PPACA exchange wrestles with producer comp strategy

“Now that some carriers are opting out of paying commissions to brokers… does the [exchange] have a duty to create an appropriate and acceptable ‘financial award’ mechanism?” the exchange managers ask.

The exchange managers also ask the board for help with determining whether the current award program, which involves no financial incentives, is compliant with all regulatory, accounting, operational and audit standards.

See also: Small-group exchange sales drift

Byron McCurdy, chairman of the board of the Colorado State Association of Health Underwriters (CSAHU), and Tammy Niederman, CSAHU legislative chair, wrote to Kevin Patterson, chief executive officer (CEO) of the Colorado exchange, which they call “C4,” to say they believe creating an exchange broker bonus program would be inappropriate.

“CSAHU feels strongly that brokers will use SHOP once they perceive it provides value to their clients,” the CSAHU reps write. “We feel that it would be more productive for C4 to use this money for further development of infrastructure and support tools, thus creating value that will naturally incentivize brokers to use the system. We strongly recommend that the money allocated for broker bonuses should be used instead to enhance C4 and make the option that brokers want to use, rather than something they are paid to use.”

Charlie Sheffield, executive director of the Colorado Association of Health Plans, a carrier group, has written to say few carriers support the idea of offering a SHOP broker incentive program.

Colorado carriers like the current C4HCO board position that compensation should be comparable inside and outside the exchange, Sheffield says.

“Carriers do not offer incentives to move away from the exchange shop direct,” Sheffield says. “C4 should not incentivize customers to move away from direct purchase and instead purchase through the exchange.”

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