By Allison Bell September 26, 2022 at 11:40 AM
What You Need to
Know
o
Chapter has raised $61
million in capital since March 2020.
o
It sells every kind of
Medicare plan it can offer.
o
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.
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