Thousands of brokers exit HealthCare.gov as plan commissions go unpaid

Each year since the launch of HealthCare.gov, insurance broker Craig Paulson faces a difficult question: Should he continue to sell individual market plans even though insurance companies increasingly refuse to pay commissions?

If his Utah-based insurance brokerage firm, Altura Benefits, stops selling exchange plans, consumers may be left with lower quality coverage or none at all. In the past year, Aetna announced it would stop paying any commissions on the individual market in Utah. Molina Healthcare later announced that it wouldn't pay for commissions on special enrollment plans.

“It's created a moral conflict,” Paulson said. “We want to do what's right for the client, but if you're not getting paid for your services, you can't remain in business.”

Paulson isn't alone in his dilemma. More insurance companies around the country are refusing to pay brokers commissions on higher-tier exchange plans or special enrollment sales as the companies face financial losses on the federal marketplace, according to Ronnell Nolan, CEO of Health Agents for America, which represents independent insurance brokers.

“It's the Wild West out here, and companies are doing what they can to survive,” Nolan said. “They're not paying commissions on platinum plans, and they are not paying them for special enrollment plans which cover some of the sickest patients.”

That policy has led to an exodus of brokers from the federal marketplace, which could undermine enrollment efforts since brokers historically sign up at least 50% of exchange enrollees, according to Kevin Counihan, the former CEO of HealthCare.gov under President Barack Obama.

Brokers help consumers navigate coverage options. Once they sign up, brokers tend to advocate for their customers if claims get denied. Between 2015 and 2017, there's been a nearly 35% drop in the number of registered brokers for HealthCare.gov, according to data from the CMS. The number dropped from more than 103,000 to just over 67,000.

Before the Affordable Care Act, insurance companies paid brokers, on average, a 5% commission based on monthly premiums for plans sold on the individual market.

Insurance companies increasingly are choosing to not pay that fee, or selectively are paying it for less expensive plans like bronze plans, which have high deductibles. The strategy is necessary for them to remain financially viable, insurance companies say.

“Like any business, we encourage the sale of products that aren't as likely to lose money for the company,” said Mary Ann Tournoux, a senior vice president at Health Alliance Plan, which offers exchange coverage in Michigan.

The number of individuals selecting bronze plans during open enrollment on the federal marketplace has jumped 6% between 2015 and 2017. During that same period, 47% fewer people chose more robust gold plans and 90% fewer consumers chose platinum plans, according to the CMS.

Under the ACA, insurers must pay commissions for marketplace coverage if they also pay commissions for similar non-marketplace plans.

Despite years of complaints from groups like HAFA and National Association of Health Underwriters, the CMS was unwilling to enforce commission payment rules for fear that it would discourage insurer participation in the federal marketplace, according to Nolan.

Counihan had a different explanation for why the CMS wasn't more aggressive about ensuring broker commissions.

“We didn't want to be overly prescriptive in telling private companies the details in how they are going to run their strategies,” Counihan said. “They're big boys that can figure that out for themselves.”

The CMS stepped in after receiving reports of insurers paying commissions for lower tier plans and not higher level gold and platinum plans, in violation of federal law.

The agency issued a guidance in December 2016 that instructed plans to be consistent in their commission-paying strategies across all metal plan levels.

The policy is effective Jan. 1, 2018, giving plans time to include commissions in premiums, Counihan said.

But brokers claim nothing has changed since the guidance came out, and they doubt it will have much of an impact because, they say, it is vague its enforcement.

The CMS policy also doesn't address whether insurers must pay commissions on special enrollment plans. Major plans like Anthem announced last year that they wouldn't pay commissions for new individual members who enroll in any ACA-compliant plans on or off the exchange.

“We believe our broker commission rates comply with the applicable laws and regulations,” said Leslie Porras, a spokeswoman for Anthem.

Other plans defended their reasons for selectively paying commissions.

“Because of widespread concerns regarding the eligibility verification of many members who enter the market through special enrollment, Highmark does not pay broker commissions on any SEP enrollment,” said Aaron Billger, a spokesman for Pennsylvania-based Highmark.

The CMS is also teaming up with HAFA to investigate the prevalence of unpaid broker commissions. The agency has asked HAFA to survey its members to determine the scope of the issue and its implications.

The National Association of Health Underwriters are also working with the CMS on a new rulemaking. The group met with HHS Secretary Tom Price last month to discuss whether broker commissions could be carved out before a plan calculates its compliance with the ACA's medical loss ratio.

The ACA requires plans spend at least 80% of their premium income on healthcare claims and quality improvement, leaving the remaining 20% for administration, marketing and profit. Insurance companies have told brokers that the breakdown makes it hard to pay commissions.

Price seemed interested in the idea and talks are ongoing, according to Marcy Buckner, NAHU's vice president of government affairs.

“What we are arguing is that without compensation for brokers, there's going to be a limiting of access to coverage for consumers,” Buckner said.

Some plans are paying commissions because they see brokers as a critical component in consumer education.

“The worst thing that can happen is that a person picks a plan that's not the right fit and they end up with more out of pocket costs than anticipated and cancel their coverage,” said Rick Notter, director of individual business for Blue Cross and Blue Shield of Michigan.