Members of the public, health care providers, policymakers and rising claim costs have been pounding UnitedHealth Group in recent months, and the giant health insurer and health care services provider has started to retreat.
UnitedHealthcare, the Minnetonka, Minnesota-based health insurance arm, is warning Medicare plan distributors and agents that it's eliminating commissions on midyear sales of many Medicare Advantage and Medicare supplement insurance policies it offers starting July 1.
Distributors are telling agents that the change will affect all UnitedHealthcare prescription drug plans and at least some Medicare Advantage plans in about 20 states.
What it means: Financial professionals who help clients with Medicare plans may earn less and have a tougher time finding coverage for clients who are shopping for coverage because they are turning 65 or moving to new locations.
All financial professionals who work with people ages 65 and older could find that some are having more difficulty than before with getting and keeping Medicare coverage that they like.
Medicare basics: "Original Medicare" exposes enrollees to many complicated deductibles, coinsurance bills and co-payments.
Many low-income enrollees use public programs to pay the out-of-pocket costs.
About 34 million of the 69 million enrollees use Medicare Advantage plans to fill in those costs. Those plans, which look to enrollees like a replacement for original Medicare, are regulated by the federal government.
About 14 million enrollees fill in the gaps with Medicare supplement insurance policies, which are written through a different program that's mostly regulated by the states.
The UnitedHealth commission announcement appears to affect only Medicare Advantage plans, not Medicare supplement insurance policies.
UnitedHealth's Medicare business: UnitedHealth is the top Medicare Advantage plan issuer, according to Mark Farrah Associates data. The company had about 9.9 million Medicare Advantage plan enrollees in March and a 29% share of the record. Humana, the second-ranked issuer, had a 17% share of the market.
UnitedHealth, which has a marketing relationship with AARP, is also the leading Medicare supplement insurance issuer, with 4.3 million Medicare supplement insureds and a 32% share of that market, Mark Farrah reports.
The history: For years, issuers in the Medicare Advantage market enjoyed strong federal subsidies and growing enrollment.
But the federal government has cooled toward the issuers in recent years and squeezed subsidy payments.
Hospitals and physicians are also bargaining harder for higher reimbursement rates, using tougher billing strategies and taking a more aggressive approach to protesting what they see as low payments.
UnitedHealth executives emphasized their unhappiness with Medicare plan claims in April, when they posted earnings for the first quarter and again in May, when the company's chairman and former chief executive officer, Stephen Hemsley, suddenly took over from Andrew Witty as the CEO.
Reactions: Jessica Brooks-Woods, the CEO of the National Association of Benefits and Insurance Professionals, and Kevin Mayeux, the CEO of the National Association of Insurance and Financial Advisors, objected to the midyear compensation change.
"At a time when seniors are grappling with rising costs, changing formularies, and overwhelming plan options, United Healthcare is cutting off the very people best equipped to help — licensed agents who know their communities, understand their clients, and act in their best interest," Brooks-Woods said. "This is about prioritizing shareholders over seniors."
Mayeux said agents serve as advocates for their clients all year round.
"Stripping away their compensation is not only disruptive but deeply irresponsible," Mayeux said. "It jeopardizes seniors' ability to make informed decisions in a system that is already complex and confusing."
Credit: UnitedHealth
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