Keith Kraemer, President of EvolveSPM, produced a white paper for RISE members that teases out the regulations and makes them clearer and more understandable. He provides us with an insight into how they work as well as the pitfalls in understanding and making our broker / agent payment processes operational. Ultimately, the broker/agent payment program involves significant financial and regulatory risk for a Medicare Advantage plan if it is not managed correctly. If brokers and agents are not properly paid, it can prove to be a significant liability, yet due to the complexities, it is extremely difficult to be sure that we are compliant with the regulations. While not intentional on the part of CMS, these regulations pose a trap to the unprepared MA plan. Keith, through his white paper, helps us better understand what we are getting into.
Some background: When Medicare Advantage and Part D took off in 2005, it was the “wild west” with regards to broker/ agent distribution channels. What had been the primary province of healthplan employed sales staff suddenly opened up to a sprawling array of independent brokers and agents. For a few years, there were limited regulations and policies about the payment rates for this new army of sales people. These agents were not accustomed to the tight regulations imposed by CMS on the healthplans, only those created at the state levels and not nearly as specific as to CMS regulations.
Different MA plans paid different rates and there were temptations to brokers to churn Medicare Advantage members from one plan to another in order to earn better commissions. After a tumultuous period of explosive growth in Medicare Advantage Private Fee For Service plans that sprouted up in every zip code in the country, it became clear that, without explicit payment rate-setting on the part of CMS, further chaos would ensue. CMS stepped in to curb the excesses of the new distribution channel after sales practice abuses became front page news and Congressional attention was focused on the ugly shenanigans of the outlier bad actors.
CMS has been honing their payment regulations ever since. They continue to set market rates and establish member transactions in ever more specific terms, requiring healthplans to administer what has become significantly complex and operationally challenging broker payment policies. Simple, homegrown Excel spreadsheets and even Access databases cannot keep track of these transactions. Having seen this attempted, I can tell you that it consumes more resources by far to try this approach, and it still leaves you vulnerable to the uncertainties of being wrong. It is both an ineffective and inefficient way to tackle the problem. Keith’s explanations of the regulations will give you a better appreciation of why that is so.
Check out the white paper here: