CMS Proposes Rule to Limit Medicare Advantage Plan Sales Commissions

Derick Alison
Derick Alison
9 Min Read

To stop Medicare Advantage (MA) and Part D plan marketing agents from steering beneficiaries into plans that pay the agents the highest commissions — rather than the plans that best suit the patients’ needs — the Centers for Medicare & Medicaid Services (CMS) proposed a rule Monday that would limit the amount they’d receive on sales to $632 for the 2025 plan year.

Currently, agents can receive far more than the current national commission cap of $601, even as high as $1,300 on one sale for 1 year’s enrollment, because of “add-on” or “incentive fees,” according to recent Senate committee hearing testimony. CMS called the practice “anti-competitive steering” since larger plans are usually paying the most, putting smaller, potentially better plans at a disadvantage.

In the 486-page proposed rule, CMS explained that it has received complaints from state partners, consumer advocates, and some MA plans that agents and brokers receive add-on and other financial incentives that “are likely to influence which MA plan an agent encourages a beneficiary to select during enrollment.”

For example, the agency said it has seen web-based ads that offer agents and brokers “bonuses and perks (such as golf parties, trips, and extra cash) in exchange for enrollments.” The payments are implemented in a way that allows the plan sponsor “to credibly account for these anti-competitive payments as ‘administrative’ rather than ‘compensation,’ and these payments are therefore not limited by the regulatory limits on compensation.”

That would change if this proposed rule is finalized.

The compensation should reflect “only the legitimate activities required of agents and brokers by broadening the scope of the regulatory definition of ‘compensation’ so that it is inclusive of all activities associated with the sales to/enrollment of a beneficiary into a Medicare Advantage plan or Part D plan,” CMS said in an accompanying fact sheet.

This proposed rule is part of a series of regulatory crackdowns on MA plans’ deceptive marketing practices, prior authorization delays and denials of care, and narrow provider network limitations.

In April, the agency finalized a rule that required all television ads for MA plans to undergo prior review, and limited the times and places that agents could approach beneficiaries with sales pitches. Last October, the agency stepped up its efforts in other areas, including its intent to use secret shoppers, and review agents’ recorded calls with their clients to make sure that beneficiaries were not being misled.

The new proposed rule estimates that about 2 million new beneficiaries a year enroll in MA plans or stand-alone prescription drug plans, and 50% of those have interaction with an estimated 100,000 agents/brokers selling the plans.

If finalized, the rule would also prohibit MA organizations from contracting with marketing middlemen, such as field marketing organizations, that result in volume-based bonuses that incentivize these sellers to enroll beneficiaries in certain plans that may not best suit their healthcare needs.

The CMS proposal would also set forth requirements for MA plans to meet network adequacy standards for outpatient behavioral health, which will include marriage and family therapists and mental health counselors. In separate rulemaking, addiction or drug and alcohol counselors meeting requirements would be able to enroll in Medicare.

Another provision of the proposed rule addresses the agency’s concern that while 99% of MA plans offer one or more supplemental benefits, such as vision, dental, or hearing services, and transportation or food support — benefits that may seem persuasive enough to lure beneficiaries into these plans — actual utilization by enrollees has been low.

“To ensure the large federal investment of taxpayer dollars in these benefits is actually making its way to beneficiaries and are not primarily used as a marketing ploy,” the proposed rule would require MA plans to send a mid-year notice to enrollees of benefits that weren’t accessed during the first 6 months, according to the CMS fact sheet. The notices would include the scope of the benefits not yet accessed, cost-sharing, and instructions on how to get these services, with a customer service number to call.

Another provision in the proposed rule would require MA plans to demonstrate in their bids to Medicare that special supplemental benefits for the chronically ill that are offered have a reasonable expectation of improving health or overall function of enrollees with chronic illness.

Further provisions in the proposed rule would lessen the burden of prior authorization delays and denials affecting underserved populations by requiring MA plans to include in their utilization management committees a committee member with an expertise in health equity. An annual health equity analysis of prior authorization policies and procedures would also be required, with those analyses available publicly on their websites.

The goal of these analyses is to “create additional transparency and identify disproportionate impacts of utilization management policies and procedures on enrollees who receive the Part D low-income subsidy, are dually eligible, or have a disability,” CMS said in its fact sheet.

Provisions would also allow Part D plan sponsors to treat formulary substitutions of biosimilar biological products as maintenance changes, thus eliminating the requirement that Part D plan sponsors otherwise would have to obtain CMS approval for each drug change. This would allow beneficiaries to have faster access to equally effective but potentially more affordable options, the agency said.

Premier, Inc., an alliance of hospitals and health systems geared toward improvement strategies and supply chain improvements, quickly applauded the proposed change for biosimilar products.

In a press statement, Soumi Saha, PharmD, JD, senior vice president of government affairs at Premier, said, “It has been known for years that biosimilars can improve patient access to medications while saving the U.S. healthcare system billions of dollars, yet anti-competitive practices by vertically integrated payers have put their own profits ahead of lowering drug costs for patients by favoring the reference biologic and lucrative rebates.”

Provisions would also require federal quality improvement organizations — instead of representatives of the MA plans — to review a fast-track appeal when the plan has decided to terminate services in a skilled nursing facility, comprehensive outpatient rehabilitation facility, or a home health agency. Such fast-track review is now available to traditional Medicare beneficiaries in fee-for-service, but not to those in MA plans.

Lastly, a provision would revise the current quarterly special enrollment period for beneficiaries dually eligible for Medicare and Medicaid and other Part D low-income subsidy to once per month, to allow them to enroll in a stand-alone prescription drug plan and a new integrated special enrollment period and to elect an integrated dual-eligible special needs plan on a monthly basis.

  • author['full_name']

    Cheryl Clark has been a medical & science journalist for more than three decades.

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