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What we learned from 2014 Medicare AEP, and how it may impact 2015

Brian Anderson

Ramping up for the start of the Medicare annual enrollment period (AEP) each October is always a busy, stressful time, and once it starts the intensity only escalates until it’s over on Dec. 7.

Only then do agents, FMOs and carriers who focus on the Medicare market have chance to look back and reflect on what went right and what needs work before the next AEP rolls around.

Insurance Forums spoke with representatives from Bankers Fidelity and Senior Market Sales to find out a little bit more about the challenges and successes of this most recent AEP.

General impressions? It went fairly smooth, but with no shortage of anxiety among both agents and consumers.

“There is always a rush leading up to the enrollment period with agents trying to get contracted for plans that best fits their client’s needs, certified, and have supplies in hand for the start of the AEP,” says Sean Pekarsky, Associate Director, Medicare Solutions at Senior Market Sales, Inc., in Omaha, Neb.

“There were more struggles this year in getting agents ready to sell because of the high number of contracts coming in to get processed in a timely manner. We had agents trying to get in ‘ready-to-sell’ status one to two weeks into the enrollment season, and in many cases there was nothing that the agent could do but wait,” Pekarsky says. “Other than that the enrollment season itself appeared to go very smoothly.”

On the carrier side, Christian Novacek, AVP, Marketing & Sales Strategy, Agency and Brokerage Markets for Atlanta-based Bankers Fidelity Life Insurance Company, says they deal with a heavy volume of calls from panicked consumers during AEP.

“As an insurance carrier, we view AEP’s marketing approach as an ‘art of confusion’ that brilliantly triggers buying behavior and anxiety in the senior community,” Novacek says. “During open enrollment, we receive thousands of calls from panicked customers asking to re-enroll, or if any changes would need to be made to their policies. Over 90% of calls end up in counseling and educating our customers that MediGap programs do not require annual enrollment changes and this only effects Medicare Advantage participants who wish to enroll, or transfer to another carrier.”

Commission change irks some agents

Some ripples were sent thought the agent community last summer when the Centers for Medicare & Medicaid Services (CMS) issued guidance on agent compensation requirements for Medicare Advantage and Prescription Drug Plan (PDP) enrollments for 2015 effective dates.

Chief among the changes were that carriers were not permitted to pay commissions in advance (prior to plan effective year) for enrollments with a Jan. 1, 2015 effective date or after, including commissions for AEP applications received from Oct. 15-Dec. 7.

Agents are still paid 12-month advances on the open enrollment business, but now the payments are not received until after the policies’ effective date in January. This has become more of a stumbling block for newer, less-established agents, while veteran agents typically are in a better financial position to wait on the commissions.

“There were some complaints, but mostly from newer agents still building a book of business that rely heavy on timely commission payments,” Pekarsky said. “This is the first time all carriers were required to pay commissions January 1 or after but there are some carriers that always waited until after January 1. So this rule wasn’t a shocker for all. We didn’t necessarily see agents steering away from selling MAs and PDPs, but noticed that there were more multiple-product sales made including hospital indemnity and dental plans than in the past years that was possibly a result of this new CMS rule.”

While it has a bigger impact for less-established agents, that doesn’t make it any more palatable in the eyes of many in the industry, including Bankers Fidelity’s Novacek.

“As a producer, you have chosen to give up the right to a salary in pursuit of the American dream of being your own boss. You get up every day having to re-create your own destiny and seek financial reward to sustain your family. Then you read a post by KFF or CMS advising you that the only financial instrument that you depend on to offset your costs of doing business and pay your wages is changing drastically, again,” Novacek says. “I believe these changes do not take into consideration the distributors’ responsibility for bearing the cost of recruiting, administrating, time spent educating and counseling all parties involved in the process. Those costs associated with gearing for an AEP season are real and immediate. How would it feel if corporate America postponed salaries for Q4 until sometime in January?”

More changes on tap

Novacek says he believes modifications to commission and renewal structures will continue, but that is far from the only change on the horizon.

“If you’re tied to CMS, then you will have to stomach a dynamically changing environment. As government finds ways to re-align Medicare spending over the next 10 years (2012-2022), I see continued government compression on Medicare Advantage providers who will have to deal with new regulations, all the while continuing to manage stakeholder profits and quality star ratings,” Novacek says.

Things you maybe noticing, according to Novacek:

  • “We are seeing less MA zero premiums plans and more consumer contribution plans as government reimbursement compression takes effect and private insurers are forced to redistribute premium to the consumer.”
  • “Large physician and hospital networks will continue to be affected through reduced fees for services and provider termination. As seen from United Healthcare’s big move to pare down 10-15% of its network (varying by state).”
  • “Cost sharing in the form of out-of-pocket maximum may continue to rise for consumers.”
  • “Carriers in the future may limit offering MA plans in counties or states that can’t turn acceptable profits.”

Novacek says that as an agent, MGA or FMO, it would be concerning to work in an environment with such government involvement and volatility. “This is a changing landscape and usually not a positive and financially beneficial one to the distributor.”

More time, more transparency

Besides CMS not coming up with additional troublesome rules, how could AEP be improved? Pekarsky and Novecek have some ideas.

“I think everyone would agree more time to prepare and more time to meet with clients during AEP,” Pekarsky says. “There is only a short window when agents can view the upcoming plan year details to decide if they need to meet with their existing clients to discuss plan options. Some agents have to meet with all of their clients to enroll them into a new plan, leaving little time to meet with new clients that need assistance. Even having an additional week during the AEP would make a huge difference.”

Bankers Fidelity’s Novacek says he’d like to see better marketing transparency and clarity, which would equate to more focus on the message commercialized by MA carriers to consumers during open enrollment.

• Have some thoughts on the ideas expressed in this article? Please share them, or your own take on the 2014 AEP and what you expect for the next AEP, on this new thread.



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