Executive: New Rules Could Hurt Medigap Brokers

The new Medicare law could cause problems for insurers that sell Medicare supplement coverage through brokers.[@@]

The president of a company that runs a drug discount card program made that prediction today at a Medicare seminar sponsored by 2 Alexandria, Va., organizations, the Galen Institute and the Council for Affordable Health Insurance.

Other speakers at the conference talked about what efforts to fight the federal budget deficit might do to federal support for private insurers that participate in the revamped Medicare Advantage managed care program.

The best known section of the new Medicare law will create a prescription drug benefit for Medicare beneficiaries starting in 2006.

The new Medicare prescription drug benefit will likely have a “profound impact on Medigap insurance sold through brokers,” said Charles Hallberg, president of MemberHealth Inc., Solon, Ohio, a company that operates the Community Care Rx Pharmacy.

Hallberg said the new program may hurt Medigap brokers and Medigap insurers that sell through brokers because the new rules may not allow those insurers to pay commissions for selling Medicare drug coverage to outside brokers.

“Anti-rebate laws are likely to come into play,” Hallberg said.

Hallberg said his views on the potential negative impact on brokers stem from the fact that the drug discount program regulation published by the Office of Inspector General said federal anti-kickback laws did apply.