Final rule issues guardrails in compensation to agents and brokers

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The Centers for Medicare and Medicaid Services is cracking down on compensation to agents and brokers, in a final rule released last week.

Excessive compensation and other bonus arrangements offered by plans to agents and brokers can result in individuals being steered to Medicare Advantage and Part D plans that meet the agent or broker’s financial interests, rather than the needs of enrollees, CMS said.

“CMS is cracking down on that,” the agency said.

Specifically, CMS is finalizing requirements that redefine “compensation” to set a clear, fixed amount that agents and brokers can be paid regardless of the plan the individual enrolls in. The final rule also addresses loopholes that result in commissions above this amount that create anticompetitive and anti-consumer-steering incentives, CMS said.

These provisions will be applicable starting with the upcoming Annual Enrollment Period.

In response to feedback from stakeholders, CMS is increasing the final national agent/broker fixed compensation amount for initial enrollments into a Medicare Advantage or Part D plan by $100, which is an amount higher than what was proposed ($31).

This increase will be added to agent and broker compensation payments for the Annual Election Period in fall 2024 and applied to all enrollments effective in CY2025 and future contract years. 

Additionally, the final rule generally prohibits contract terms between Medicare Advantage organizations/Part D sponsors and middleman Third Party Marketing Organizations (TPMOs), such as field marketing organizations, which may directly or indirectly create an incentive to inhibit an agent or broker’s ability to objectively assess and recommend the plan that is best suited to a potential enrollee’s needs. 

Some TPMOs have been selling and reselling personal beneficiary data, which can undermine existing rules that prohibit cold calling people with Medicare and result in other aggressive marketing tactics for Medicare Advantage and Part D plans, CMS said. 

Individuals may be unaware that by placing a call or clicking on a generic-looking web link, they are unwittingly agreeing and providing consent for their personal beneficiary data to be collected and sold to other entities for future marketing activities. 

To curtail this practice, CMS is codifying the requirement that personal beneficiary data collected by a TPMO for marketing or enrolling the individual into a Medicare Advantage or Part D plan may only be shared with another TPMO when prior express written consent is given by the individual. 


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