Medicare Plan Commissions May Steer Beneficiaries to Wrong Coverage

Yves here. I’ve ignored all Medicare Advantage pitches because they are too obviously sales-y, as in the slickness and/or the aggressiveness of the marketing makes it a wee bit too obvious that those promotional costs will come out of your hide, via coverage tricks and traps. It’s particularly off-putting to see commercials on old people TV channels.

Some readers have pointed out that Medicare Advantage effectively creates a two-tier system, particularly the “no premium” plans. They are a second-class product compared to traditional Medicare plus Medigap or another backup policy. But that is seldom acknowledged in polite company.

By run75441. Originally published at Angry Bear

This article is easy reading exploring some the differences and why people may choose one plan over the other plan. Attached is also a Commonwealth Fund article with more detail.

Medicare Plan Commissions May Steer Beneficiaries to Wrong Coverage, MedPage Today, Cheryl Clark.

Agents and brokers selling Medicare plan coverage often steer their clients to a Medicare Advantage (MA) plan because it earns them a higher commission compared with a Medigap supplemental plan with traditional Medicare that might better serve the beneficiary’s needs.

What role do financial incentives play for healthcare planning agents and brokers in the advice they give to their clients?

One incentive for agents and brokers steering clients to a Medicare Advantage (MA) plan are the higher commissions in the sales of it. Medigap supplemental plan with traditional Medicare commissions are lower. The sale may still occur even if a Medicare Supplemental plan might better serve the beneficiary’s needs.

Among the report’s findings:

  • Most brokers and agents in the focus groups said they received higher commissions for enrolling beneficiaries in MA plans compared with Medigap supplemental plans with traditional Medicare. One said the commissions could be three times higher. They receive more from selling MA than they do selling a Medigap, even when adding in the commission they get from selling a Part D drug plan.
  • Agents said many plans offer bonus commissions as high as $100 per policy when an agent sells a benchmark number of a certain plan. Assume 20 policies in a 3-month period which can “create an incentive for a broker or agent to steer clients to a plan regardless of whether it’s the best one for their clients. “
  • For themselves, most brokers and agents said they would reject MA plans in favor of traditional Medicare with a Medigap. One broker; “Combination offers better coverage and choices than Medicare Advantage, particularly as people age. If I ever have a medical issue, I’d want to be able to go to any physician I want.”
  • Some in the focus groups remarked. Based upon the commission rates and information from the Centers for Medicare & Medicaid Services, it seemed “obvious” the federal government wants more people in MA plans rather than in traditional Medicare.
  • Agents claim, commissions for sales of Part D prescription drug plans are so low, many neglect to enroll their clients in them and the plans were “not worth the time.” Then, after having enrolling in Medicare for years, beneficiaries may need a Part D for their medications. By then, however, they have to pay a federally required Part D late-enrollment penalty each month, amounting to about $1 for every 3 months that they didn’t have Part D or other creditable coverage after becoming Medicare eligible. Additionally, they can’t enroll in a Part D plan until the next open enrollment period. These low Part D commissions also don’t incentivize brokers and agents to encourage their clients to reevaluate their Part D plan each year, even though coverage and premiums can change and vary greatly among plans, participants said.
  • Focus group members said they are concerned about deceptive MA marketing. These ads, one participant said, mislead clients into believing “they can just switch to a Medicare supplement anytime that they want.” Supplement plans in most states require beneficiaries to pass an extensive underwriting questionnaire before they can be approved. Most focus group participants said that for many of these clients with health conditions, there are few options, although they may enroll beneficiaries in an MA preferred provider organization, which offers more provider choice. Focus group participants characterized the advertising as “relentless,” “overwhelming,” and “misleading,” and said it has led some clients to enroll in plans that excluded their doctors, and other clients to unknowingly change plans. “I’ve had clients call me up in tears not realizing that their plan had been switched,” one said. In some cases, agents have even lost clients who didn’t believe them and wanted everything the ad promised.
  • Focus group participants said they tend to sell MA plans to beneficiaries with lower incomes, and Medigap policies with traditional Medicare to those with higher incomes.
  • For Medigap supplemental coverage, commission structure pays more to sell plans with higher premiums and low or no deductible, such as a G or an F plan, rather than plans with lower monthly premiums and higher deductibles, such as K or L. But for beneficiaries with limited financial resources, a plan with a higher deductible but lower premiums and out-of-pocket payment limits “may make more sense,” the report said. “The [Medigap] commission structure may result in some beneficiaries paying more than they need to.”
  • Health plan sellers can earn extra money — $75 to $100 — for 5 minutes of work if they complete a “health risk assessment” for clients who enroll in a new MA plan. The report noted that it is unclear if these assessments are sent to the enrollees’ primary care physicians, whether it informs their care management, “or helps to expedite additional resources and benefits to them.”
  • One reason for the recent and rapid increase in beneficiaries choosing MA plans over traditional Medicare with supplemental plans is the rising cost of Medigap premiums. One Arizona broker said, “They’re getting these price increases year in and year out on those supplement plans. And yeah, you bet, it has definitely shifted my focus.”

