Members of Health Agents for America (HAFA) and other agent groups are worrying about an effort by Aetna Inc. (NYSE:AET) to shift to a new approach to small-group broker compensation.
Brokers have been arguing, in connection with the debate about what should and should not be included in Patient Protection and Affordable Care Act (PPACA) medical loss ratio (MLR) calculations, that customers are the ones who really pay brokers’ compensation.
Brokers have said that insurers simply collect the broker compensation from the customers as a courtesy to the brokers and the customers.
Now Aetna is saying that, in at least some markets, starting July 1, for groups with 100 or fewer lives, it will have brokers negotiate service fees with the clients, and simply administer collection of the fees for the brokers, according to a copy of a sample billing agreement posted by Kilpatrick Companies.
The Center for Consumer Information & Insurance Oversight (CCIIO) has encouraged insurers and brokers to take just that approach by coming up with seven steps insurers can take to get some producer comp payments out of MLR calculations.
On the one hand, many other intermediaries have to negotiate with consumers over their compensation. Why not health insurance brokers? Maybe brokers who are great negotiators will be able to get more from consumers than they could from insurers.
On the other hand, I think it’s reasonable to make the argument that health care and health insurance are unusual markets, because they involve complicated, opaque markets, and consumers often get their first detailed information about those markets when they are seriously ill, or possibly dying.