Where a Medicare Advantage Broker Comp Proposal Falls Short

For anyone who's been in the Medicare insurance industry as long as I have, especially those who've worn hats from agent to marketer to field marketing office owner, you know that change is a fact of life.

But what I've been most heartened about all these years is that, despite everything thrown at us — from new regulations, to constantly changing technology, to a more fragmented consumer environment — we keep moving our industry forward: for our agents, our businesses and, most importantly, our clients

FMOs are product distributors that provide support services for agents.

But we're more than that. We're also coaches, and supporters.

I'm proud to be part of a nationwide FMO community that's working tirelessly to ensure that, no matter the changes we face, agents feel supported and empowered to grow their businesses and deliver peace of mind to their clients.

That's the essence of the agent-FMO relationship: the understanding that we have the agents' backs — and, by extension, their clients' backs — when it comes to helping them find the right coverage for their unique needs.

Now, unfortunately, our ability to do what we do best for our agents is being threatened, and this time, it's not from outside forces, but from those within our own industry.

The ACHP Proposal

The Alliance of Community Health Plans, a group for nonprofit regional health plans, has released a package of proposals that includes a strict cap on the amount of support a Medicare Advantage plan can provide an agent or broker, on top of the existing federal limit on sales commissions and other producer compensation.

ACHP claims that some producers get too much cash from some plans, and that this may lead to those producers steering clients toward the plans that spend the most on sales support.

Let me be clear: We all share a desire to improve the Medicare Advantage program and ensure that agents and consumers alike are protected from bad faith actors and suspect practices. But ACHP's latest recommendations aren't the way to achieve that.

ACHP's proposal of a cap on total broker compensation is misguided and disingenuous, and not only risks negatively impacting the valuable support that agents deserve, but consumer choice and protection, too.

First, it's important to remember that the broker commission per enrollment maximum is set by the Centers for Medicare and Medicaid Services, the agency that sees the Medicare and Medicare Advantage programs, as a fair market value item. Period. End. Stop.

In truth, what ACHP is proposing — in particular, its suggestion for capping administrative fees — will undercut FMOs' ability to provide the value-added services that so many agents rely on to serve their clients.

The Tools

Conveniently, the ACHP proposal will actually "steer" consumers towards ACHP members' preferred plans, which are often limited in scope and may not be in consumers' best interest — depriving the consumers and their trusted agents of the opportunity to consider the breadth of options available to the consumers in their areas.

One example is quote-and-enroll software tools.

All true FMO partners offer these tools to their agents, which show all available plans in a ZIP code and include features such as searchable information about a plan's doctors, other care providers and prescription drug benefits.

These tools position agents to make sure the product they present is the most comprehensive choice for their clients.

Before these tools were widely available, carrier directories were often outdated. Plan comparison tools were limited. The result? Beneficiaries were limited in their ability to purchase the best plan for them based on their financial, logistical or provider access needs.

That's just one example of a tool provided by FMOs, funded by the very administrative fees the ACHP recommendation looks to limit.

What FMOs Do

I could give 10 more examples, but the point is that administrative fees drive compliance and support efficiencies that agents on their own could not afford.

In fact, the term "administrative fees" directly describes the very nature of the payments: The fees exist to directly support agents and their clients on a carrier-independent basis, with everything from marketing, training and administration services, to technology and compliance services.

Simply put, ACHP's proposal fails to recognize the important role that FMOs play in supporting agents, and why our carrier partners entrust FMOs with their distribution needs.

FMOs are a critical support system for today's agents.

We firmly believe that cleaning up Medicare marketing and cracking down on bad actors are critical to the long-term sustainability of our industry, but not at the expense of the over 1 million agents and their partners who are working tirelessly on behalf of — and doing what is right for — their clients.

Making Things Better

I firmly believe that our industry's collective energy is better spent looking at the amounts offered and implementing requirements to justify those fees.

Are you providing compliance oversight? Providing enrollment tools and assisting with marketing campaigns? Helping train agents and ensure that they have implemented all the necessary security software?

If so, that would stop agencies that are not providing a true service to downlines from bloating the landscape.

Until then, I would encourage the FMO community to make sure all of your carrier partners are aware of everything you do. Transparency is key.

At the end of the day, we view the carrier and the agent as partners. As partners, we should be working together to provide the absolute best outcome for all our agents and their clients. That's a vision I can get behind.

Angela Palo is the chief operating officer and co-owner of Pinnacle Financial Services, a national field marketing organization that serves health and life agents and financial advisors. She is a member of the National Association of Business and Insurance Professionals' Medicare FMO Council.