Is the New 2025 CMS Rule for Agent compensation actually GREAT news for AGENTS and FMOs?

[InsuranceGuy29]

This came out a little after 2 this afternoon which doesn't sound promising.

[EXTERNAL LINK] - Humana Withdraws Its Already Lowered 2025 Profit Guidance - Humana (NYSE:HUM)

The problem with Humana is they have leaned far too hard into HMO's, with Medicare Advantage. They do have a few PPO's, but they are very weak when compared to most other competitors.

Humana has always been known for their Gold Plus HMO and their HMO Chronic Condition D-SNP, at least in my region.

Problem is, PPO's came on the market about 6 years ago, and enrollment and broker and Medicare recipient sentiment has trended HARD to PPO's.

Their HMO's are good, but if I meet with 50 clients nowadays, 35-40 of them are basically demanding a PPO, immediately. And I cannot blame them.

Humana has not pivoted enough to make a PPO their flagship plan. This is a Humana-specific problem, not a Medicare Advantage problem. Lack of quality leadership and foresight is the main issue.

 

[sman]

The problem with Humana is they have leaned far too hard into HMO's, with Medicare Advantage. They do have a few PPO's, but they are very weak when compared to most other competitors.

Humana has always been known for their Gold Plus HMO and their HMO Chronic Condition D-SNP, at least in my region.

Problem is, PPO's came on the market about 6 years ago, and enrollment and broker and Medicare recipient sentiment has trended HARD to PPO's.

Their HMO's are good, but if I meet with 50 clients nowadays, 35-40 of them are basically demanding a PPO, immediately. And I cannot blame them.

Humana has not pivoted enough to make a PPO their flagship plan. This is a Humana-specific problem, not a Medicare Advantage problem. Lack of quality leadership and foresight is the main issue.

The lower than expected Medicare reimbursement rate for Advantage plans IS a Medicare Advantage problem and not just a Humana problem. That has zero to do with whether it's an HMO or PPO. When claims are eating 89% of the monies received, that's a problem for any insurer.

 

[DonP]

77% of Humana’s rev comes from mapd were all the other carriers it’s 30-47% . Other carriers can mask some short term pain better than Humana . I’ve probably written only 20 mapd hmo’s with Humana ever and it’s irrelevant as far as claims go . Med sups feeling the same sting of increased loss ratios . Every agent whether you sell sups/pdp or mapds will be scrambling to move clients this aep .Humana cut benefits in most areas in 2024 while the Aetnas and devoteds increased there’s . If other carriers stay stable or cut little and Humana cuts deep they’ll lose 1 million members or 8% of there book .They got a huge decision to make

 

[InsuranceGuy29]

The lower than expected Medicare reimbursement rate for Advantage plans IS a Medicare Advantage problem and not just a Humana problem. That has zero to do with whether it's an HMO or PPO. When claims are eating 89% of the monies received, that's a problem for any insurer.

Then why aren't other companies having these huge issues?

Obviously losing some money on the reimbursement side isn't a good thing, but it's obvious to me that Humana dropped the ball majorly, somewhere, in their leadership department.

In my opinion, the plan situation that I described plays into it heavily. As Don alluded to, as well, the fact that their success is also so heavily reliant on MAPD's is another major factor.

The other carriers can easily absorb or make up the losses by only maybe cutting a few ancillary benefits, because they're more diversified. But Humana can't because their business is so heavily reliant on MAPD's.

They would need to severely cut benefits, and this will simultaneously make them WAY less attractive and competitive versus other players like Aetna, United, Blue Cross, etc.

These other carriers are big into group work plans, under-65 marketplace plans, medicare medigap supplements, MAPD supplemental indemnity plans, life insurance, etc. Humana is not.

These other carriers don't need to cut nearly as much and this will keep them competitive and attractive. And as I said in my previous posts, their devotion to HMO's is also a huge negative factor.

Humana has a huge problem right now.

 

[Yagents]

Decent article

3 big changes coming to Medicare in 2025—and what they'll mean for you

Here's the lowdown on how Medicare will operate differently in 2025.

fortune.com

 

[Yagents]

She needs to retire......or give up already. Every industry has bonuses, it's what drives sales for things that need to be "sold". I thought she wants to raise income for people, and reduce profits for insurance companies?

Sen. Warren Asks Insurers About Life and Annuity Sales Incentives | ThinkAdvisor

The Massachusetts Democrat sent letters questioning the use of cash bonuses, incentive travel and other perks.

www.thinkadvisor.com

 

[Yakdude]

Part D plans will pay $200? Seriously?

That's what the Feds say... [EXTERNAL LINK] - Contract Year 2025 Medicare Advantage and Part D Final Rule (CMS-4205-F) | CMS

 

[25MercuryHP]

The new rules dropped yesterday and I am copying the most interesting paragraphs below. Here is my admittedly optimistic reading of this rule.
1. Agents will get a $100 increase in both MAPD and PDP commissions and CMS is anticipating adding an additional 2.5% on top of that. Commissions will be raised to $726 for MAPD for most states, and PDP's will have a massive increase to $200.
2. The new rule specifically states:
This proposal, and all agent broker compensation rules at §422.2274(d) are
limited to independent agents and brokers, and do not extend to TMPOs more generally.

