Thursday, June 18, 2015

Aetna exiting small group arena?

Well, how else to explain this:

"A new producer service fee arrangement introduced by Aetna looks to eliminate broker commissions on small-group business ... The Producer Service Fee model requires brokers and their clients to negotiate a service fee that will be paid by the customer/employer to Aetna, and then paid out by Aetna to the broker."

Right after they skim off their vig, I'm sure. But what's behind this?


"They are specifically angling to say that we do not represent them, that we would be engaged by the customer and that therefore they have absolutely no obligation to pay us"

Sounds about right.

Of course, it's Aetna's prerogative to do pretty much anything it likes, but there are always those pesky consequences. For one thing, it's possible (likely?) that this violates MLR requirements.

How's that?

Well, premiums are calculated based on a group's demographics, location and the like, but they also include the commission. Nothing in the announcement indicates that premiums will be reduced based on the carrier's lower cost (perhaps they're emulating the old Blue Cross model?).

I haven't received my copy yet, so I'll withhold judgement until then. But I'm pretty sure I know my response should this prove out.
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