A good salesman knows that incentives and referrals are good ways to gain leads and close sales. In the health insurance industry, certain incentives and referral methods are considered illegal activity.
As the health insurance industry grows and competition increases, you do need to find new ways to turn your leads into closed sales. There are ways for you to give incentives up to certain limits, and there ways to generate leads through referrals without directly asking for them. Here are some tips to help you use Medicare incentives and referrals to your advantage without crossing any legal lines:
Medicare Incentives
The Stark Law, which was enacted long before the Affordable Care Act (ACA), “prohibits the knowing and willful offer, payment, solicitation, or receipt of remuneration to induce federal health care program business”(according to the APTA). This law goes above and beyond health care sales. It includes situations like those where doctors use incentives to push patients towards a certain pharmacy or drug. It also means that health care agents cannot use incentives to push a client towards a certain plan.
Similar laws apply to Medicare sales. According to CMS, the only way you can use incentives in your insurance sales is if you carry snacks or distribute small gift cards and promotional items that value less than $15.
The $15 limit doesn’t mean that each attendee can only get an item that costs less than $15. You can have raffle or drawing at marketing events that you host*. The CMS stipulation for your raffle or drawing is that the item costs no more than $15 per expected attendee. For example, you can have a drawing for an item that costs $450 or less if you expect 30 people to attend your event.
Still, you can’t use those items to push a client in one direction or another.
- What you can’t say. “I will give you this $15 Amazon gift card if you enroll in a plan.”
- What you can can say. “Thanks for meeting with me today. Here’s this $15 gift card as a token of my appreciation.” For a bigger-ticket raffle item, you can say something like, “Thanks for coming! You’re now entered for a drawing to win an iPad mini.”
Reiterate that enrolling in a plan does not increase the attendee’s chances of winning.
You don’t have to use something that costs the $15 maximum, either. For example, keeping small snacks in your office or bringing small gifts to your appointments can make clients feel more comfortable. It benefits them and increases your chances of closing a sale. Note: CMS prohibits agents from offering full meals at events, even if they cost less than $15. You can only offer “refreshments and light snacks.”
*You must register your events with CMS.
Health Insurance Referrals
Referrals are a bit easier to navigate than incentives, and the Baby Boomer population loves to give referrals when they receive excellent service. When it comes to client referrals, you cannot solicit contact information. You can, however, give your clients extra business cards and promotional swag in the hopes that they pass them on to eligible friends and family. You can’t ask your clients for leads, but you can hope that they’ll find some for you anyway.
Additionally, doctors and pharmacies are allowed to refer patients to each other’s practices, but they cannot use incentives to do so. The same applies to you. You can refer clients to a specific doctor, hospital, or pharmacy in the hope of providing them with the best care possible and keeping them within their plan’s doctor network. You cannot do so for your own financial gain.
What happens if I don’t follow CMS compliance rules?
Be careful with these compliance rules. One slip-up can mean a lot of trouble for you. According to Gina Angelo, Senior Compliance Manager at Senior Market Advisors, “CMS can launch an investigation and as a result you can lose your ability to sell insurance, or, depending on the severity or the offense, be fined or imprisoned.”
Senior Market Advisors Can Help You Stay Compliant With Medicare Incentives and Referrals
CMS’ guidelines for licensed agents may seem constrictive. However, Senior Market Advisors (SMA) can help you generate leads and make sales while staying compliant. When you partner with SMA, you get extensive sales training, lead generation services from an experienced sales and marketing team, and a full-service print shop that can offer discounted marketing materials such as business cards. Jeff Pitta, our CEO was a licensed agent just like you before he started SMA. We know what it’s like to talk to Medicare-eligibles every day, and we do our best to make your job easier. Ready to start? Call 1-844-452-5020 or eContract with us today!
This post was originally published on May 24, 2017, by Anastasia Iliou. The latest update was on November 18, 2019, by Troy Frink.
