Kaiser Permanente Implements New Payment System for Health Insurance Brokers

HMO Kaiser Permanente on Jan. 1 implemented a new system that will reduce payments to health insurance brokers, a "well-paid, low-profile group that's generally escaped cost-cutting so far," the Sacramento Business Journal reports. Kaiser will pay insurance brokers a flat fee per month based on the number of policies that they write, rather than a percentage of the premiums paid from the patients that they enroll in the HMO; most brokers have earned about 4% of premiums in the past. For example, a broker who enrolled a patient with a $500 monthly premium would collect $20 per month. Under the new system, the broker would earn no more than $12.82. Kaiser officials have not announced the amount that the move will save. According to the Business Journal, the new payment system will have a "minimal" impact on brokers who write a large number of new policies, but those who "don't do much business with Kaiser, or don't find new accounts, are likely to see a huge cut in pay." Kaiser plans to establish bonus programs to reward brokers who increase enrollment in the HMO, such as special privileges and "most favored broker" status. Cinde Breedlove, a Kaiser spokesperson, said, "With health care costs continuing to increase, we are looking at all aspects of our program in order to keep health care affordable. This helps meet our business goals and fairly compensates brokers who are successful." Blue Shield of California, Health Net and Blue Cross of California and other health plans in the state said that they do not plan to make similar revisions to their insurance broker payment systems in the near future, the Business Journal reports (Robertson, Sacramento Business Journal, 12/20/02).