As com­mis­sions on ACA plans van­ish, some bro­kers stop sell­ing them

Modern Healthcare - - NEWS - By Vir­gil Dick­son

Each year since the launch of Health­Care.gov, Salt Lake City in­sur­ance bro­ker Craig Paul­son has faced a dif­fi­cult ques­tion: Should he con­tinue to sell in­di­vid­ual-mar­ket plans even though in­sur­ers in­creas­ingly refuse to pay him com­mis­sions?

In the past year, Aetna an­nounced it would stop pay­ing com­mis­sions for new in­di­vid­ual mem­bers who en­roll in any Af­ford­able Care Act-com­pli­ant plans. Molina Health­care later an­nounced that it wouldn’t pay com­mis­sions for sign-ups dur­ing spe­cial en­roll­ment pe­ri­ods out­side the an­nual open en­roll­ment.

At least partly as a re­sult of such moves by in­sur­ers, there was a nearly 35% drop in the num­ber of reg­is­tered bro­kers for Health­Care.gov be­tween 2015 and 2017, ac­cord­ing to CMS data. The num­ber dropped from more than 103,000 to just over 67,000.

Paul­son wor­ries that if his bro­ker­age firm, Al­tura Ben­e­fits, stops sell­ing ex­change plans, his cus­tomers may be left with lower qual­ity cov­er­age or none at all. “It’s cre­ated a moral con­flict,” Paul­son said. “We want to do what’s right for the client, but if you’re not get­ting paid for your ser­vices you can’t re­main in busi­ness.”

As in­sur­ers face losses in the ACA’s in­di­vid­ual mar­ket, more in­sur­ers around the coun­try are re­fus­ing to pay bro­ker com­mis­sions, par­tic­u­larly on higher-tier ex­change plans or spe­cial en­roll­ment pe­riod sales, said Ron­nell Nolan, CEO of Health Agents for Amer­ica, which rep­re­sents in­de­pen­dent bro­kers.

She and other ex­perts say in­sur­ers are do­ing this to dis­cour­age en­roll­ment of peo­ple need­ing costly med­i­cal ser­vices, who tend to se­lect plat­inum or gold plans with low cost-shar­ing or who sign up through spe­cial en­roll­ment pe­ri­ods.

Se­lec­tively pay­ing com­mis­sions based on tier level is hap­pen­ing even though the CMS is­sued a guid­ance in De­cem­ber in­struct­ing health plans to be con­sis­tent in how they pay com­mis­sions across all metal tiers. The pol­icy is

ef­fec­tive Jan. 1, 2018, giv­ing plans time to fac­tor com­mis­sion pay­ments into pre­mi­ums, said Kevin Couni­han, who was CEO of Health­Care.gov un­der Pres­i­dent Barack Obama.

The guid­ance did not ad­dress pay­ment of com­mis­sions for spe­cial en­roll­ment pe­riod sign-ups.

“It’s the Wild West out here and com­pa­nies are do­ing what they can to sur­vive,” Nolan said.

Such no-com­mis­sion poli­cies have led to an ex­o­dus of bro­kers from the ACA’s fed­eral mar­ket­place. And that could un­der­mine en­roll­ment and re­ten­tion ef­forts, since bro­kers his­tor­i­cally sign up at least 50% of ex­change en­rollees, Couni­han said. Bro­kers help con­sumers nav­i­gate cov­er­age op­tions. This is espe­cially im­por­tant in re­cent years when in­sur­ers have changed ben­e­fits to help curb the im­pact of their fi­nan­cial losses. Once con­sumers sign up, bro­kers ad­vo­cate for their cus­tomers if claims get de­nied.

In­deed, the exit of bro­kers due to non­pay­ment of com­mis­sions likely is one fac­tor in the de­cline of mar­ket­place en­roll­ment this year, down about 4% from 12.7 mil­lion last year to 12.2 mil­lion.

Be­fore the ACA, in­sur­ance compa- nies on av­er­age paid bro­kers a 5% com­mis­sion based on monthly pre­mi­ums for plans sold in the in­di­vid­ual mar­ket.

In­sur­ance com­pa­nies in­creas­ingly are not pay­ing that fee, or are pay­ing it only for bronze plans, which have higher de­ductibles and tend to at­tract peo­ple who don’t think they need med­i­cal care. The strat­egy is nec­es­sary for them to re­main fi­nan­cially vi­able, in­sur­ance ex­ec­u­tives say.

“Like any busi­ness, we en­cour­age the sale of prod­ucts that aren’t as likely to lose money for the com­pany,” said Mary Ann Tournoux, a se­nior vice pres­i­dent at Health Al­liance Plan, which of­fers ex­change cov­er­age in Michi­gan.

The num­ber of in­di­vid­u­als se­lect­ing bronze plans dur­ing open en­roll­ment on the fed­eral mar­ket­place in­creased 6% be­tween 2015 and 2017. Dur­ing that same pe­riod, 47% fewer peo­ple chose more-ro­bust gold plans and 90% fewer con­sumers chose plat­inum plans, ac­cord­ing to the CMS. Un­der the ACA, in­sur­ers must pay com­mis­sions for ex­change plans if they also pay com­mis­sions for sim­i­lar plans sold out­side the ex­changes.

De­spite years of com­plaints from groups such as Health Agents for Amer­ica and the Na­tional As­so­ci­a­tion of Health Un­der­writ­ers, the CMS was un­will­ing to en­force rules re­quir­ing in­sur­ers to be con­sis­tent in pay­ing com­mis­sions across metal tiers or to pay them for spe­cial en­roll­ment signups, Nolan said. The agency feared that would dis­cour­age in­surer par­tic­i­pa­tion in the fed­eral mar­ket­place, she added.

Couni­han said the CMS sim­ply didn’t want to in­ter­fere with in­sur­ers’ busi­ness de­ci­sions, “We didn’t want to be overly pre­scrip­tive in telling pri­vate com­pa­nies the de­tails in how they are go­ing to run their strategies. They’re big boys that can fig­ure that out for them­selves.”

The CMS stepped in af­ter re­ceiv­ing re­ports of in­sur­ers pay­ing com­mis­sions for lower-tier plans and not for plat­inum or gold plans, in vi­o­la­tion of fed­eral law. But bro­kers say noth­ing has changed since the CMS’ De­cem­ber guid­ance came out re­quir­ing con­sis­tency across metal tiers. They doubt it will have much im­pact be­cause there’s no en­force­ment mech­a­nism.

Cov­ered Cal­i­for­nia, the state-run health in­sur­ance mar­ket­place that re­lies on bro­kers for nearly half of its busi­ness, last year con­sid­ered re­quir­ing that in­sur­ers pay bro­ker com­mis­sions for all new cus­tomers, in­clud­ing the high-cost ones. That was in re­sponse to some in­sur­ers say­ing they would not pay com­mis­sions for cus­tomers who sign up for plans out­side of their open en­roll­ment pe­riod.

Penn­syl­va­nia-based High­mark de­fended its de­ci­sion not to pay bro­ker fees for spe­cial en­roll­ment pe­riod signups, ar­gu­ing there are de­fi­cien­cies in the el­i­gi­bil­ity ver­i­fi­ca­tion process. An­them ad­dressed the bro­ker fee rules last year by an­nounc­ing it wouldn’t pay com­mis­sions for any new in­di­vid­u­als en­rolled in its in­di­vid­ual-mar­ket plans, on or off the ex­change.

The CMS is work­ing with Health Agents for Amer­ica to sur­vey its mem­bers and de­ter­mine the preva­lence and im­pact of non­pay­ment of bro­ker com­mis­sions.

The Na­tional As­so­ci­a­tion of Health Un­der­writ­ers met with HHS Sec­re­tary Tom Price last month to dis­cuss whether bro­ker com­mis­sions could be carved out be­fore a health plan cal­cu­lates its med­i­cal loss ra­tio.

Un­der the ACA, bro­ker com­mis­sions are in­cluded in a plan’s ad­min­is­tra­tive costs and prof­its, which can­not ex­ceed a cer­tain per­cent­age of pre­mium rev­enue. In­sur­ers say this makes it fi­nan­cially dif­fi­cult to pay com­mis­sions.

De­spite the trend away from pay­ing com­mis­sions, Rick Not­ter, direc­tor of in­di­vid­ual busi­ness at Blue Cross and Blue Shield of Michi­gan, said his plan con­tin­ues to pay the fees be­cause bro­kers are vi­tal in ed­u­cat­ing con­sumers.

“The worst thing that can hap­pen is a per­son picks a plan that’s not the right fit, they end up with more out-of-pocket costs than an­tic­i­pated, and they can­cel their cov­er­age,” Not­ter said.

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