Medicare officials to review insurers' commissions: putting profits before patients ... Oct 24, 2008

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commissions Medicare officials hint at coming crackdown on growing insurance

agent commissions KEVIN

FREKING AP News Oct 24, 2008

20:38 EST Federal health

officials said Friday they will soon address growing concerns about the

lucrative commissions that some Medicare insurers plan to pay their agents and

brokers this year. In

Medicare, the elderly and disabled can enroll in private insurance plans that

assume responsibility for covering a participant's health benefits. Those plans

get a generous government subsidy and now serve roughly 10 million people. The

program is called Medicare Advantage. Documents

obtained from some companies participating in Medicare Advantage show that

their agents stand to make $500 to $550 this year for enrolling a beneficiary

into one of their plans. In subsequent years, the agents could make another

$500 for every year the beneficiary stays with the plan. After five years, an

agent could have made more than $2,500, which is quite a jump from previous

years. Such

a financial reward is raising concerns that agents and brokers will work too

aggressively to enroll people into plans that don't meet their health needs. "Medicare

Advantage plans that have nearly quadrupled agent commissions are putting

profits before patients and that's wrong," Sen. Max Baucus, D-Mont., said

in a news release Friday. "We can't let seniors remain at risk of being

targeted by predatory sales agents looking to make a quick buck." The

Centers for Medicare and Medicaid Services recently issued regulations designed

to curb abusive sales tactics in the Medicare Advantage program. The

regulations went into effect Oct. 1, the start of the new marketing season.

Plans can't begin enrolling new beneficiaries for their 2009 coverage until

Nov. 15. Rep.

Pete Stark, D-Calif., urged CMS to consider capping commissions. "This

issue needs to be resolved immediately, before open enrollment begins,"

Stark said. Kerry

Weems, the acting administrator for CMS, said the agency plans to take action

soon. "We

will address the concern and expect to take regulatory action next week,"

Weems said. "CMS is strongly suggesting that plans keep this in mind as

they contemplate making any final arrangements regarding commission

structures." Weems

did not elaborate on what regulatory changes will be make. The trade group

representing insurers encouraged CMS to take some action. "We

support CMS acting in this area and believe clear and consistent standards are

necessary," said Ignagni, president and CEO of America's Health

Insurance Plans. Two

of the major players in the program, Humana Corp. and UnitedHealth Group, both

said Friday that they welcomed regulation of insurance agent commissions. "Nine

months ago, we called for capping commissions and total compensation paid to

contracted agents and brokers. Consistent with our position, we support

Chairman Stark's proposal," said Humana spokesman Tom Noland. "We

believe this payment method ensures that agents and brokers are rewarded only

when seniors are satisfied with their choices, and penalizes agents and brokers

who use marketing tactics that result in beneficiaries signing up for a product

they do not fully understand." "We

would also welcome regulation that establishes reasonable industry-wide broker

commission norms," said a statement issued by Ovations, a subsidiary of

United Health Group. Officials

familiar with the Medicare Advantage program say the increases being seen in

insurance agent commissions this year are a result of competition as well as

regulatory changes that the government made. ___ On

the Net: Rep.

Pete Stark: http://www.house.gov/stark Medicare:

http://www.medicare.gov