Agents’ pay for Medicare sales much lower than last year

Nov 12, 2008

Florida Health News–November 11, 2008

By Carol Gentry

Agents and brokers who sell Medicare drug and health plans will receive only a little more than half as much in commission payments in 2009 as they are accustomed to receiving, based on new federal rules released Monday.

The Centers for Medicare and Medicaid Services (CMS) wants plans to hold back about half of the usual first-year commission and use it to pay agents in later years if the member sticks with the plan. By cutting the upfront payments, CMS hopes to reduce the incentive for agents to “churn” members through multiple plans, regardless of whether those plans are best for them.

This practice, which was common in Florida in past years, led to thousands of complaints, Congressional hearings, fines and other discipline for plans that had agents who churned on their behalf.

While agents are bound to be disappointed at the drop in pay, the new rules set commissions at a higher level than CMS had suggested a month ago, under pressure from Congress. Confronted by the possibility of receiving $100 to $250 a head in 2009 instead of last year’s average of $500, some agents were vowing to leave the business entirely.

Patient advocates called their bluff, saying taxpayers’ money would be better spent supporting independent programs that use volunteers to give neutral advice to seniors. Florida’s SHINE is such a program.

Monday’s payment rule represents the third go-round for the 2009 sales season, and it had better be the charm: Sign-ups begin Saturday.

Sales commissions are only one of many contentious issues covered in the new federal rules designed to cut down on marketing abuses encountered in past years. Plans or independent agents can no longer call Medicare beneficiaries (they have to wait to be called); they must record all calls and interviews; they can discuss only one type of plan per interview; and they can no longer attract sales prospects to seminars by offering free meals, although a beverage and dessert is permitted.

Monday’s revisions:

• Specify that payments to agents and brokers reflect “fair-market value” based on the commissions paid in the past, adjusted for inflation.

• Require that payment to an agent when a member renews be half as much as the payment at the initial enrollment, with a payment cycle of up to six years.

• Impose similar limits on payments to field marketing organizations, companies that contract with plans to train and deploy agents.

• Require plans to tell CMS how much they’ve paid agents for the past three years as well as their payment structure for 2009. That information must also be provided to agents and brokers that are contracting with the plans, but it is not provided to members or the public.

• Limit new-enrollment commissions to the renewal rate until CMS can verify that the sign-up is indeed new.

With government workers off for Veterans Day on Tuesday, further explanation was in short supply.