Medicare Plan Chief Hails Local Brokers, Blasts FMOs at Senate Hearing

What You Need to Know

Sen. Ron Wyden questioned why Medicare plan distribution costs $6 billion per year.
An Oklahoma Republican said Medicare Advantage plan issuer coverage denials are chasing hospitals away.
An Ohio official said the new Medicare plan marketer call recording rules hurt the wrong marketers.

A health insurance company executive praised local Medicare Advantage plan brokers but blasted field marketing organizations last week at a Senate Finance Committee hearing.

Krista Hoglund, the chief executive officer of Security Health Plan of Marshfield, Wisconsin, told lawmakers that the large, national FMOs’ telemarketers are hounding seniors, tricking some enrollees into changing plans unnecessarily and driving total distributor compensation costs far above the Medicare Advantage program’s normal commission cap.

“Instead of collecting the maximum commission of $611 for a new enrollee, many brokers are collecting $1,300 or more,” Hoglund said. “This additional compensation is marked as marketing, administrative dollars, and can include all kinds of additional add-on fees besides that.”

Hoglund, who is a member of the board of the Alliance for Community Health Plans, called for Congress to adopt the group’s Medicare Advantage plan broker compensation proposal, which would set new limits on total compensation and require health plans to report total broker compensation amounts.

What it means: An effort to cap total Medicare Advantage plan distributor compensation may still be in play.

Medicare Advantage plan marketing: Medicare Advantage plans now provide what looks to enrollees like an alternative to original Medicare for 32 million of the 66 million Medicare enrollees.

Critics have attacked the rise of big, national Medicare plan distributors that advertise heavily on TV.

Medicare plan managers recently set new marketing standards for Medicare plan sellers, including call recording rules, and now they are implementing restrictions on efforts to use in-person meetings with Medicare plan prospects to generate Medicare plan sales leads.

The hearing: Wyden, the chairman of the Senate Finance Committee, is a former gerontology law professor who served on Oregon elder law organizations before serving in the Senate.

He and Sen. Mike Crapo, R-Idaho, the highest ranking Republican on the committee, ran a collegial hearing and seemed to express roughly similar levels of frustration with issues such as problems with Medicare plan information tools.

Wyden noted that Medicare Advantage sellers and distributors collect about $6 billion in compensation, and he suggested that that amount is too high.

Doctors and hospitals have complained about some Medicare Advantage plan issuers’ procedures for preauthorizing coverage for some services and preauthorization process delays.

Sen. James Lankford, R-Okla., said the denials have hurt Medicare Advantage plan enrollees’ access to some providers in his state.