This is an excellent article comparing FFS Medicare and Medicare Advantage plan issues. The Commonwealth Fund also has a report on similar findngs which can be found here:

Challenges Choosing Medicare Coverage Views Brokers Agents,Commonwealth Fund, multiple authors.

The demographics from which the findings are based upon is here: Table – Focus Group Demographics (

It appears that CMS is starting to take an active role in investigating the selling of both programs.

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  1. Arizona Slim

    Once again, Slim expresses mega-gratitude to the people who bring us Naked Capitalism. Thank you for keeping me far, far away from Medicare DIS-Advantage!

    1. JG

      Yes, I concur. Catastrophe Spinal Cord injury, 2021. Eligible for Medicare…. 5 months later. I chose original Medicare, Supplement Plan G. A Drug Plan that was 1.60 a month. I just knew better. The robotic surgery to put me back together was 120k. Imagine paying 20% of this, on my below the FPL income…. I read much, and worked! In the medical chain gang! for 20+ years. Know what’s going on…

  2. flora

    Thanks for this post.
    I hear lots of these TV ads. The most common phrases in all the ads are: may be, might be, could be. Weasel words. Nothing definite about what the plans do guarantee.

    What was the old Publishers Clearinghouse Sweepstakes’ tag line: “You could win a million dollars!”

    1. Questa Nota

      Twofer when bundled with a friendly, folksy actor pimping reverse mortgages.
      Why, a person could just tap that equity and pay for those Medicare Advantage premiums and whatnot!

      It would be great to see some truth in advertising, along the lines of even-up comparisons showing your gross and net cost for each option in plain English. Add the sales commission incentive to show why those ads get made.

      Apples-to-apples a day to help keep the bad people away.

  3. antidlc

    ‘One broker; “Combination offers better coverage and choices than Medicare Advantage, particularly as people age. If I ever have a medical issue, I’d want to be able to go to any physician I want.”

    Physicians do not have to accept Medicare.

    And people who are on traditional Medicare may be thrown into an ACO Reach plan. The only way is to opt out and get a new PCP.

    1. antidlc

      Does your provider accept Medicare as full payment?

      You can get the lowest cost if your doctor or other health care provider accepts the Medicare-approved amount
      as full payment for a covered service. This is called “accepting assignment.” If a provider accepts assignment, it’s for all Medicare-covered Part A and Part B services.
      Using a provider that accepts assignment

      Most doctors, providers, and suppliers accept assignment, but always check to make sure that yours do.

      1. Yves Smith Post author

        Not the case in NYC for many doctors, and I hear that is the case in other parts of the Northeast and Dallas. Some doctors accept Medicare only from established patients.

        As one of my NYC doctors said, “If you are on Medicare, you are a fourth class citizen.”

