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51-250: Anthem's New Large Group Commission Structure

Mar 11, 2011

Anthem Blue Cross Broker Partner Announcement

Dear Valued Broker Partner

There have been dramatic changes over the last year in the economic, regulatory and payer environments that affect our business. Demand for value strikes at the core of our industry - from affordable products, to organizational collaborations focused on removing redundant processes and costs. New legislation also requires that we become more administratively efficient, as well.  

We recently conducted a Large Group Broker Compensation Survey, asking for feedback regarding how we manage the compounding increases inherent in our distribution expenses.  Having not changed our broker compensation program in over twenty (20) years, we felt it was important to consider your input, before making any changes. We considered per contract per month (PCPM) compensation with a minimal cost of living adjustment, a percent of premium fee carved out of the MLR, and a modified percent of premium that reduces over time, to accommodate the impact of medical trend year over year.  Large Group broker feedback supported a modified percent of premium methodology to adjust for medical inflation. 

With your assistance, our focus continues to be on providing market leading cost management initiatives, innovative products and clinical programs that improve the lives of our members, and the health of our communities.  In order to achieve this together and after careful review, we are making changes to our current commission structure. 

Large Group Broker Commission Structure - Effective July 1, 2011

Anthem Blue Cross will be introducing changes to the commission structure for group medical business, beginning July 1, 2011.  For Large Group (51 - 250 lives) "pooled" new business, we will include a standard 4% flat annual premium broker commission.  This will be our standard approach moving forward, but will still allow for single-case agreements in the Large Group market (51+), to accommodate the compensation you negotiate directly with your clients. 

As a starting point for renewals in our pool, we will convert the standard percent of premium of 5.0% flat to a 4.0% flat, effective January 1, 2012.  If that amount needs to be adjusted up or down, you must provide us with120 days' advance notice, so that we can modify your client's renewal rates accordingly.    

For 51-250 pooled business renewals on the books through GA agreements, we will continue to pay renewals on a percent of premium basis, in accordance with these agreements.   For new business through GA's, we have limited the group size to 125 lives, down from 250 lives effective January 1, 2011; and this new business going forward will be paid on a 4% of premium basis as well, unless notified by you to modify this percentage because you and your client have agreed that you will receive a different percentage.   

For non-pooled, experience-rated groups with 126 or more lives, we will continue to build in the percent of premium negotiated between you and your client.  Specialty lines of coverage will continue to be payable on a percent of premium basis. 

All annual Form 5500 Schedule As will continue to report all compensation to our mutual clients.   

Our Small Group Business unit is announcing a step-down broker compensation structure for new business, with incremental reductions that account for annual premium inflation, beginning July 1, 2011 as well. 

The decision for this change was made after thoughtful consideration and feedback received from our brokers and agents through our national and state Broker Advisory Councils, as well as the Broker Compensation Survey results.  They indicated that early notification was vital, allowing you the opportunity for planning.  While this change will not become effective until July 1, 2011 for new business, and January 1, 2012 for renewals, we felt it was important to share this decision in March, prior to your July new sales effective dates. 

We understand you may have questions we may not have covered in this notice. If you still have questions, click here. We will be providing more detail associated with this change in the coming months. Until then, if you have additional questions or would like to discuss, please do not hesitate to contact your local Sales Account Executive or Account Management Executive.  

Martin P. Lutzeier
Vice President, Large Group Sales 

Tammy Tucker
Vice President, Large Group Account Management

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