12 Worst States for Medicare Advantage Sales Comp

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Medicare Advantage plan issuers may use commission rates for 2024 that are a little lower than the rates they used for 2023.

In the typical state, a commission index we created based on Centers for Medicare and Medicaid Services agent-broker compensation reports will fall to $247 for the 2024 coverage, down 1.2% from the typical amount for the 2023 coverage.

At the state level, the commission index will range from $219, in one state in the Midwest, up to $317, or about 50% more, in California. For a look at the states with the 12 lowest commission index levels, see the gallery above.

The Medicare Advantage plan and Medicare Part D prescription drug plan annual enrollment period for 2024 is set to start Sunday and run through Dec. 7.

What it means: Relatively stable commission index levels could be a sign of healthy insurer interest in providing coverage for your older clients, in spite of financial problems that pushed some companies, including Bright Health and Friday Health, out of the Medicare Advantage plan market, and insurer complaints about changes in Medicare Advantage program rules and financial parameters.

The gameboard: The Medicare Advantage program gives private insurers and managed care companies a chance to provide what looks to the enrollees like an alternative to traditional Medicare coverage, or “original Medicare.” The plans serve about 32 million of the 66 million Medicare enrollees.

The Centers for Medicare and Medicaid Services, the agency that oversees Medicare, puts tight constraints on all aspects of Medicare Advantage plan administration, including payments to agents and brokers.

Medicare Advantage distribution payments: CMS posts plan-by-plan, county-by-county agent-broker compensation data in large spreadsheets on its website.

The spreadsheets show plans’ use of agent-brokers, captive agents, employed agents and independent agents.

The spreadsheets also show information about four different commission types: high and low initial compensation amounts, and high and low renewal commissions.

The spreadsheets do not show total commission payout figures, and they do not show the average or median figures for commission payments.

Commission index methodology: To compensate for the lack of average or median commission figures, we started by adding the high and low amounts for initial compensation and renewal compensation for each plan in each county, then dividing by four.

Some plans serve all counties in a state, and others serve only a limited number of counties and list the commission information for each county separately.

To keep the county-by-county rate information from swamping the data for plans that serve entire states, we computed average commission index subtotals for full-state plans and limited-footprint plans separately, then averaged the subtotals for both types of plans.

We included plans that do not pay commissions in the averages, as plans paying $0 commissions.

We also created a “compensation types offered” rating, by counting whether they offer commissions for agent-brokers, commissions for independent agents and referral agents for non-agents.

In most states, most plans offer all three types of compensation, but in a few states, including Minnesota and Oregon, some issuers have decided not to pay referral fees.

The totals include only compensation for Medicare Advantage health maintenance organization, preferred provider organization and private fee-for-service plans, not for Medicare Part D prescription drug plans or some relatively unusual types of Medicare health plans.

Quirks: Alaska has no Medicare Advantage plans and is not on the list.

Puerto Rico does have Medicare Advantage plans, but its Medicare market is much different from the Medicare market in U.S. states and the District of Columbia, and we left it out of the gallery rankings. If we had included it in the rankings, it would have been shown as the jurisdiction with the very lowest Medicare plan commission index.

The logic: At the state level, the 2024 compensation index amounts are similar to the 2023 amounts, and they tend to reflect the popularity of Medicare Advantage plans in those states.

In California and Connecticut, for example, two states with Medicare Advantage penetration rates over 50% and highly competitive carriers, the index levels are over $300.

Many of the states in our “worst compensation” level gallery are known as Medicare Advantage plan deserts, where a large rural population or provider hostility to participating in managed care networks holds down use of the program.

But producer compensation environments vary widely. Florida, for example, almost made it into the worst compensation gallery, in spite of having a 55% Medicare Advantage penetration rate. In Florida, fierce competition between efficient agents and brokers may be contributing to the low commission index level.

Credit: Diego M. Radzinschi/ALM

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