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September 26, 2022 at 11:40 AM
What You Need to Know
- Chapter has raised $61 million in capital since March 2020.
- It sells every kind of Medicare plan it can offer.
- It likes working with financial advisors and outside insurance producers.
Corey Metzman is hoping that the Medicare plan broker he helps run, Chapter, has the right strategy for the times, and for building relationships with outside financial advisors and insurance agents.
The New York-based company says it offers every Medicare plan it can, uses technology to simplify the plan comparison and selection process, and refrains from using compensation arrangements that could favor sales of one plan over another plan.
Metzman, Chapter’s chief operating officer, says the company’s approach is good for the customers, good for health insurers’ efforts to maximize enrollee satisfaction and retention levels, and good for financial professionals and advisory firms that take holistic financial and retirement planning seriously.
“Health care is an expense category often overlooked until it’s too late to realize significant savings,” Metzman said, in an email interview.
In August, Mercer Advisors — a financial advisory firm that has no relationship with the Marsh & McLennan Companies — announced that it would use Chapter to handle Medicare plan inquiries from its 25,000 wealth management services clients.
In some cases, Metzman said, Chapter may be able to structure relationships with outside firms and financial professionals through arrangements that offer compensation for the external partner.
What It Means
The Medicare annual enrollment period for 2023 coverage starts Oct. 15 and runs through Dec. 7.
If you would prefer to outsource Medicare plan advisory services, companies like Chapter are happy to help you do that.
The TPMO Shift
Two years ago, Medicare plan sellers were hiring every agent who could sign an X and celebrating the alchemy of converting leads into sales.
Then, traditional local brokers began complaining about unrealistic product descriptions in the ads, and some consumers who received calls from telemarketers complained that they had no idea they had put themselves on a lead list.
The Centers for Medicare and Medicaid Services, which oversees Medicare, clamped down in April.
CMS reacted to complaints about the national lead-generation companies by imposing new “third-party marketing organization” rules on both the big national companies and on traditional brokers and agents.
TPMOs now must warn consumers about whether they offer only some of the Medicare plans available in a given market, and record calls with consumers for compliance review purposes.
Meanwhile, CMS has increased the emphasis on patient satisfaction factors in its Medicare plan “star ratings,” or quality grades that influence how much money a plan issuer can collect from the Medicare program.
Enrollee retention has a correlation with enrollee satisfaction.
What Metzman Is Seeing
Metzman has a unique perspective on the Medicare plan market.
He has a bachelor’s degree from Wharton, a master’s degree in law and finance from Oxford, a stint as a White House intern, and about four years of experience as an engagement manager with McKinsey & Co. — and less than three years of Medicare plan market experience.
But he is also a top executive with a company that has used its vision of how to make the Medicare plan market work better to attract $61 million in capital from outside investors.
Metzman answered questions via email about the effects of the new TPMO rules, the impact of the Medicare plan sales tables at retail stores, plan menu trends and the Medicare supplement insurance medical underwriting rules.
The interview has been condensed and edited.
THINKADVISOR: Does it look to you as if the new TPMO rules are having much effect on the market?
Corey Metzman: The large Medicare brokerage call centers have a churn problem. Approximately 40% to 50% of people who choose coverage through them disenroll from that coverage within a year.
More importantly, this dynamic indicates that most consumers are not being matched with the right plan.
As a result, the largest Medicare brokerages have slowed new agent hiring this year as they focus more on retention than “growth at any cost.” However, one underlying issue is that Medicare brokers are not required to search a minimum number of health care carriers to find the optimal plan for each consumer.
Historically, these brokers have not disclosed the number of carriers they search or that they only offer the consumer options that pay them commissions.
In short, the current system sadly creates incentives to match people with plans that don’t offer quality health care at an affordable price.
The new TPMO regulations have a worthy aim, but in our view don’t quite solve the problem. These regulations require Medicare brokers to disclose that they don’t sell every plan. But there’s a massive difference between selling two or twenty plans in a given area, and the regulations don’t allow consumers to distinguish between these two scenarios.
They also fall short of requiring Medicare brokers to make a professional commitment to place beneficiaries’ interests over their own.
At Chapter, this is exactly the commitment we make, but there’s no regulatory provision that requires anyone in our industry to make this commitment.
Some Medicare plan agents and brokers work from tables in retail stores. How big of a factor do the retail store tables seem to be?
We don’t see this dynamic as a significant factor.
Carriers and retailers will sometimes allow agents to staff tables at certain stores. [But] many consumers often feel uncomfortable discussing their personal health situations in a semi-public environment.