  4. Boomheist

    Good article, and I think it covers most of the major points. For the past year I have been working as a SHIBA or State Health Insurance Board Advisor, in Washington State, where the program began a few decades ago – an all volunteer force of Medicare advisors who provide information but not recommendations to clients seeking help with Medicare choices. I would say, to fully understand this system (Medicare), takes hundreds of hours. I took a course, a test, then have been shadowing experienced advisors for the last 9 months, up to 8 hours a week, plus since the first of the year I have been “in the barrel” one half day a week handling calls myself. I would guess that so far I have spent close to 1000 hours in this learning effort and practicing. I am far from an expert but getting there. SHIBA is now a national program, available in every state (and county) in the United States, I believe. Because each state has different Medicare-State rules, we SHIBA volunteers focus on our state only.

    In my experience there are two main reasons people lean toward MA plans – a sense of one-stop shopping (Advantage Plans roll in the drug plans with the doctor and hospital plans, plus some add dental and vision and hearing elements) and, maybe even more important, the attraction of “zero premium” MA plans. Everyone must pay the Part B $164.90/month premium, but many MA plans charge no other premium, just co-pays (unlike with Original Medicare charging for Part D drug plans and the Medigap coverage for the copays, about 200 a month for the best coverage) .

    This means anyone who is cash poor is likely to be drawn to these MA plans. However, all Advantage plans also have out of pocket annual maximums in the range of 5700 to 7500 a year, meaning, if you get hit by a Black Swan event or have high monthly medical “burn costs” you will pay a lot out of pocket. The Original Medicare, Parts B, D and then a Medigap to cover the co-pays, costs between about 400 – 450 a month or 5000 – 5600 a year, but that is all you pay, ever. Compare that with an MA plan which includes drugs and charges no premium – that cost is 12 times 164.90, call it 2000, making the MA plan, on an annual basis, almost 3000 less expensive BEFORE CONSIDERING any doctor and hospital costs.

    So if you are healthy, visit the doc twice a year and take no drugs, and if your parents lived to 90, you might lean toward the no premium MA plan pretty confident a Black Swan won’t strike you. However, if you get cancer, or some kind of drug dependent condition, you’ll run through your 5700-7500 maximum out of pocket cost very very fast, whereas under Original Medicare with a full Part G Medigap (the most comprehensive coverage available) while you will be paying 5000-5600 a year, that is ALL you will ever pay no matter what happens.

    There is also a high-deductible Medigap option available, with costs 50 dollars a month, not 200, and has a deductible of 2700 this year, which means your annual premiums are lower yet you still have the good Medigap coverage. With the high deductible Medigap, your additional costs above a no premium MA plan are that 50 dollar monthly charge plus a Part D charge (which in Washington can be as low as 1.60 a month) – call it 800 a year more. You have an out of pocket maximum as much as 5000 less than an MA plan (2700 as compared to up to 7500) yet you have the Medigap coverage which if you sign up within 6 months of registering for Medicare you must be given without any underwriting questions.

    Plus, once you have Medigap, you can change from high deductible to full coverage at nearly any time, again no questions asked, whereas if you start with an MA plan and then want to switch to Original Medicare and Medigaop you might not get into Medigap.

    Advantage Plans require you to work with doctors in their network. Advantage Plans can change their rules year to year or even during the year, Based on my experience with clients it seems some MA plans refuse charges knowing, if you appeal, the charges will be covered, yet confident that most people elect to pay rather than go through the bureaucratic hassle of chasing repayment. In other words, MA plans will raise coverage questions confident a large percentage of clients will pay the charges instead of appealing, meaning, the MA plans make more money and the customers pay more.

    It all depends on each person’s financial and health situation. For some people, the MA option is their preferred choice. For others, Original Medicare is the preferred. Every Medicare booklet mailed to every citizen has, on the back cover page, the phone number fore the local SHIBA contact within that citizen’s zip code. I work with volunteers who have been doing this work for six, ten, even 20 years, offering advice free of charge. Don’t listen to Joe Namath, and just know that every broker you talk to is ultimately trying to sell you something. SHIBA is not.

    1. antidlc

      “The Original Medicare, Parts B, D and then a Medigap to cover the co-pays, costs between about 400 – 450 a month or 5000 – 5600 a year, but that is all you pay, ever.”

