Are you considering adding agents/brokers to your sales force? Will these agents/brokers be exclusive or non-exclusive? If you are a health plan preparing to expand into a multi-channel sales approach, Gorman Health Group (GHG) recommends considering two types of agent/broker distribution sales channels: 1) Captive Agent/Broker and 2) External Agent/Broker.
While adding additional agents/brokers to your sales force will potentially increase enrollment, this enrollment may come with some challenges if not structured correctly. Explained below are both the advantages and disadvantages when working with non-employed sales agents/brokers in the Medicare and Medicaid arenas.
Advantages of onboarding a captive agent/broker channel:
- Exclusivity – Consists of direct writing agents/brokers (no upline) and can be managed by health plans sales staff. The sales staff would have the ability to recruit, onboard, and train these selected agents/brokers.
- Flexibility – Because these agents/brokers are onboarded by the health plan, management staff would be able to make the decision on when these agents are utilized, how many agents/brokers would be needed, and in which community engagement opportunities they would participate in a particular neighborhood.
- Loyalty – Health plans can build loyalty with this channel by offering support and marketing opportunities such as specialized training to help develop selling skills, marketing dollars for book of business mailings, special events, industry trade shows, small publications, discounted rates for Errors and Omissions insurance, and continuing education vouchers and credits.
- Control of Commissions – With the captive agent/broker channel, health plans would only pay the agent-level commission (standard Centers for Medicare & Medicaid Services (CMS) rate) and yearly renewal. There is no upline commission disbursement associated with this channel.
- Diversity – The ability to recruit for multicultural diversity by territory and as needed; languages and religions.
- Footprint – The ability to onboard agents/brokers in areas where the employed sales force has little to no presence, where benefits are stronger and a larger agent footprint is needed, or where a competitor has pulled out of the market and/or degraded benefits, and health plans have a strong opportunity for growth.
- Growth and Increase Membership – Recruitment for the captive agent/broker channel will be designed to fill the missing footprint in the community. By increasing visibility and “feet on the street,” you increase the awareness around health plan products, in turn increasing probability for growth.
Listed below are a few disadvantages of onboarding a captive agent/broker channel:
- Administration Cost – Typically with the captive agent/broker channel, they contract with a health plan that can offer them support with marketing, printing, mailing (postage), and sales training. Typically this channel works out of their homes, has minimal marketing resources, and will need guidance and training.
- Experience and Sales Acumen – Some agents/brokers recruited for this channel come with no sales experience or knowledge of Medicare and Medicaid. Health plan sales management will need to create a training curriculum that will help newly contracted agents/brokers learn all the rules and regulations of Medicare and Medicaid, along with selling skills that accommodate health plan clientele and products.
- Agent/Broker Oversight – Increased agent/broker oversight is necessary to maintain health plan Star Ratings and to comply with all Medicare Marketing Guidelines (MMG), which encompasses not only marketing materials but also marketing/sales activities.
- Not an Employee – When recruiting 1099 contractors, it is more difficult to tell the contractor (sales person) how to prospect, to participate in training, what they should wear to an appointment, how to conduct an appointment, and when to be at a community event. In addition, independent contractors who are unsuccessful may not give the experience enough time to pursue the necessary training needed to elevate their talent. This results in high turnover.
- Recruitment – The health plan sales management team would be responsible for recruiting, onboarding, and training these captive agents/brokers. The management team would need to create a strategy that incorporates their already existing internal sales force to maximize the growth opportunity.
As health plans explore the idea of working with external agents/brokers, it is important to understand the different contract levels represented when contracting with a National Marketing Alliance (NMA) and Field Marketing Organization (FMO). Health plans contract directly with and pay commission to the NMA and/or FMO, including Super General Agent (SGA), Master General Agent (MGA), General Agent (GA), and Agent levels.
As you consider the possibilities of managing a channel with non-exclusivity, keep in mind some of the advantages and disadvantages of onboarding this type of distribution channel. Listed below are some of the advantages:
- Footprint – Similar to the captive agent/broker channel, health plans have the ability to onboard agents/brokers in areas where the employed sales force has little to no presence, where benefits are stronger and a larger agent footprint is needed, or where a competitor has pulled out of the market and/or degraded benefits, and health plans have a strong opportunity for growth. GHG recommends contracting with reputable NMAs/FMOs in the community that have a large broker base and can fill the gaps in your current agent footprint.
- Diversity – Similar to the captive channel, the external agent/broker distribution channel has the ability to recruit for multicultural diversity by territory and as needed; languages and religions. In most cases, the NMA/FMO already has a sales force in place (downline), and that sales force can be deployed in designated areas as needed.
- Volume – NMAs/FMOs spend a great deal of time recruiting, training, and onboarding agent/brokers. In addition, a majority of these agents/brokers have built relationships in the community and may bring more opportunity to your health plan in areas the internal sales team has not been able to penetrate.
Below are a few disadvantages of onboarding this type of non-exclusive distribution channel:
- Commission Costs – Compensation for this channel varies based on the level of contract agreement. In addition to paying the agent-level commission, health plans are also required to pay the upline commission: GA, MGA, SGA, FMO, NMA. This upline commission schedule is established based on the FMO/NMA contract with the health plan and can vary from $25 per enrollment to $100 per enrollment for each upline contract level.
- Agent/Broker Oversight – Similar to the captive distribution channel, increased agent/broker oversight is necessary to maintain health plan Star Ratings and to comply with the MMG, which encompasses not only marketing materials but also marketing/sales activities.
- Non-Exclusivity – The external distribution channel may have contracts with health plan competitors. The external distribution channel is not limited to how many contracts an agent/broker can hold. This arrangement enables the agent/broker to manage his or her book of business, which in turn may result in book of business flipping.
If you have questions or need help building your business case, please contact Carrie Barker-Settles at firstname.lastname@example.org.
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