Notice of Modification of Compensation to the 2018 Group Agent Agreement

Transcription

1 Date: September 17 th, 2018 Market: All Notice of Modification of Compensation to the 2018 Group Agent Agreement Effective January 1, 2019, for fully-insured 51+ new business and upon renewal for existing Group medical and drug business, CareFirst BlueCross BlueShield will be transitioning from a commissionbased payment model to a Producer Service Fee payment model for Agent compensation. The Producer Service Fee will commonly be referred to as PSF. Attached you will find a Notice of Modification to the 2018 Agent Agreement for Group Market Products that ends Commission payments for fully-insured new and renewing 51+ Group medical and drug business effective January 1, Instead of commission compensation, Agents may negotiate a Producer Service Fee ( PSF ) with a Group. CareFirst will begin administering a PSF for all new and renewing fully-insured 51+ Groups effective January For renewing Groups, this change will be made at the Group s renewal on or after January A Group may choose to have CareFirst collect the PSF and remit the PSF to Agents on behalf of the Group pursuant to a fully-executed Producer Service Fee Collection Agreement ( PSF Collection Agreement ). The PSF Collection Agreement: Specifies the PSF percentage agreed to by the Group and the Agent who jointly sign the PSF Collection Agreement. Grants CareFirst permission to collect the PSF from the Group and remit the PSF to the Agent on the Group s behalf subject to the terms and conditions of the PSF Collection Agreement. The PSF Collection Agreement (attached) will be part of the new sale or renewal package provided by Underwriting, along with the Rate Sheet. The PSF Collection Agreement must be returned with the Rate Sheet. The agreement must be executed by the Group and Agent if the Group wishes CareFirst to administer the PSF. As indicated in the Agreement, CareFirst will only provide administration of the PSF up to 5% of premium. A Group may also return the PSF Collection Agreement electing not to have CareFirst administer the PSF by checking the box at the top of the form. Once a PSF Collection Agreement is signed, it is effective until a change is requested or there is a Broker of Record change request. This change applies to fully-insured medical and drug business only. Dental, Vision, and small group products are not affected. Commissions still apply to all other segments and in-force business subject to the 2018 Group Agent Agreement. CareFirst BlueCross BlueShield is the shared business name of CareFirst of Maryland, Inc. and Group Hospitalization and Medical Services, Inc. CareFirst of Maryland, Inc., Group Hospitalization and Medical Services, Inc., CareFirst BlueChoice, Inc., The Dental Network and First Care, Inc. are independent licensees of the Blue Cross and Blue Shield Association. In the District of Columbia and Maryland, CareFirst MedPlus is the business name of First Care, Inc. In Virginia, CareFirst MedPlus is the business name of First Care, Inc. of Maryland (used in VA by: First Care, Inc.). Registered trademark of the Blue Cross and Blue Shield Association.

2 FREQUENTLY ASKED QUESTIONS: 1. Why is CareFirst moving to a PSF Model? Beginning with rate filings effective 1/1/19, CareFirst has removed commissions from our filed rates for 51+ fully-insured Groups. CareFirst acknowledges that Agents provide valuable services to our clients, and that these services are not administrative services of CareFirst. The compensation for these services in this market segment has historically been negotiated between the Agent and the Group. We believe this model more accurately reflects the relationship between the Agent and the Group. 2. What is the difference between Producer Service Fees and Commission? Generally, commission refers to a payment made by CareFirst to the Agent for services provided by the Agent on CareFirst s behalf. Commission is included in premium. Producer Service Fee refers to a payment made by the employer Group for services provided by the Agent on the Group s behalf. The Producer Service Fee is not a part of premium, however, is included in the billed amount on the invoice. 3. Is CareFirst the only health plan adopting this payment model? No. Health plans have already adopted the PSF payment model in the majority of states. 4. How will PSF be reflected on a new business quote? The Request for Quote Form has been updated to include a section to indicate the PSF percentage when quoting 51+ fully-insured medical and drug business. Underwriting will include the PSF Collection Agreement in the CareFirst Proposal package. The PSF Collection Agreement must be completed and returned along with the Rate Sheet for sold accounts. The PSF percentage must match on the Rate Sheet and the PSF Collection Agreement. 5. How will renewal packages be handled? The CareFirst Renewal Packet will be updated to include the PSF Collection Agreement. The PSF Collection Agreement must be completed and returned along with the signed Rate Sheet. The Rate Sheet included in the CareFirst Renewal Packet will show the PSF percentage included in the rates. 6. What is the timing for January renewals and new business quotes? Previously released January Agent account renewals and new business quotes do not include the PSF Collection Agreement. Sales will provide the PSF Collection Agreement to the Agent and assist in education for all January renewals and new business quotes released. Moving forward, Underwriting will add the PSF Collection Agreement to both new business quotes and renewal packages. 7. Will there be specific language about the PSF on all billing invoices or only those that are affected by this new arrangement? A disclosure will be included on invoices only for Groups to which the PSF model applies. The disclosure indicates that the billed amount includes premium and PSF. 8. How do Agents submit PSF Collection Agreements? The completed and fully executed PSF Collection Agreement must be returned with the signed rate sheet. 2

3 9. Does the PSF Collection Agreement need to be submitted to CareFirst if the Group does not wish CareFirst to administer a PSF? Yes, the PSF Collection Agreement must always be returned. If the Group and Agent do not wish CareFirst to administer the PSF, the box at top of the PSF Collection Agreement should be checked. 10. How will this change affect Broker of Record (BOR) procedures? A PSF Collection Agreement will now need to accompany the BOR change request and will become effective at the same time as the BOR, according the schedule in the 2018 Agent Administrative Manual for BOR changes. 11. Does this change affect other Market Segments? No, this change is for 51+ fully-insured medical only. 12. Are Ancillaries subject to the PSF? No, Dental and Vision products are out-of-scope. Drug rates are included in medical rate filings for 51+ fully-insured business. 13. Will Agents still receive their payments in the same way and on the same schedule? Yes. There will be no changes to the way Agents receive their payments. 14. Will the PSF be billed to the Group separately? No. CareFirst will not break out the PSF in billing. The bill will include a disclosure that indicates that the total amount due includes premium and the PSF pursuant to the PSF Collection Agreement. The same will apply to bills issued by Full-Service Producers. 15. How does an Agent or Group change the PSF originally included in the PSF Collection Agreement? Once a PSF Collection Agreement is signed and returned to CareFirst, it is effective until there is a renegotiated change or a BOR change. If there is a change, a new PSF Collection Agreement must be completed, executed and returned to CareFirst. All changes will be made prospectively. 16. Does an Agent have to be licensed and appointed with CareFirst to receive a PSF? Yes. CareFirst will only provide PSF collection and administration for duly licensed and appointed Agents who meet CareFirst s credentialing requirements. For more information If you have any questions, please contact your broker sales representative. Sincerely, Timothy Matthews Vice-President, Sales Small-Medium Group SBU 3

4 NOTICE OF MODIFICATION OF COMPENSATION 2018 Agent Agreement for Group Market Products Pursuant to Section VIII(B) of the 2018 Group Agent Agreement (the Agreement ), which states that Insurer may terminate or amend Exhibit A of the Agreement by giving thirty (30) days notice to Agent, the following modifications to Exhibit A shall take effect January 1, Exhibit A Section 1(B)(i) Groups 51+, Risk Business is deleted in its entirety and replaced with the following language i. Medical Risk Business. 1. In-Force Risk Business. For existing fully insured Groups 51+ medical products, Commission is based on a percentage of premium as submitted by Agent and accepted by Insurer. Commission cannot exceed 5.0% of premium. 2. New and Renewing Risk Business. For fully insured Groups 51+ medical products, a Group may choose to have Insurer administer a Producer Service Fee negotiated between the Agent and the Group. The amount of such fee to be administered by Insurer shall not exceed 5% of the total Premium for all fully insured medical insurance purchased by Group from Insurer. Insurer will not administer a Producer Service Fee except subject to the terms of a Producer Service Fee Collection Agreement executed by Group and Producer on the form specified by Insurer, and after such agreement is accepted by Insurer. Insurer s administration will be subject to the terms and conditions set forth in the Producer Service Fee Collection Agreement and any addenda thereto and any other terms and conditions established by Insurer. Insurer s obligations to administer a Producer Service Fee shall terminate if the Producer Service Fee Collection Agreement terminates. CareFirst BlueCross BlueShield is the shared business name of CareFirst of Maryland, Inc. and Group Hospitalization and Medical Services, Inc. which are independent licensees of the Blue Cross and Blue Shield Association. Registered trademark of the Blue Cross and Blue Shield Association.

