Why Medicare Advantage is an unlevel playing field, according to 1 payer CEO

Marketing and broker incentives are putting smaller insurers at a disadvantage when it comes to competing with big Medicare Advantage payers, Security Health Plan CEO Krista Hoglund told lawmakers. 

Ms. Hoglund testified in front of the Senate Finance Committee Oct. 18. Security Health Plan has around 225,000 Medicare, marketplace and Medicaid members in Wisconsin. 

In her testimony, Ms. Hoglund said Security is unable to pay for large incentive payments to brokers or to field marketing companies. 

Security Health Plan has had double its average attrition rates in the past two years, with most of these members moving to competing plans with higher administrative costs. 

"In competitive markets like ours, the current structure not only limits our ability to be successful, but it also runs counter to our long-standing commitment to be a good steward of the Medicare dollar," Ms. Hoglund said. "We have been forced to make tough decisions between adding extra benefits for seniors and lowering costs or increasing our administrative budget to keep pace with national competitors in order to retain and grow enrollment." 

Ms. Hoglund testified Security Health Plan's marketing budget is "pennies on the dollar" to that of large national insurers. 

In her testimony, Ms. Hoglund said lawmakers should consider requiring insurers to make public their spending to field marketing organizations and brokers, and create caps on the amount of money plans can pay brokers and third-party marketing organizations. 

In 2009, CMS established maximum amounts health plans can pay brokers — $611 for a new enrollee and $306 for returning enrollees in 2023 — but there are no limits on add-on fees. 

"It would be very interesting to track that data and see transparency around total payments — is there a correlation between those dollars and where we see the enrollment lining up," Ms. Hoglund said. "Once we understand and have transparency, we can talk about true, maximum caps that encompass not just commission, but total payments [to brokers]." 

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