Centene Execs Address Part D Broker Pay Controversy at Wells Fargo Conference
Centene Corp. late last month riled agents and brokers with the news that it would no longer pay new and renewal commissions for enrollments in its stand-alone Prescription Drug Plan (PDP) products. During a Sept. 4 presentation at the Wells Fargo Healthcare Conference, Centene executives for the first time publicly acknowledged the firm’s controversial decision.
“One important thing to note on PDP, partly because of the IRA [Inflation Reduction Act] changes and then final rate notice provisions at the time that we filed bids, we made the difficult decision to eliminate broker commissions this year for PDP only,” Centene CEO Sarah London emphasized during the conference. She added that “we’ll continue to pay full commissions in Medicare Advantage and obviously work very closely with the broker community to support the work they do, to support our members.”
In response to the move from Centene, which was unveiled in an Aug. 23 email to contracted brokers, hundreds of industry professionals have reached out to their trade organization, the National Association of Benefits and Insurance Professionals (NABIP), to express their concerns about the announcement and its implications. On Aug. 27, NABIP posted a policy alert to LinkedIn, and issued a statement warning of the potential impact to Medicare beneficiaries. In the statement, NABIP CEO Jessica Brooks-Woods said the association has asked key decisionmakers at Centene to engage in a “solution-driven dialogue” and is “ready to take strong action to protect our members and the communities they serve.”
The statement noted that “some health plans” chose not to extend PDP compensation to health insurance agents next year. In an email to AIS Health, a division of MMIT, a spokesperson clarified that Centene’s Wellcare appears to be the only carrier not paying renewals on existing business, while other carriers have indicated that certain plans will not pay commissions next year on new PDPs. Centene did not respond to requests for comment from AIS Health.
Sources say the abrupt move impacts insurance agents who previously enrolled clients in a Centene/Wellcare product and anticipated putting time and resources into continuing to serve those clients.
“The big issue is they took away the renewals” while other carriers have found ways to make it work, emphasizes Andrew Shea, who runs an independent insurance brokerage and was one of the first brokers to cry foul with an Aug. 25 LinkedIn post. “Thousands of insurance professionals will stop being paid for policyholders they previously enrolled,” he wrote. Further, the move could lead to “needless policy churn,” he warned. “Agents want to keep their clients, and many of them will find every opportunity possible to move their book elsewhere. For these mostly small business owners, it’s less about the money and more about protecting a client base built through years of hard work.”
In an interview with AIS Health, Shea clarified that the post was not intended to chastise Centene but to point out that the insurer could have handled this differently. “In the drug plan world, there have always been at least a couple of plans that were not commissionable, which is outrageous anyway…but it’s very rare when you have [a company] like Wellcare with 6 million PDP holders, and brokers sent them about 3 million last year from other carriers,” he laments. “I think taking away the renewal commissions is much different, and that’s why everybody is upset.”
Brokers Feel Centene Acted in ‘Bad Faith’
Shea points out that CVS Health Corp.’s Aetna, for example, will no longer pay commissions on any new business driven to its PDPs but will continue to pay commissions on previous business, so long as that member remains enrolled in an Aetna stand-alone drug plan. (Aetna declines to comment, citing CMS regulations preventing plans from discussing their 2025 Medicare benefits prior to Oct. 1). By contrast, Centene will stop paying brokers for clients who remain in a Wellcare drug plan. “Brokers feel that Wellcare is doing this in bad faith and that they wouldn’t have sent them these clients had they known commissions would be stopped … and stopped quickly,” he says.
As of June 30, the company reported serving approximately 6.6 million PDP lives — an increase of more than 2.1 million lives from a year ago. Centene currently offers three PDP products under the Wellcare brand. Between 2023 and 2024, the Wellcare Value Script PDP alone gained 1.1 million members because of its low monthly premium. AIS Health estimates that about one-third of its PDP enrollees qualify for the low-income subsidy (i.e., extra help) and are automatically enrolled into Centene plans in its qualifying LIS regions.
The publicly traded insurer also serves more than 1.1 million Medicare beneficiaries in MA and Medicare Supplement (MedSupp) products. In August, Centene disclosed plans to stop offering MA products in Alabama, Massachusetts, New Hampshire, New Mexico, Rhode Island and Vermont next year. It will continue to provide stand-alone PDPs in those states.
During the company’s second-quarter 2024 earnings call, which was held on July 26, Chief Financial Officer Drew Asher said upcoming Part D changes stemming from IRA are major concerns. “We’re always thinking about how to optimize network and balance access and cost of goods sold, so that continues as we prepare for 2025,” he stated.