I am curious, is anyone as optimistic as me about the new rules? We do not get volume based enrollment bonuses from our NMA or the carriers and I have many levels under my FMO (SGA's, MGA's, GA's) I don't think this rule applies to overrides paid to them. I believe the rule is targeting HRA fee's and other administrative fee's such as some carriers paying you to get a clients email address, or paying a bonus if you select a PCP on an app. It also seems to be targeting "per app marketing money" that some carriers are paying outside of the override structure. I hope this is true. Read it and let me know what you think:


We believe that increasing the FMV rate for new enrollments by a total of $100, and

therefore applied to renewals at a maximum amount of 50 percent of the total compensation

amount, should provide agents and brokers with sufficient funds to continue to access necessary

administrative tools and trainings, to offset appointment fees and encourage the representation of

multiple plans, and therefore to continue providing adequate service to Medicare beneficiaries.

Accordingly, based on the information provided in comments and for the reasons discussed in

this final rule, we are finalizing a policy to make a one-time $100 increase to the FMV

compensation rate for agents and brokers for initial enrollments into MA plans for the 2025 plan

contract year.

TABLE FC-1: AGENT BROKER COMPENSATION UPDATES CY 2024–2026

2024 2025 2026

Initial Enrollment $611 (FMV TBD) + $100 FMV TBD

Renewal $305 (FMV TBD +100)*0.5 FMV TBD*0.5

By way of example, if we were to assume that the FMV increase in years 2025 and 2026 is 2.5

percent, the payment rates for those years would be as follows:

TABLE FC-2: EXAMPLE AGENT BROKER COMPENSATION UPDATES

CY 2024-2026

2024 2025 2026

Initial Enrollment $611 $726 $744

Renewal $305 $313 $372


Comment: Several comments expressed confusion about whether this payment is an “all in cap” that is intended to include all fees paid by an MA organization to an agent, broker, or

other TPMO, and what that would mean for payments related to marketing activities.

Response: This proposal, and all agent broker compensation rules at §422.2274(d) are

limited to independent agents and brokers, and do not extend to TMPOs more generally.

Therefore, this policy represents a limitation on payments in excess of those paid under

“compensation” only for commissions paid for enrollments to independent agents and brokers.

Though we are continuing to consider future rulemaking in this space, our current policy does

not extend to placing limitations on payments from an MAO to a TPMO who is not an

independent agent or broker for activities that are not undertaken as part of an enrollment by an

independent agent or broker.

This product was never designed to be brokered out to agents. Back in 2000 in house agents were only allowed to sell and that was a 1 time commission of 200.00 to salaried employees of let say a company like AARP. Once the flood gates opened brokers swooped in like myself in 2005 lime kids in a candy store. CMS got caught w pants down and then regulated the crap out of it bc of bad agents. Now the commissions are more in some cases than ever before.

Personally I stopped selling this bc I see the writing on the wall coming. Many insurance agents think this is a product that will be funding their retirement w huge renewals and little service.

Frankly, I think as the recession looms alot of funds are going to cut program bells and whistles as well as these non guaranteed commissions to FMO and broker agents. I think they tried farming this product but the commission takes away alot of coats that need to go bak to medicare members to keep these bells and whistles. Its not going to end well for agents imo. Most act like this is a regualr insurance product but fail to realize this MAPD structure is subsidized. Like all subsidies they come to an end when the money tightens up. Seniors wont lose benefits Broker Agents will get the axe IMO

TBA

 

[DonP]

This product was never designed to be brokered out to agents. Back in 2000 in house agents were only allowed to sell and that was a 1 time commission of 200.00 to salaried employees of let say a company like AARP. Once the flood gates opened brokers swooped in like myself in 2005 lime kids in a candy store. CMS got caught w pants down and then regulated the crap out of it bc of bad agents. Now the commissions are more in some cases than ever before.

Personally I stopped selling this bc I see the writing on the wall coming. Many insurance agents think this is a product that will be funding their retirement w huge renewals and little service.

Frankly, I think as the recession looms alot of funds are going to cut program bells and whistles as well as these non guaranteed commissions to FMO and broker agents. I think they tried farming this product but the commission takes away alot of coats that need to go bak to medicare members to keep these bells and whistles. Its not going to end well for agents imo. Most act like this is a regualr insurance product but fail to realize this MAPD structure is subsidized. Like all subsidies they come to an end when the money tightens up. Seniors wont lose benefits Broker Agents will get the axe IMO

TBA

I don’t think it will be cut to zero . The desperation for help for seniors is eye popping . I can see commission cut in 1/2 . If that happens obviously I’d no longer solicit new business . I’d only work referrals and do service work on the phone . I’d go back to selling fe mostly

 

[somarco]

Don't count your money yet . . . until you see the fine print