The board of Covered California voted last week to approve a new health plan contract that includes agent compensation standards.
All four members of the board who were present at a board meeting in Sacramento, Calif., voted in favor of the new contract.
The contract will apply to health insurers and managed care companies that want to sell qualified health plan (QHP) coverage through Covered California in 2017, 2018 and 2019.
The contract requires a QHP issuer to:
Pay the same level of agent compensation for applications taken during the regular open enrollment period and applications taken from consumers who qualify for special enrollment period (SEP) treatment during other times of the year.
Pay the same level of compensation for different “metal levels” of the same product. That means an issuer will have to pay the same level of commission for budget-priced, bronze-level coverage that it pays for high-end platinum coverage.
Participate in an agent appointment reporting and agent appointment error correction system.
Let Covered California post the agent support grade the issuer gets from its agents on the Covered California agent website.
California runs a state-based Patient Protection and Affordable Care Act (PPACA) public exchange.
Peter Lee, executive director of Covered California, wrote to federal exchange program regulators to suggest that they consider setting minimum agent and broker compensation standards. His suggestion arrived in response to reports that some individual health coverage issuers are responding to high claim costs by eliminating commissions, or by eliminating commissions for SEP applications.
Michael Lujan, president of the California Association of Health Underwriters (CAHU), said CAHU is happy to see the agent compensation provisions in the new Covered California plan contract.
CAHU is hoping policymakers will not have “to reach legislation defining a floor for compensation,” Lujan said.
The Covered California board is also debating how it should respond to QHP issuer complaints that many of the consumers who apply for coverage through SEPs cannot show that they qualify for the SEPs.
Exchanges, insurers and regulators developed the SEP system to discourage younger, healthier people from using the new PPACA ban on most forms of medical underwriting as an invitation to wait until they are sick to pay for coverage.
Most people can now buy individual coverage only during an exchange open enrollment period. To buy coverage at other times of the year, consumers must show they have a good reason to buy coverage such as the loss of access to employer-sponsored coverage.
Some consumer group advocates said at the Covered California board meeting that they are seeing little concrete data on whether SEP abuse is actually a problem. The consumer group reps argued that any new SEP documentation problems could cause enormous problems for consumers who, in many cases, may have erratic incomes, limited levels of interaction with the kinds of organizations that produce good documentation, or limited English language proficiency.
Bill Wehrle, a vice president at Kaiser Permanente, said his company is seeing SEP eligibility problems in “pretty significant numbers,” and that refusing to look at the evidence that Covered California’s current lack of SEP eligibility verification is a problem is like ignoring the data showing that global warming is a problem.
Jeff Smith, a vice president at Blue Shield of California, said SEP abuse is a big enough problem at his company to add roughly 3 to 5 percent to 2017 premiums.
Lujan said CAHU members might be able to bridge the divide by coming up with eligibility verification methods for consumers who have a hard time documenting SEP eligibility through electronic systems.
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