Life and Health Insurance Blog

Aetna: A Year after CMS Sanction and how its impacted Agents

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For many Health Insurance professionals across the country, this morning began with a fresh cup of hot coffee and a seat in front of the computer.  They begin by checking emails; filtering through messages from lead vendors promising the best lead program on the internet.  They read information on new products, product updates, and industry news.  One email that many agents would love to see in their inbox is:

Date:               April 21^st, 2011

Last April, Aetna was issued a sanction by CMS (Centers for Medicare and Medicaid services).  This governing party is responsible for overseeing marketing and compliance for Medicare Advantage companies like Aetna.  This sanction came after Aetna failed to provide accurate information on its’ 2010 prescription drug formulary.  This unfortunate mistake kept Aetna from marketing to and enrolling new members for the 2010 enrollment season.

Insurance companies take advantage of Aetna’s sanction:

With Aetna sitting on the sidelines for the entire 2010 selling season, this opened up opportunities for several Medicare Advantage companies.  Companies like Humana, Blue Cross Blue Shield, United Health Care, and Healthspring/Bravo Health Plans were available and willing to take advantage of this ‘time-out’.  Some companies made huge strides in 2010 through acquiring other health insurance companies and making strategic partnerships.

Healthspring, a Tennessee based health insurance provider, made a favorable move by purchasing Bravo Health Plans in 2010.  This acquisition made Healthspring the seventh largest Medicare Advantage provider in the country adding over 100,000 members and over 250,000 prescription drug plan members as well.

Humana also took a giant leap forward by positioning themselves with retail-giant Wal-Mart.  In 2010 Humana used in-store kiosks as a way to educate and enroll members in select Wal-Mart stores.  Humana also pulled off a genius marketing initiative by co-branding a stand-alone prescription drug plan.  This national drug plan is currently a very cost-effective plan that offers additional benefits to members who pick up their prescriptions at a Wal-Mart Pharmacy.

Aetna’s sanction effects on the Agent and broker community:

This Aetna sanction effected independent insurance agents and brokers who were certified to sell Aetna’s Medicare plans.  Agents rely on large companies like Aetna to consistently develop benefit rich plans for the agent to market.   Agents also rely on brand recognition to act as a marketing tool.  Seniors like to deal with products they know or are familiar with.  Most independent agents do not have the budget for a large marketing campaign.  Especially one that would compete against the millions of marketing pieces mailed to seniors by the large insurance carriers.  Agents have to rely on things like the senior recognizing the company name to help them compete in an already competitive market.  Unfortunately Aetna, who is a household name to seniors in many parts of the country, was not available in 2010.

Most agents utilize partnerships with Brokers to help them achieve success in the field.  Brokers may have additional marketing budgets for agents to utilize.  However, Aetna’s sanction forced brokers to shift marketing efforts to other insurance providers.  Usually brokers will become notified first regarding marketing initiatives like in-store kiosk opportunities or leads given to the brokerage from insurance carriers.  Insurance companies like working directly with brokers and rely on the brokers to train and offer a line of support to the agents.  This hierarchy is pretty common and can be very resourceful to independent agents looking to get into the Medicare Advantage market.

Future of Medicare and Aetna’s fate:

As Medicare becomes a heated topic in the political arena, CMS will continue its efforts to keep a close and watchful eye on the Medicare Advantage industry.  This will force Medicare Advantage companies to tighten up their internal marketing and selling guidelines.  The form of ‘checks and balances’ will trickle down to the agents who will be held accountable for their actions in the field.  Most companies already have a “zero tolerance” policy in place for things like Fraud, Waste, and Abuse which helps weed out unscrupulous agents.

Aetna will no doubt come out of this sanction a stronger organization and will continue to grow as a Medicare Advantage carrier.   CMS will eventually lift the sanction and agents all across the country will be able to market Aetna’s Medicare Advantage plans once again.  Until then, agents will continue to check their inboxes for the email that Aetna so anxiously anticipates.