A fledgling Connecticut effort to rely more heavily on private insurance brokers to boost enrollments in Obamacare has resulted in a bitter commissions dispute that could end up in court.
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A fledgling Connecticut effort to rely more heavily on private insurance brokers to boost enrollments in Obamacare health plans has resulted in a bitter dispute over commissions that could end up in court.
The disagreement emerged after Farmington health insurer Connecticare recently informed four high-volume brokerage agencies that their commissions for bringing customers to the state's online exchange, Access Health CT, would be 25 percent lower than what brokers say their contracts stipulated. The exact amount of monthly commission payments in dispute is unclear, but it could total upwards of $500,000 over the next year.
The clash emerges on the heels of the most successful enrollment period ever for the state's exchange, which announced last week that it now has just over 116,000 commercial plan members.
It also puts Access Health in an awkward position, forcing it to help mediate a dispute between the brokers that helped it reach record enrollment and the exchange's most prolific insurer.
Boost in market share
Connecticare has boosted its exchange market share to 54 percent of all commercial enrollments, up from 42 percent in early 2015, according to Access Health.
The four insurance agencies involved in the dispute are known as “lead brokers.” They were tapped by Access Health in 2015 to handle high volumes of enrollment referrals from the exchange's call center and other sources. Collectively, South Windsor's Crystal Financial, Cromwell's Health Markets, Hartford's Main Street Insurance, and Bridgeport's Premier Advisors enrolled or reenrolled nearly 19,000 customers this year with the four insurers offering exchange plans: Connecticare, Anthem, HealthyCT and United Healthcare. It's not clear exactly how many Connecticare plans the brokers helped sell.
Access Health CT CEO Jim Wadleigh said he's worried the dispute could damage future relations between brokers and the exchange, which has increasingly leveraged insurance agents as a cost-effective way to boost enrollments. If the exchange were to lose broker support, it may need to hire more staff to advise and enroll customers, Wadleigh said.
“Access Health is working with our lead brokers as well as our carriers to make sure that everyone understands each other's roles and responsibilities,” Wadleigh said. “There does appear to be some confusion and we are working to communicate these items.”
Last month, Wadleigh expressed concern about a recent decision by United Healthcare to stop offering exchange-related commissions, because the insurer found its state exchange plans unprofitable. United Healthcare's market share on Connecticut's exchange was just 2 percent in 2015, shrinking to 1.6 percent this year. The company hinted in November that it may pull out of state exchanges in 2017.
[Update: The Insurance Department ruled that United Healthcare could reduce but not eliminate its 2015 broker commissions, the Connecticut Mirror reported Friday. A department spokeswoman confirmed that information on Tuesday morning, saying that officials allowed United Healthcare to reduce its per-enrollee commissions from $20 to $10.]
The dispute
Jennifer Lovett, CEO of Crystal Financial, said she and her three fellow lead brokers believe their contracts with Connecticare require the insurer to pay them $16 per month for each member they signed up during the third annual Obamacare enrollment period, which began in November and ended in January. It's the same commission they've received in the past, before becoming lead brokers in 2015, she said. The exchange has been operating since 2013.
But Connecticare informed the four brokers this month that it had reclassified them as “e-producers,” or brokers that generally enroll customers online and receive a lower commission of $12 per enrollee per month.
Connecticare said it assigns an e-producer classification to any broker that it provides with marketing support or sales leads.
In an email to one of the lead brokers obtained by the Hartford Business Journal, a Connecticare vice president, Terry Guidone, appears to argue that the $8 million assessment the insurer pays Access Health to help fund the exchange's customer call center counts as marketing and/or sales support because lead brokers receive referrals from it.
Guidone wrote that the lower commissions for e-brokers help “offset the dollars we spend in marketing and resources to direct leads to them.”
In a statement, Connecticare reiterated the company's contention that lead brokers are e-producers, and that its e-producer arrangements predate the creation of Access Health CT. It's unclear how many e-brokers and regular brokers Connecticare uses.
“We value our broker relationships and the important role brokers play during open enrollment and throughout the year,” the insurer's statement said.
Assessments don't matter
Lovett said her contract with Connecticare classifies her as a regular broker and that the assessment Connecticare pays to Access Health shouldn't affect her own agreement with the insurer.
She provided a copy of her contract to HBJ, signed by her agency in 2013. Lovett said that contract, which pays a $16 commission, according to Connecticare's broker marketing materials, remains in effect today and that she never signed an e-producer agreement with the insurer.
She also said she never received advertising money from Connecticare, and that she spent $25,000 on her own ad campaign to drum up exchange business. She acknowledged, however, that the majority of her sales this year came from Access Health's call center — specifically previous Medicaid patients who were no longer eligible for the low-income social healthcare program due to changes made last year by the legislature.
She said some of her sales also came from her own network of customers and other sources.
'Attacking all my leads'
“They're attacking all my leads,” said Lovett, who estimates that her six-employee agency sold 2,300 Connecticare plans during the most recent enrollment period. If they receive the lower $12 commission rate they'll lose $110,000.
Lovett said her team often worked 12-hour days during the enrollment period.
“Now I have to tell my staff they won't get the amount they thought they would,” Lovett said. “It's heartbreaking when you see your staff that's so dedicated and working so hard.”
Lovett said she planned to hire at least one additional employee to service the influx of new exchange clients, but that is now on hold.
She is also worried the dispute could set a precedent that would impact the more than 600 regular brokers across the state who sell Access Health plans.
“If they get away with it with us, [other insurers] will follow suit,” she said. “There's a ripple effect.”
It's possible the spat will end up in court, since contracts are in dispute.
State intervention
Access Health has asked the state Insurance Department to weigh in on the question of whether an insurer can modify commission rates once their premiums have received approval from the state in a given year.
An Insurance Department spokeswoman said last week the agency “is aware of the issue and currently looking into it.” There's no clear timetable for a possible resolution.
