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Corey Metzman. (Photo: Chapter)

Life Health > Health Insurance > Medicare Planning

Medicare Plan Brokerages Have a 'Churn Problem': Corey Metzman

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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.

And most of these agents represent either a single plan or a small number of carriers, so it’s more challenging for a consumer to get a full plan comparison.

While many of the agents you see at a table in a retail store this annual enrollment period are well-intentioned, they typically don’t have the tools or technology to pinpoint the right plan for consumers after searching across all available options.

Specifically, detailed tools that take into account the doctors consumers see, the prescriptions they use, and other benefits they need.

Insurers seem to be talking more about medical costs. How do you see the health care cost environment?

As the COVID situation continues to normalize, insurers are paying close attention to medical costs.

Legally, there’s a provision of the Affordable Care Act that requires Medicare Advantage plans to spend at least 85% of premium revenue on medical claims. The question most plans are facing now is how much more they will need to spend on medical costs, and plans keep a very close eye on this metric — called the medical loss ratio — each year.

What trends, in general, are you noticing in terms of communities’ plan menus?

One trend we are seeing is most clients of financial advisors prefer Medicare supplements, also known as Medigap plans.

These plans offer peace of mind by nearly eliminating out-of-pocket medical costs for Medicare-approved services, in exchange for a monthly premium. They also allow policyholders to see any doctor or health care provider that accepts Original Medicare.

Many people who work with financial advisors are looking for this type of flexibility when it comes to their health care options.

Finally, these plans have legally commoditized medical benefits. This means, for example, that a Medigap Plan G from one carrier offers identical medical benefits as a Plan G from another carrier.

Among Medicare supplements, we are seeing premium stability offered among a subset of the strongest carriers in each area.

However, some carriers offer larger premium increases, especially as beneficiaries get older.

This dynamic means that it’s important for all consumers to consider not just the initial premium level of their Medicare supplement plan, but also consider how that premium may change over time.

One signal to gauge potential price increases in the future is to assess how each carrier currently prices its products for older cohorts of beneficiaries.

We are also seeing Medicare Advantage plans — also known as Part C plans — continue to grow in popularity. Many analysts expect more than 50% of Medicare beneficiaries to receive coverage through a Medicare Advantage plan over the next two to three years.

These plans typically bundle Part A (hospital coverage), Part B (medical coverage), and Part D (prescription coverage) in a single plan offered through a private insurance company.

These plans typically have a predefined network of providers and are structured as HMOs or PPOs. To stay competitive, the strongest carriers are continuing to invest in both the strength of their provider networks and the prescription drugs that are covered.

There are thousands of Medicare Advantage plans available nationwide and typically 35+ in a typical urban county, so there are still meaningful differences across plan options.

Another area where we are seeing Medicare Advantage plans invest are ancillary benefits.

While these have traditionally included benefits like dental, vision, and hearing, many plans are expanding these benefits to cover options like fitness memberships, a quarterly over-the-counter allowance, meals or grocery credits, and even transportation to and from the doctor’s office.

Finally, we are seeing a large number of Medicare Advantage carriers start to offer more plans focused on the specific needs of veterans.

For context. veterans often receive their prescription drugs via their VA benefits so these Veteran-focused Medicare Advantage plans often do not include Part D Drug coverage.

Many of these plans that do not include a Part D Drug plan invest that money in other benefits, sometimes including a partial “give-back” of consumers’ Part B premiums rebated each month.

Medigap has medical underwriting for people who want to change coverage. How much do you think that affects the Medigap market?

In the majority of states, consumers who want to change Medicare supplements must undergo medical underwriting and answer health questions.

The sad reality is that many people won’t pass, particularly if they have certain chronic health conditions, recently had a serious medical procedure, or take certain prescriptions.

The good news is that every American is eligible to get a Medicare supplement plan — with no underwriting requirements — if they sign up during their first six months of Part B coverage.

At Chapter, we have a saying we use with our clients: “Marry your Medigap plan. Date your prescription drug plan.” The underwriting requirement for Medigap doesn’t apply for prescription drug coverage, which can be changed every year during the annual enrollment period.

And while the underwriting requirement does make it harder to change Medigap plans, it also contributes to more affordable premiums for people with those plans. As a result, there is not tremendously strong interest in changing the Medigap underwriting rules. However, each state has discretion here.

For example, in New York and Connecticut, Medicare-eligible consumers can change their Medicare supplement plan year-round, and underwriting is never required. The result is that Medicare supplement premiums are at least 2.5 times higher in New York for a 65-year-old, relative to identical coverage in a state like Tennessee.

Corey Metzman. (Photo: Chapter)


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