      All Medigap plans, including Plan G, sold to new Medicare members don’t cover the following:

      Part B deductible (since 2020, new Medicare members can’t buy any plan that covers the Part B deductible, although existing members may own older plans that do).

      1. Randy

        Just before I started Medicare my Medigap plan was selling the rider to cover the $185 Part B deductible for about $190. Everybody I know was buying that rider. Really doesn’t make sense unless you like never, ever getting a bill.

        I figure Medicare made them stop because of that little extra gouge.

    2. Angie Neer

      Thanks for the info, Boomheist, and for your effort on the front line. What a country we live in. We set up a predatory for-profit system, then rely on volunteers like you to defend the public against it.

    3. Oh

      Thanks for your detailed comments and the work you do. My preference, strictly based on principle is original Medicare. However if one is quite healthy and needs a gym membership, he would pay around $60 per month. With a DIS-Advantage plan, you get membership through Silver Sneakers or other that includes gym membership and drug coverage. The cost of gym membership plus the added cost of drug coverage (Part D) of say $2 per month and a Medigap policy (cheapest at $50 per month makes DIS-Advantage more attractive from a cost standpoint. ($165 vs. 165+2+60+50 for gym membership) or $277 per month. It looks like the table is purposely tilted against original Medicare! However, as you point out, if one requires treatment for cancer or other ailment, original Medicare comes out ahead from the yearly max out of pocket cost (co-payment). Most of all, the ability to go to any doctor is the biggest advantage.

      My two questions:

      Do you know if Medigap policies cover all co-payments without exception? Does one pay the doctor or medical facility and then submit the bill for reimbursement or does the doctor submit the bill for co-payment directly to the Medigap insurer? Could you explain? Thanks.

      1. antidlc

        ‘Most of all, the ability to go to any doctor is the biggest advantage.”

        Doctors do not have to accept Medicare.

        Does your provider accept Medicare as full payment?

        You can get the lowest cost if your doctor or other health care provider accepts the Medicare-approved amount
        as full payment for a covered service. This is called “accepting assignment.” If a provider accepts assignment, it’s for all Medicare-covered Part A and Part B services.
        Using a provider that accepts assignment

        Most doctors, providers, and suppliers accept assignment, but always check to make sure that yours do.

      2. Boomheist

        As far as I know, Oh, if you have Medigap what happens, is, the Medigap pays the copays, I think to the doctor. What I do know is – and this highlights a comment further down – people with full Medigap basically never see a bill, because first Medicare pays 80 percent then Medigap gets the rest, and what this does is create patients or people who have no idea what they are really burning in medical costs, because to them it is all “free.” These people also tend to get all the tests, all the time, and are quirte blind to the costs because they don;t see the costs unless they choose to dig into all the monthly statements line by line, which few people do, I thin. So that very good Medigap coverage also at times creates all sorts of medical tests and check ups because they are “free”.

    4. Nikkikat

      Thanks for all the information boomheist, perhaps helped some people to make the right decision. I just too straight Medicare A and B and a cheap drug plan that cost $13.00 per month. I am in late 60s and take no drugs. I stay as far away from doctors as I can and am lucky to be fairly healthy. We have not had any problem getting Doctors that take Medicare as full payment. Dermatologist and a general practitioner. My Mother paid 300.00 per month for medi-gap coverage and another 100.00 for a drug plan. Plus her Medicare premiums. From a Social security income of 1500.00. Needless to say, along with utilities and various other bills, she had nothing left at the end of the month. Yet, I hear we are sending another few billion to Ukraine and doing a big bailout for criminal bankers. I have given up hoping people will demand better for themselves.

    5. Katniss Everdeen

      It all depends on each person’s financial and health situation.

      Yes it does.

      I will be 71 this year and have had MA since turning 65. I haven’t seen a doctor in decades, take no drugs and have no intention of starting now. Most of my friends are Medicare age. Some have MA and some traditional Medicare with supplementals and drug plans. I live in Florida where there’s a lot of Medicare.

      Let me explain how this works in reality. This is anecdotal but real.

