Blue Cross and Blue Shield Commission Structure

Blue Cross and Blue Shield Commission Structure

Kelli Podhajsky

BUSI 5423

September 04, 2015

Richard J Thomas

Oklahoma Wesleyan University

Blue Cross and Blue Shield has been a healthcare coverage provider for 75 years and cover over 106 million Americans. Nationwide over 96% of doctor and hospitals accept the Blue Cross and Blue Shield insurance card. Blue Cross and Blue Shield was originally two separate companies, Blue Shield would provide doctor visit coverage, while the Blue Cross would provide hospital coverage. They merged in 1982 and have since been known as Blue Cross and Blue Shield. BCBS employs thousands of people and has set up programs to make sure that every employee is fairly compensated. While creating fair compensation a sales commission program was established, not only for internal employees but also for insurance broker throughout the country who are paid for the business they bring to BCBS on a monthly basis.

Many companies create commission structures that will incentivize their sales staff to make sure their product is widely used and purchased. These programs can increase salaries, create competition among sales personnel to increase sales, and create huge profits for the company. Figuring out how to compensate your sales staff is not an easy task and can easily become unfeasible and unappealing to sales teams. Companies cannot simply implement a one size fits all plan, each business needs to make sure the commission plan is designed and specifically works for their business. When deciding on compensation plans business financials are crucial. Not only are the financial repercussions a priority but also the accounting procedures and implementation of a commission structure are big tasks that cost major dollars to set up and implement correctly. Depending on the client, and the sales representative you are trying to attract a sales compensation plan can be altered. A sales plan that puts emphasis on strong performance, for instance, will attract the brightest and best salespeople.

Blue Cross Blue Shield has a commission structure set up for its sales representatives but it has failed to pay correctly or accurately costing sales reps money and the company profit because of the increase in staff to help clean up the commission files and accounting data. The sales commission structure has been in place for many years, even though the scope of the job description has changed they have failed to change or alter the commission structure. The reporting techniques used by Blue Cross Blue Shield are non-existent and need to be altered to help retain the best employees possible. The incentive to sales representatives is that there is no cap on commissions and a competitive base pay is offered. Through the sales process a sales representative will make contact with a potential client, talk about the plans offered through BCBS and then the member will make a decision on which plan they want. Once the sale has been completed the member will transfer over to an enrollment representative and complete the process. Payment from the member is not needed to complete the application but is suggested to help speed up the process. The main point here is that a sales rep does not get paid a commission until a payment has been applied to a members account. A member may not pay on an account for 30-90 days and the sales rep is left wondering is sales quotas are met and whether or not commissions will be paid. Due to this inefficiency BCBS has to comb through thousands of applications and link them to a sales rep long after they have sent the member to enrollment. In order to facilitate this process they have someone manually look up the member and decide whether or not a sales rep should be paid and if it follows the strict guidelines put into place by corporate on what constitutes a sale and if it should rightfully be given to the sales representative. On the current commission plan a sales goal is established based on preliminary sales data or average data from previous months. Sales representatives must meet that goal or they will be paid a decreased percentage, each sales representative is paid per head, meaning each person sold is paid a set amount. For instance if you sell a five-person family you receive five dollars per head equaling a commission of $25 for that specific family. Once the sales goal is met you are then awarded an increased dollar amount per head, for instance your sales goal is 100, when you reach 101 you are then paid ten dollars per head, instead of five. The commission rate is determined by the monthly sales amount.

The main problem did not come from the initial set up as much as it did the payout of these commissions to sales representatives. Sales representatives would go months without seeing a dime not only was there a major lag in the payment of premiums by the member but there was the issue of the guidelines that each sale had to follow in order to be paid to the representative. As I previously mentioned these had to be individually looked at and a decision was made on each sale. As a sales representative you would often keep a tally of the amount of people you sold that month but very often these tally sheets would bleed into the next month or as far as six months before an actual commission was paid. The tracking of these sales was a difficult process not only by the sales representative but by Blue Cross and Blue Shield, an overhaul of this system was needed badly. With the addition of Healthcare reform and the influx of applications the system became very blurry and cumbersome.