BIP Summer 2024

An FMO is just another name for a general agent in the private sector. They perform the same functions that FMOs do in the Medicare space. My worry is that micromanagement of the agent “

rule because they admit that they don’t have data to support the decision. How did NABIP combat the CMS concern that rule changes were needed to prevent agents from steering business? Most agents don’t have a 401(k) plan — their book of business is their 401(k). If they don’t place people properly, customers can go to another agent. We keep telling CMS there’s no steering occurring in the marketplace. Agents get fair market value compensation, a system designed by CMS to discourage steering. You get paid the same whether you put customers in plan A, or plan B, or plan C. So why not put customers in the best plan? That’s how agents get referrals.

They won’t even sell regional carrier products because they won’t know about them. What is the potential effect of this rule on commission based business? An FMO is just another name for a general agent in the private sector. They perform the same functions that FMOs do in the Medicare space. My worry is that micromanagement of the agent compensation migrates to the private sector. It’s a misunderstanding by CMS as to what the role of the field management organization is. There’s a witch hunt in Washington, D.C., for middlemen — and those middlemen are blamed for rising costs. CMS has always viewed FMO compensation as a second

compensation migrates to the private sector.” - JOHN GREENE, NABIP SVP OF GOVERNMENT AFFAIRS

We keep telling CMS there’s no steering occurring in the marketplace. Agents get fair market value compensation.

commission. They haven’t been able to separate the fact that it’s a fee that allows the carrier to be free of all those administrative costs and agent oversight. Paying a small administrative fee is an efficient way to deliver services to agents. NABIP’s advocacy on the new rule doesn’t stop here. What’s next? The carriers are uncertain as to what lies ahead. NABIP’s FMO Council is putting together a summary of what we believe the rule says, what it allows. Then we’re going to go to the carriers and let them know what we think is the path forward. We think that by speaking with one voice and sending the same message to all the carriers, they will be part of our path forward. They need the FMOs to perform the functions that they do. Without them, those administrative costs would become the carriers’ costs, and carriers have no infrastructure for them. That would cause premiums to skyrocket. And that’s a real hit on the trust fund, which nobody wants. Katie Butler is a freelance writer and former editor of Independent Agent magazine, the flagship publication of the Independent Insurance Agents & Brokers of America, Inc.

One of NABIP’s major concerns as the rule was being developed was that CMS would eliminate the ability for FMOs to contract with carriers to perform services on behalf of agents. What is the status of FMOs in the new rule? We think that the FMO relationship is still allowable if you look at the law — and that means FMOs can get paid. If FMOs can get paid, they can still assist agents with the tools and resources that they have in the past. So long as that holds, then the system will hold and survive as it is. Without the support of FMOs, it will be difficult for many agents to earn a living. For a new agent, there is a lot to learn. As members of our Medicare Advisory Committee note, an FMO gives you solid leads, can put you in a doctor’s office or a Walmart or CVS. FMOs are paying those fees. If you take away FMOs, you take away resources for agents. In addition, if the FMO isn’t there for the agent, agents are going to sell national carrier products. Why is preserving the role of the FMO important to agents — and the industry as a whole?

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