      When you have traditional Medicare + a supplemental + comprehensive drug plan, you have an effective medical blank check. There are very few limits on what will be paid for, albeit at a “lower rate,” but with zero deductibles. Everything’s “free.” And you get it in spades. You’re old, after all, and you’re probably sick with something.

      Go for one “wellness” visit, and before you know it you’ve got a cardiologist, pulmonologist, urologist, dermatologist, gynecologist, hematologist, otolaryngologist, proctologist, immunologist and somebody who’s concerned about your bone density.

      You become a professional patient. But hell, you’re retired, so you’ve got time. And you get all the shitty appointment times that no one else wants like 3 p.m. on New Year’s Eve because that keeps the schedule full and “productive.”

      And there are no gatekeepers. Nobody gets your test results and tells the next “specialist” that you just had a CT scan two days ago and they should look at that one instead of ordering another one. Because it’s “free.” And billable. Not to mention that your arms look like beat up pin cushions and you’ve got an oxygen concentrator makin’ a racket in your guest bedroom and three wheelchairs in your foyer.

      So let me tell you. This fucks with your head. I’ve seen this barrage of possible diseases and conditions that a person has to be constantly “on guard” against, that they didn’t even know about, depress the most optimistic of “seniors.” One day you’re looking forward to the future and the next you’re a quivering mass of impending health disaster who can’t take a walk outside without checking that your durable power of attorney and living will are in order.

      It’s a hellish, enfeebling existence. And all for the low, low price of $5600 extra (this year, age is a preexisting condition) + drug plan. But there’s no deductible. Such a deal.


      1. JG

        So true, thank you. IF, I had NOT experienced that catastrophe spinal cord injury, I would not have walked down the path…of all those additional tests. I had over 100 appointments post emergency surgery, all sorts of studies and treatments. I can now ambulate and am no longer “diapered”. Excellent health prior, no meds. The injury was spontaneous, thus I woke from a deep restful sleep and realized upon awakening, my life had changed drastically moving forward. I stay insured with Original Medicare and that expensive Supplement, Plan G…the cheapest drug plan. Will see, as I live right near the FPL.

      2. Yves Smith Post author

        Sorry, this was not at all my 94 year old mother’s experience. One GP visit a year, two visits to the pulmonologist (she had COPD). Routine bloodwork with the GP visit. She must have had a bone density test at some point because she was diagnosed with osteoporosis.

    6. Jim

      Imagine living in East Palestine, OH, after having lived a clean life, exercising, doing all of the things necessary for a healthy old age, and choosing a Medicare Advantage plan. Then the Black Swan arrives.

  5. jake

    That anyone already familiar with insurance networks and PCP referral requirements would voluntarily reassume that yoke when finally free of it, with or without Medigap, is a testament to American marketing. Medicare Advantage indeed!

    And the so called perks — dental, vision — are provided at establishments you wouldn’t choose to frequent and with very limited benefits, anyway. There are no free crowns or implants in this life, even at the Medicaid mills they’ll direct you to.

    1. Dave

      This makes zero sense and shows you don’t understand what you’re talking about. The first year is the only year you make more than a supplement commission. Also, most people agents write for Medicare Advantage are those going from one MA plan to another. You make $301 for that. Which is SIGNIFICANTLY less than a supplement.

    1. jake

      That’s easy to say, but for all but the best private insurance, which few could ever hope to afford, traditional Medicare is far superior to anything else available today in the U.S. Short of free universal care, it’s remarkably good.

      There’s been some dispute in these comments over the number of doctors who accept Medicare (and also see above), but at least in NYC, there are numerous board-certified specialists to choose from. To revert to anecdote, the nearest ophthalmologist on Central Park West, recommended by Castle Connolly, accepts it. So does the highly recommended Moh surgeon across the park, on 5th Avenue (who, incidentally, accepts no other insurance).

      Or beyond anecdote, take the highly regarded Hospital for Special Surgery: a search for hip replacement surgeons who take Medicare Part B yielded over 20 results (at which I stopped counting).

      Ideal? Maybe not. But for anyone used to narrow networks and directories three years out of date….

      1. antidlc

        The problem is the CMS has stated that it wants everyone on Medicare to either be in a Medicare Advantage plan or a Medicare ACO-REACH network by 2030.