IRA Changes Are Likely Behind the Move
CMS has yet to release the so-called landscape files for the coming year, but industry experts predict there will be a shrinking of the PDP market due to the IRA. In its Aug. 23 announcement, Centene highlighted those changes — including the introduction of a $2,000 out-of-pocket cap on drug costs and a shift in cost sharing liability in the catastrophic coverage phase — and said this “difficult decision” would enable the sponsor to “continue providing access to high-quality healthcare and Part D coverage.”
For 2025, the Part D national average monthly bid amount (NAMBA) is expected to increase by an unprecedented 180% to $179.45, CMS said in late July. The NAMBA — an enrollment-weighted average of the estimated cost to Part D plan sponsors of providing the basic benefit package — was always expected to increase because of benefit changes taking effect next year. It’s unclear how much of that increase was driven by PDP bids or MA-PD bids.
It’s likely that Centene, being a major publicly traded corporation, “clearly mapped out a dramatic change like this and had to understand that there was going to be a strong reaction to it,” speculates John Selby, chief strategy officer with Rebellis Group. “I know there are a lot of theories on LinkedIn and some other social media places as to whether this is a pivot to in-house sales, a strategy to migrate” stand-alone Part D members into MA Prescription Drug (MA-PD) plans, a move to shed PDP members because Centene captured too many this year, or “some combination of the above.”
But the theory that PDP to MA-PD migration would be successful hasn’t necessarily played out, or at least to the effect that insurers had hoped, says Selby, who previously led government sales and marketing for Horizon Blue Cross Blue Shield of New Jersey and was executive vice president with a regional broker. “Maybe with the advent of MA-PD PPOs, the market is ready for a little bit more of a shift” from the traditional combination of MedSupp with a PDP product to MA, “especially if it’s being driven by what I expect is going to be a pretty dramatic product disruption in the Part D market, because a Part D plan on a stand-alone basis has no place else to spread the cost implications” of shifts like increasing liability in the catastrophic phase.
“There’s no doubt this is going to create churn, greater than what we probably expected,” he continues. “And this was unexpected. We’ve seen plans not pay on new business before, but not paying on renewals…I’m sure somebody’s going to find a way to sue about this, but that goes back to the contract that Centene would have with the broker. And again, you have to figure that whatever move they made, they made it with the full awareness and input of their legal department, because you’re risking a pretty big reputational hit in the broker community if you’re also still relying on them to sell your MA-PD products.”
In a LinkedIn post, NCD CEO Sam Melamed said he could see some “distributors with a large PDP book and small enough [MA-PD] book” suing, while other agents are “talking about interesting ways to ‘punish’ Wellcare for their actions, including sending all of their highest cost PDP members exclusively to Wellcare, encouraging members to use the smoothing ‘loans’ and even ordering expensive printed materials.”
But another concern, he warned, is that Wellcare’s own call centers may “crosswalk” PDP members into MA-PD plans and not have to pay any commission. “The holy grail for [MA-PD] plans are members with no commission obligation and converting PDP to [MA-PD] is one of the ways that carriers can build those books,” wrote Melamed, whose firm provides ancillary benefits such as dental and vision.
That fear may be valid, given that Wellcare has a history of sharing its client lists with certain external brokers, who in turn call those clients and try to sell them a Wellcare MA plan, says another source who asked not to be named.
Broker: Beneficiaries Will Be Left Unassisted
In the meantime, insurance professionals worry that other companies could follow suit. “The biggest concern for agents is that it is setting a precedent that an insurance carrier can say with only a few months’ notice that they are canceling a contract where the agent is no longer receiving commission that they earned,” says Amanda Brewton, owner Medicare Answers Now, a field marketing organization based in Cleveland, Ohio.
Then there’s the impact to the beneficiaries “who are their trusted clients,” she tells AIS Health. “Some of these agents are losing over $30,000 in income with four months’ notice, which will impact their ability to pay the salaries of their employees. The beneficiary will be impacted because their policy moves to a house account and will be told to contact the carrier, which the agent usually helps with mail order, claims issues and any possible issues with prescribed medications not being on the plan’s formulary.”
The majority of agents, asserts Brewton, “will always do what is in the best interest of their clients.” And that means showing beneficiaries the two to three “plans that meet their needs, and if one of them is a plan that they are not contracted with or compensated for, they will explain if the beneficiary enrolls in one of those plans, the agent cannot help with any issues that may arise. I see the carriers, [State Health Insurance Assistance Program] volunteers and Medicare being inundated with calls given there are so many other changes this year which will lead to so much confusion.”
Editor’s note: Portions of this story were originally published in AIS’s Health Plan Weekly.