Commission Payment in the Medicare Market
Financial Drain or Strategic Advantage?
Paying FMO, agent and internal sales commissions may appear to be a straightforward undertaking, however there is a great deal of underlying complexity in this process that can create a significant financial drain on a health plan. Many plans operate with outdated systems that rely too heavily on manual intervention and lack sufficient regulatory and financial controls. Additionally, the increasing complexity of CMS guidelines requires automated, repeatable and auditable processes while the leveling of the playing field by CMS further dictates that competition between plans is based on the ability to provide a higher level of service to the producer community.
These issues present a difficult challenge for health plans operating in the Medicare market as information systems currently in use create a situation where the cost of managing the commission payment process is not in line with the resulting performance. Specifically, personnel costs are too high, overpayment expenses are a significant financial drain, producer satisfaction is low and there are insufficient regulatory and financial controls. Oftentimes the rationale for continuing to operate under these conditions is that there is no funding available for system replacement. Our goal in this brief white paper is to show that carriers operating with outdated and underperforming systems cannot afford NOT to replace their systems and that full return on investment is typically found in less than one year.
Why Should Medicare Plans Evaluate ACom3?
The ACom3 product suite from ActekSoft provides specialized Medicare functionality and has a proven track record of success in the Medicare industry. Medicare plans that have implemented ACom3 have demonstrated that:
- Overpayments and payout errors are virtually eliminated
- The personnel costs associated with managing the business process are greatly reduced
- Regulatory and financial controls are firmly in place
- Service levels and producer satisfaction are vastly improved
The ACom3 product suite is built around the ACom3 Commission and Incentive Compensation System, the most widely used compensation system in the health insurance industry. Additional functionality is delivered through add-on modules that support reporting, analytics and dashboards, compliance tracking, Web-based statement/report distribution and Web-based producer onboarding.
Eliminating Overpayment Expense
Overpayment rates in the insurance industry range from a low of two percent (2%) to a high in excess of ten percent (10%). Overpayments come in a variety of forms, including duplicate payments, failure to properly handle chargebacks, incorrect calculations, transposition errors and more. The common theme across all of these problems is manual intervention due to missing functionality within the commission payment system.
ACom3 eliminates overpayment expense and errors by fully automating the business process, regardless of the complexity of the underlying environment. ACom3 addresses every potential source of error by easily integrating with the systems that supply the data controlling processing and payout (enrollment system, CMS, CRM applications, etc.) and by offering flexible and powerful features to eliminate the need for any type of manual intervention. The end result is that overpayments and payout errors become a thing of the past and the financial leakage often associated with commission payment is eliminated. Return on investment from this area alone will often cover the full investment of the system in less than one year and, in many cases, is clearly demonstrated to clients during the testing phases of the implementation project.
Reducing Personnel Costs
Outdated systems and manual processes can result in personnel costs that are three to four times higher than they should be when compared with plans using efficient and effective systems like ACom3. ACom3 automates every aspect of the commission payment process, including:
- Easily integrating with any number of systems and data sources (including CMS) to drive payout automation and accuracy without the need for manual intervention
- Putting power into the hands of business users to easily support the business requirements of compensating internal and external distribution partners
- Ensuring all producers meet compliance standards (licensed, appointed, CMS certified, etc.)
- Automatically delivering statements, reports, dashboards and performance metrics to all producers via the Web
- Providing Web-based tools to support paperless onboarding of producers
- Bringing clarity to the process with more than 70 standard reports that can be delivered via the Web, via email or using ACom3 workflow functionality
With ACom3, end-to-end automation of the business process delivers the best possible result at the lowest possible cost, allowing internal resources to be deployed into more productive, revenue-producing roles.
Establishing Regulatory and Financial Controls
ACom3 functions as a single repository for all data associated with the commission payment process including:
- Producer demographics and compliance data
- Enrollment applications and enrollment data
- Enrollee updates (original effective date, cycle year, termination dates and reasons, etc.) based on CMS supplied data
- Complete payment and chargeback history
- Performance metrics such as enrollment/disenrollment rates, retention percentages, growth rates, etc.
Many health plans have this data spread across multiple systems, making it impossible to gain complete clarity and control over the business process. Acting as a single repository, ACom3 eliminates this issue while also providing comprehensive security, complete audit trails and detailed producer compliance tracking and editing. The end result is that clients can achieve a level of clarity and control that would otherwise be impossible without such a system.
Increasing Producer Satisfaction
Timely, accurate and well-documented payouts clearly improve producer satisfaction and can be the difference between a producer maintaining plan loyalty or searching for a plan that can better meet these criteria. Taking this benefit one step further, plans that can accomplish Web-based delivery of statements and reports via a user-friendly portal that also provides other value-added features will do a better job of capturing and maintaining “producer mindshare.”
The ACom3 Producer Portal provides the functionality to deliver on this vision. It can also be easily integrated into other portal applications or be set up to run in a stand-alone format. The Producer Portal can also provide access to a Web-based onboarding application, enabling producer recruitment and onboarding to occur through a completely paperless process.
In spite of all the potential benefits of better automation, many health plans continue to take the position that securing funding for implementation of a top tier software product is a difficult challenge. The success ActekSoft has been able to achieve for more than 35 insurance carrier clients, however, has affirmed to us that organizations cannot afford to maintain the status quo when it comes to commission payment processing. The cost of managing the business process will continue to be significantly out of line with results for those plans that continue to do nothing in this area.