        Right now you are allowed to go outside the ACO-REACH network if you are in one, but I think this may change and you will eventually be tied to the ACO-REACH network and not allowed outside the network.

        1. jake

          I’m not sure how useful it is to debate unknowns. And getting everyone into these ACOs in 7 years? The public has halted the recommendations of the usual cat food commissions before.

          OTOH, that so many have been coaxed into Medicare Advantage on the promise of free dental x-rays and reduced price barbells isn’t encouraging. I guess the best one can hope for is that death precedes narrow networks.

        2. orlbucfan

          I’m on the email list for the PNHP who are fighting ACO-REACH tooth and nail. They are making progress along with other grassroots groups opposing this latest JokeCare rip-off.

      2. Katniss Everdeen

        I would have to assume that the majority of joint replacements are performed on over 65s and so are paid for by Medicare. If joint replacements are your bread and butter, you’d probably have a lot of free time if you didn’t take Medicare.

      3. Yves Smith Post author

        That is false. My insurance plan is way way way way better than Medicare. I am keeping it even though it is now a backup to Medicare B.

        1. jake

          I think I said that Medicare is superior to everything but the best private insurance, which few could afford –or what is even available to most workers. What is false about that statement?

          Here’s guessing you pay a little more than $164.00 a month?

  6. scott s.

    I helped my 97 y-o father manage things. His company retirement provided an annual payment into an HSA which we used to fund a PPO plan with Humana at $100/mo that seemed to work out OK.

    My wife and I are both career military, so we were in the military health system until they kicked us out at 65. Find it hard to find a provider accepting new medicare patients. I decided finally to try the VA but it’s a 4 month wait for appointment.

    1. flora

      Do retired military still qualify for TriCare if applied for? It used to be pretty good. Don’t know if it’s changed.

  7. JBird4049

    And I adding a probably superfluous comment that this whole post is insane.

    It would probably be extremely easy to put everyone on Medicare A, B, D, and then the equivalent of Medi-Cal. If they insist people pay, have them pay only for the parts of Medicare they would be paying for anyways. Everyone would have essentially full healthcare at an almost reasonable premium.

    As it is, you have to guess what you are going to be sick from as well as your future financial situation for thirty years if you are lucky. Nobody can reasonably do that.

    Yes, corporate greed, political corruption, and possibly some weighted stochastic eugenics if wearing a foil hat (although paranoid is a good survival trait nowadays), but gee whiz, for almost all Americans, it would be so much better. There is nothing else that would immediately improve the general health of the population. So, it must be the evil communism.

    End of rant.

  8. jackiebass63

    When I retired our contract included our employer providing health insurance. The you turn 65 you picked up medical and the employer provided supplemental coverage. That system lasted 20 years. Just last year Retirees were informed that their coverage would be an Advantage plan or you could keep your traditional medicare and purchase your own supplement.In effect we were forced into an advantage plan. So far I see no difference but it has only been 2.5 months.My wife and I only have routine office visits. I don’t know what will happen if either of us has a serious illness. I hold my breath and hope neither of us gets seriously ill.As an 81 year old old foggy I was very satisfied with my medicare and supplement. I have been around long enough to be cautious about these new Plans. They certainly aren’t created to provide better insurance for the consumer. They are created to increase profits.

  9. Susan Wainess

    Medicare is unnecessarily complex. Needing to pick any type of plan based on an illness you might have someday is absurd. We should not – need – navigators. Or gym memberships. And the fed gov’t should just fund it. Deducting a benefit (Medicare) from another benefit (SS) is unnecessary and asinine. Fund it. Simplify it. And stop privatizing it.

  10. Charles Yaker

    I find the silence concerning NYC’s attempts at transferring all their retirees to a Medicare Advantage Plan interesting. First they tried creating a Blue Cross plan but lost a law suit now they are conspiring with Aetna to transfer all retirees to a Medicare Advantage PPO. The unions or at least the UFT and District 37 are in full collusion to screw retirees. Neither the City’s newspapers nor Naked Cap seem to be aware or care.

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