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Medicare Referral Compliance: What You Can and Can’t Do

How Do I Compliantly Ask for Medicare Referrals?

Mastering customer retention is key to the health of your business, but new customer acquisition is a big piece of that puzzle, too.

How to Use Customer Feedback to Identify Referral Opportunities

Identifying potential customer advocates can seem like a huge challenge, but using a simple Net Promoter Score® (NPS) survey can help make the process a little easier. Using an NPS survey can help you pinpoint potential advocates and turn this customer feedback channel into a referral growth engine.

NPS is a customer loyalty metric utilized across multiple industries to measure how happy a customer is with your product or service. NPS is determined by sending out a single-question survey to your customers that asks: How likely is it that you would recommend our company/product/service to a friend or colleague?

Respondents are asked to score their answer based on a 1-10 scale. Responses of 7 or 8 are labeled as "Passive", and scores of 0 to 6 are considered "Detractors." If a customer responds with a score of 9-10, they're labeled "Promoters" of your business. This group is most likely to provide referrals.

Once you have identified your promoters, you should formulate a plan to follow up and make it easy for them to refer your company or product to their professional network.

People are more likely to trust your brand early on if they have social proof of your expertise, and testimonials and case studies are one of your most powerful assets. A great way to get testimonials for your company is simply by asking for customer feedback and turning that exact same feedback that you receive into a testimonial on your website.

Medicare Marketing and Gifts

CMS allows nominal gifts to be given to beneficiaries for marketing purposes, but these gifts must comply with certain rules:

  • The value of a single gift can’t be more than $15 retail. There’s also a $75 aggregate limit on gifts per person, per year.
  • The gifts have to be given whether or not the individual enrolls, without discrimination.
  • It is permissible to provide beneficiaries with a chance to win one big gift instead of giving each beneficiary a small gift. If you choose to do this, the value of the big gift cannot be more than $15 multiplied by the number of people expected to attend a marketing event. For example, if you expect 10 people to attend your marketing event, you could have a raffle to win a prize with a value of up to $150 (10 X $15).
  • You cannot give cash or monetary rebates as a nominal gift.
  • You cannot give a meal as a nominal gift. Only light snacks and refreshments can be provided at marketing events.

Communication Methods

CMS also has strict rules about what you can and cannot do to contact prospective enrollees.

  • You can use email to contact prospective enrollees, but an opt-out process must be included with each email.
  • You can use conventional mail and print media to contact prospective enrollees.
  • You cannot cold call or text prospective enrollees, a permission to contact must be secured, they must contact you first.
  • You cannot use direct messaging, including direct messaging in social media, to contact prospective enrollees.
  • You cannot use door-to-door solicitation for any MA/MAPD/PDP products

Don’t Risk Non-Compliance

Breaking Medicare’s marketing rules could lead to big consequences and even put your career in jeopardy. Don’t risk it.

  • Review the Revised Medicare Communications and Marketing Guide and MCMG Release Memo for more information on what is and is not allowed. Marketing guidelines may be updated each year, so review the most recent guidelines and look for new and updated information.
  • You can ask for referrals, but do not ask for or accept phone numbers. Calling a prospective enrollee, even one who is referred by a friend, is considered an unsolicited telephonic communication and is prohibited under the marketing guidelines. If a client would like to make a referral, CMS recommends that you provide a business card for your client to give to the other person, so that person can contact you.
  • Do not announce that you will provide gifts for referrals. When providing gifts, comply with all the rules for nominal gifts.

If you have any questions about compliance, contact us. We’re here to help!

Additional Referral Marketing Tips

Make Sure Your Info is Stored in Your Client’s Phone. In order to obtain a referral, your clients must be able to immediately access your contact information. So, do everything you can to make sure your information is on hand. Stress the importance of being able to contact you in case of an emergency.

Create Referral Cards in Addition to Business Cards. For more traditional clients, make a separate card that reflects your business card’s design and has “Referred By:” printed on the back. Handwrite your client’s name in the blank space and hand them a few cards in person (don’t mail them) to make sure they get inside the customer’s wallet or purse.

Script Your Pitch and Practice It. 

Give and You Shall Receive. This is a no-brainer for most of us in the industry, but sometimes a reminder doesn’t hurt (especially if you’re new to selling insurance). It is 100% a fact that the more referrals you give, the more you will receive. Consider Cialdini’s Principle of Reciprocity: “people are obliged to give back to others the form of a behavior, gift, or service that they have received first.” So be confident in the fact that you’ll receive referrals in return for introducing clients to insurance agents who specialize in other areas like Property & Casualty, for example.

Send Thank You Cards to Referrers. It’s no secret that people like to be recognized for their efforts. Take the time to send each person who refers you a thank you card and include some aforementioned referral cards so they have an easy way to continue sending business your way.

Document. How you choose to document your referrals is up to you – there’s no universal method that works for everyone. Whether you use a handwritten list or an Excel spreadsheet, the important thing is to document your referrals and always be aware of who is and who is not giving them. As you do this over time, you’ll have a better sense of who your main influencers are, what they have in common, and how you can make the most of these important relationships.

Proper Handling of Referrals. Selling Medicare Advantage plans can be a little different than other insurance products in that agents must adhere to guidelines set forth by the Centers for Medicare & Medicaid Services (CMS). It’s important to note that, as an agent who sells Medicare plans, you are not able to request prospects’ contact information; rather, the prospect must reach out to you first. So, if your current clients want to refer you, make sure they have the prospect contact you – this ensures you receive a compliant referral.

Entire books have been written about how to successfully obtain referrals and several are probably worth reading. But if you start with these core ideas and tactics, refine and build on them, and add different elements to create your own referral marketing method, then you’ll be well on your way to forming the rewarding career you want in insurance sales.