Business
Medicare agent commissions to be subject of federal probe
01:00 AM EDT on Monday, October 27, 2008
WASHINGTON — 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 about 9 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.”
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