Industry battles "upsetting" commission change

Rather than restructure brokers compensation for Medicare Advantage sales, some fight for less invasive changes.



The rule change proposed by the Centers for Medicare and Medicaid Services that would restructure producer compensation schedules for Medicare Advantage plans has met with uproar from independent agents and brokers.

Jason Perry of Medicare Advantage Specialists believes the change from a one-year policy calendar to a pro-rated policy represents more “big government” involvement in the insurance industry, and will be for the worse.

“Do we think it’s going to be a loss in the agent base across the country because of the reduction? Sure,” he said, adding that the rule change will “definitely decrease commission.”

“We just have to plan accordingly,” Perry concluded.

However, some industry thought leaders aren’t quite so prepared to accept the proposed change—at least not without a fight.

John Greene, vice president of congressional affairs at the National Association of Health Underwriters (NAHU), told Insurance Business he is actively campaigning against the changes to broker compensation, along with the proposed cuts to the Medicare Advantage program as a whole.  

“It's a solution looking for a problem. It's upsetting,” Greene said simply. “I think [CMS] is concerned about churning—that agents are signing people up to a new plan every year for the higher commission. I can’t say that it never happens, but I’ll tell you this: beneficiaries change plans for many, many good reasons.”

Greene said NAHU, along with representatives from the Coalition for Affordable Healthcare, have spoken with CMS officials personally on “the role of the agent” and some of the reasons beneficiaries switch plans.

The group’s efforts have also scored the commission issue a hearing before the House Ways and Means Committee.

During the hearing and continuing discussions with CMS, Greene said he plans to emphasize alternative solutions to concerns regarding churning, including requiring agents to have beneficiaries sign a policy replacement form stating why the policyholder is making a modification or change to their plan.

Such a practice would keep quality agents in the Medicare Advantage business while addressing the concerns of CMS officials, he said.

“An agent’s book of business has value and keeping clients happy is of more importance to them than first-year commission,” Greene emphasized. “This really isn’t commission-driven. [CMS] is trying to build a better mousetrap and what they’re doing is going to squeeze broker compensation to the point that it will drive a lot of brokers out.”

However, he believes the outcome is still up in the air.

“They heard us out, but they can’t comment because the rule is still out there [for public comment],” Greene said.

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