5 Check here if the Producer and Group will not enter into this Agreement to authorize CareFirst BlueCross BlueShield 1 and/or CareFirst BlueChoice, Inc. (collectively CareFirst ) to administer a Producer Service Fee on behalf of Group. CAREFIRST PRODUCER SERVICE FEE COLLECTION AGREEMENT The undersigned Producer and Group (collectively the Parties ) enter into this Agreement for purposes of authorizing CareFirst BlueCross BlueShield 2 and/or CareFirst BlueChoice, Inc. (collectively CareFirst ) to administer a Producer Service Fee on behalf of Group. REPRESENTATIONS The Parties understand and hereby represent to CareFirst that: 1. Group has 51 or more eligible employees and has purchased or will purchase fully-insured large group health insurance issued by CareFirst in Maryland, the District of Columbia or Virginia. 2. Producer is an independent contractor and is not an employee of Group or CareFirst. 3. In connection with its purchase of health insurance, Group has engaged Producer to provide services ( Services ) to Group in exchange for a fee negotiated between Group and Producer (the Producer Service Fee or PSF ) in compliance with applicable state law. 4. Group and Producer understand and agree that the Producer Service Fee is neither consideration for nor a condition of receiving insurance from CareFirst. For Groups using a Producer, CareFirst does not (1) determine the amount of the Producer Service Fee; (2) determine the services to be provided by Producer in exchange for such fee; (3) participate in negotiations between Group and Producer relating to such fee; or (4) require that Group use CareFirst to administer any fees that Group has negotiated with Producer. 5. CareFirst has no responsibility to provide the Services or to oversee the provision of the Services. The Parties agree as follows: AGREEMENT 1. The Representations set forth above are true and accurate. 2. CareFirst will administer the PSF subject to the Terms and Conditions set forth in the attached Addendum, or as subsequently modified by CareFirst upon notice to the Parties, until CareFirst s administration is terminated as provided in this Agreement. 3. Group recognizes that CareFirst may have an agreement with Producer under which Producer may be compensated for the performance of additional administrative services, or otherwise under programs offered by CareFirst to agents and brokers. Such compensation will be treated as an administrative expense of CareFirst and will not be an additional charge to Group. CareFirst will be responsible for paying any such compensation under the terms of the applicable compensation program. 4. The terms of this Agreement are binding upon the Parties, their successors, and their assigns and may be modified only in a writing executed by the Parties. 1 CareFirst BlueCross BlueShield is a trade name of Group Hospitalization and Medical Services, Inc. and CareFirst of Maryland, Inc. 2 CareFirst BlueCross BlueShield is a trade name of Group Hospitalization and Medical Services, Inc. and CareFirst of Maryland, Inc. 1

6 5. The terms of the Producer Service Fee to be administered by CareFirst shall be: Producer Service Fee: % of the total premium for medical and prescription insurance purchased by Group from CareFirst, in an amount up to 5%. This does not include dental, vision or ancillary insurance products. Effective Date: The PSF will be effective beginning at the later of the date upon which this Agreement is executed or the Group s effective date for new groups, or, at the group s 2019 renewal date for renewing groups, provided this Agreement is received prior to that date. The parties agree to the terms of this CAREFIRST PRODUCER SERVICE FEE COLLECTION AGREEMENT as set forth above. By and on behalf of GROUP: Name of GROUP Address Address Signature Name of Signer Title of Signer Group Number Date By and on behalf of PRODUCER: Name of PRODUCER Address Address Signature Name of Signer Title of Signer NPN Number Date CareFirst BlueCross BlueShield is the shared business name of CareFirst of Maryland, Inc. and Group Hospitalization and Medical Services, Inc. which are independent licensees of the Blue Cross and Blue Shield Association. Registered trademark of the Blue Cross and Blue Shield Association. 2

