will be $283.33.

($425 full-year new business commission ÷ 12 months) x 4 months member is not enrolled=$141.67 chargeback amount

($425 full-year new business commission ÷ 12 months) x 8 months of enrollment
=$283.33 net commission
If a member disenrolls after their first plan year, monthly renewal commission payments stop.
Renewing business
For the purposes of calculating commission, a member’s first policy year ends December 31, regardless of the policy effective date. The second policy year begins January 1. As a result, all policies begin generating renewal commission starting January 1 after their effective date.
Renewal commission for MA and MAPD plans is paid in monthly installments upon confirmation of the producer’s training certification for that calendar year. Renewal commission for standalone PDP plans is paid once a year, during the first quarter of the year.
We pay producers lifetime renewal commission on individual policies for as long as the member remains continuously enrolled in an Aetna plan and the producer passes training certification for the current year.
Producers must complete certification annually to receive renewal commission for existing business.
Resources
View a new spreadsheet on Producer World to see how commissions are pro-rated based on the enrollment effective date and disenrollment date

See our 2014 commission flyer

See the compensation section of the Aetna Medicare Producer Handbook
If you have any questions, please contact your Aetna Medicare Broker Sales Representative or the Aetna Medicare Broker Support Unit at [email protected] or call 888-247-1050.

 

[Chazm]

Yeah I noticed Coventry doing this which I think is owned by Aetna. Wrote biz effective sept and I got $1XX.00 instead of the $400.

I don't mind it, keeps the chargebacks down and I'll get the rest soon

 

[amazinagent]

CMS is always to blame. Just like WellCare is blaming CMS for the elimination of their partial dual plan in northeast Florida.
The commission change could be coming from CMS. But I'm contracted with 7 companies (including Aetna). I don't actually sell the Aetna products so I don't read most of their many emails and must have missed the commission memo. But the 6 other companies haven't said anything (yet).

 

[GreenSky]

Health Net started doing this months ago. I said years ago that it was the advancing of commission that caused much of the problems with MA agents. The thought of a quick buck for selling zero premium plans with few regulations was an inducement for many dishonest agents.

To solve the "problem" Humana threw us under the bus by telling Max Baucus who I believe was head of Ways and Means at the time and a chief proponent of Obamacare until he called it a train wreck (what a bastard) that it was the high commissions that caused all the problems. I remember waiting until February to find out how much I'd be paid for business written late in the prior year.

It took me years to be willing to sell Humana again.

Rick

 

[G.Gordon]

I kinda like it. Over the course of time you get the same amount per person. As earned commissions is where the security is at.

 

[bpenn9]

I kinda like it. Over the course of time you get the same amount per person. As earned commissions is where the security is at.

Agreed. Will be harder for the new agent to "break in" with slim marketing funds. Personally, with my residuals built up I would rather just be paid as earned.

 

[Guest]

I think as earned is the only way to go.

 

[Jacob59]

Do you get full commission on replacement if the client never had a MAPD plan before but did have a medicare supplement policy, say a 70 yr old or whatever age?