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Life Health > Health Insurance > Health Insurance

PPACA: Federal PCIP Axes Broker Fee

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The Centers for Medicare & Medicaid Services (CMS) is eliminating a $100 broker referral program aimed at brokers who help consumers enroll in the federal Pre-existing Condition Insurance Plan (PCIP).

The Government Employees Health Association (GEHA), Lee’s Summit, Mo., the cooperative insurer administering PCIP for CMS in states that are letting CMS provide PCIP services, told brokers about the change last week in an electronic mail massage.

“We are writing to thank you for the extraordinary efforts you have made in helping to increase awareness of and enrollment in the PCIP program,” GEHA says in the e-mail. “We have determined that our outreach efforts have succeeded in significantly raising awareness of PCIP and enrollment in this program. As such, CMS will end the PCIP Broker Referral Payment Program in federally administered PCIP states May 1, 2012.”

CMS announced plans to add the $100 PCIP referral fee program in May 2011.

Congress put the PCIP program in the Patient Protection and Affordable Care Act of 2010 (PPACA) in an effort to provide immediate relief for uninsured people with health problems. PCIP is meant to help fill the gap between the date PPACA was signed in March 2010 and the day when insurers are supposed to start selling subsidized coverage on a guaranteed issue, mostly community-rated basis in 2014.

PCIP provides comprehensive health coverage for people who have a hard time qualifying to buy ordinary individual commercial health coverage.

Eligibility is not based on income. The price of coverage is supposed to be comparable to what healthy people would pay for health coverage purchased through the conventional market.

To avoid crowding out private health coverage, Congress required that people with health problems be uninsured for at least 6 months before applying for PCIP.

Congress let states choose between running PCIP risk pools themselves or letting the parent of CMS, the U.S. Department of Health and Human Services (HHS) provide PCIP risk pool services for residents. The federal Office of Personnel Management (OPM) helped HHS hire GEHA to take charge of administration.

GEHA is now providing PCIP services for 23 states and the District of Columbia; 27 states are running their own PCIP programs.

Program critics originally predicted that millions of uninsured Americans with health problems would rush to enroll in the program and quickly use up federal PCIP funding.

Early on, enrollment was much slower than expected. CMS and GEHA added the broker referral fee in an effort to boost enrollment.

PCIP ended 2011 with a total of 48,879 enrollees, officials say. About one-third of the enrollees were in states using the federal PCIP program.

Although enrollment is still low, expenses have been much higher than program creators anticipated. At the federal PCIP program, annual claims have averaged about $29,000 per enrollee, CMS officials say.

Wayne Sakamoto — a Naples, Fla., health insurance broker — helped make brokers aware of the elimination of the referral fee by tweeting about it Friday. LifeHealthPro and other organizations retweeted the tweet, and the story gained momentum over the weekend.

Sakamoto says he went through a complicated, slow, two-part registration process to sign up to be a PCIP broker, mainly because he thinks access to the program is good for Florida residents with pre-existing conditions.

Florida allows medical underwriting and has no functioning risk-pool program of its own, Sakamoto says.

When Sakamoto heard about the PCIP program and the referral fee, “initially, I was excited about it,” he says.

But Sakamoto says the elimination of the referral fee will have little practical effect on his business: He never managed to get GEHA to pay him any referral fees for the PCIP business he placed.

Tanya Boyd, a Sunnyvale, Texas, broker, says she did manage to get paid.

“But many in my peer group did not,” Boyd says. “They — PCIP — are very difficult to work with, I will say.”


Officials at CMS said after the original publication time that they believe the outreach and enrollment strategies CMS has used helped get PCIP moving.

“In recent months, we have seen increases in awareness and enrollment,” officials say. “We are now making some changes as we move into a new phase of the program, and we are confident we can build on our efforts and use these resources to continue to strengthen the program. These changes apply on the federal PCIP program. We deeply appreciate the work of agents and brokers and they will continue to be our valued partners in enrolling people in the program.”


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