7 ADDENDUM TO CAREFIRST PRODUCER SERVICE FEE COLLECTION AGREEMENT CareFirst s administration of the Producer Service Fee ( PSF ) is subject to the following terms and conditions: 1. CareFirst will only administer a PSF after receiving a fully executed Service Fee Collection Agreement. No changes to the template agreement may be made. 2. The PSF will be administered as a percentage of total premium on all medical and prescription insurance products purchased by Group through CareFirst. 3. CareFirst will only administer a PSF for duly licensed and appointed Producers who have met CareFirst s credentialing requirements in accordance with the Producer s agreement with CareFirst. If CareFirst terminates the appointment of a producer, CareFirst may terminate its administration of the PSF upon termination of the appointment. 4. The total amount of the PSF administered by CareFirst will not exceed 5% of total premium. Should Group and Producer negotiate a fee in a higher amount, CareFirst will administer a PSF in the amount of 5% of premium and Group would be responsible for paying any additional amounts directly to Producer. 5. The PSF is in addition to and is not included in premium. 6. If Group pays less than the total amount billed, the Group may instruct CareFirst how to divide the payment between premium and PSF. Absent such instruction from the Group, the Parties agree that the PSF will be reduced in proportion to what the Group pays. 7. If a Premium refund is due to the Group, the Group may instruct CareFirst in writing how to adjust any PSF paid to Producer. Absent such instruction from the Group, the Parties agree that CareFirst will set-off overpayments of PSF to Producer against future PSF due. 8. For any PSF funds received by CareFirst, Producer agrees that CareFirst is acting as the Producer s agent for the limited purpose of administering such funds, that Producer constructively receives such funds when CareFirst receives them, and the Group s obligation to pay such funds to Producer is discharged. 9. CareFirst is only responsible for administering PSF funds that are paid to CareFirst. Producer will be responsible for collecting any unpaid PSF from Group. CareFirst will have no obligation to pay any amounts to Producer except valid PSF funds actually received from Group. 10. CareFirst will pay any PSF funds to Producer within sixty (60) days of Group s payment. Any income earned on PSF funds in CareFirst s possession will be retained by CareFirst. CareFirst receives no other compensation in exchange for its administration of the PSF. 11. Absent written instruction from the Group to the contrary, CareFirst will provide Producer with a Form 1099 on behalf of the Group and file the information with the appropriate taxing authorities. If applicable to the Group, CareFirst will provide the Group a summary of PSF paid to Producer on Group s behalf for use in Form 5500 reporting. Group agrees that CareFirst will not be liable to Group under any legal theory for any action taken by CareFirst under this paragraph. 12. Group or Producer may modify the amount of the PSF by executing a new Producer Service Fee Collection Agreement and providing the executed agreement to CareFirst. New Producer Service Fee Collection Agreements reflecting modified PSF amounts received between the 1 st and 15 th day of the month will be administered the first day of the month following receipt of the new Producer Service Fee Collection Agreement. New Producer Service Fee Collection Agreements received after the 15 th of the month will be administered the first day of the second month following receipt of the new Producer Service Fee Collection Agreement. CareFirst will administer changes prospectively only. Producer and Group must reconcile any under or overpayments as a result of a change not provided within the required notice period. 13. Group or Producer may terminate CareFirst s administration of the PSF at any time upon thirty (30) days prior written notice to CareFirst. 14. If Group notifies CareFirst in writing of a change in Producer, CareFirst may immediately terminate its administration 3

8 of the PSF. CareFirst will not be obligated to administer the PSF for any new producer until CareFirst is provided with a Producer Service Fee Agreement executed by Group and the new producer. Broker of Record changes and a new associated Producer Service Fee Agreement will be applied and administered upon the Broker of Record change effective date. CareFirst will administer changes prospectively only. Producer and Group must reconcile any under or overpayments as a result of a change not provided within the required notice period. 15. In the event of termination of this Agreement, CareFirst will pay to Producer all PSF funds that CareFirst received prior to the effective termination date. 16. In the absence of notice of termination of the PSF in accordance with these terms, CareFirst will continue to administer the PSF for as long as Group purchases insurance products from CareFirst that are subject to the PSF. 17. CareFirst will have no duties or obligations pertaining to the PSF except as expressly set forth in the Producer Service Fee Collection Agreement or the terms and conditions established by CareFirst for administration of the PSF. Upon notice to the Parties, CareFirst may change the terms of its administration of the PSF or may stop administering the PSF. 18. The Parties agree that this Agreement shall be modified, if and to the extent necessary, to meet applicable legal requirements, as determined by CareFirst. 19. CareFirst may designate a Full-Service Producer or third-party administrator the terms of this agreement, in which case, all of the terms of this agreement shall apply to the Full-Service Producer or third=party. BOK0059-1E 4