Understanding the Proposed CMS Rules

Key Dates

  • Rules Proposed: November 6, 2023
  • Comments Due: January 5, 2024
  • Rules Effective, if Adopted: TBD (likely Q3 2024)

    As you’re aware, CMS recently issued proposed amendments to its regulations governing the 2025 Medicare Advantage Program (MA) and Medicare Prescription Drug Benefit Program (PDP). Click the link in the sidebar for more details.

    As conversations about these proposed rules have continued with our partners and throughout our industry, there remains much confusion surrounding the impact these proposed rules may have on our industry. As such, we’ve prepared the below FAQ designed to clarify our interpretation of the rules and how you should view them and, if needed, communicate their impact to your stakeholders.

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    Frequently Asked Questions

    Q: What exactly is CMS’s role in proposing these rules?

    A: CMS, a division of the Federal Department of Health and Human Services, is charged with protecting public health by administering the Medicare program.  It issues regulations to help ensure that beneficiaries are protected and the sale of MA plans and products, among other health insurance offerings, are made in the best interests of consumers.

    Q: Can YourFMO summarize the proposed rule changes related to agents, brokers, and other third parties?

    A:  CMS is proposing three changes related to agent, broker, and third-party payments. CMS indicates that it is proposing these rule changes to help ensure that brokers and agents do not receive financial incentives that will influence them to favor any one Medicare Advantage plan or product that may not be in the best interest of a beneficiary.  The changes can be summarized as such:

      1. Generally, the proposed rules prohibit contract terms between Medicare Advantage organization and agents, brokers, or other TMOs that may interfere with the agent’s or broker’s ability to objectively assess and recommend the plan that best fits the beneficiary’s health needs.
      2. Set a single agent and broker compensation rate for all plans, while revising the scope of what is considered “compensation.”
      3. Eliminate the regulatory framework that currently allows for separate payment to agents and brokers for administrative payments.

    If passed as currently drafted, the new rule will cap payments made to brokers and agents for anything other than commissions to $31 per enrollment.  That “administrative payment” will include payments to brokers and agents related to training, travel reimbursements, and any other payment for services related to the enrollment into a Medicare Advantage plan or product.

    Q: CMS’s proposed rules seem to cover much more in the document than outlined above – how did YourFMO come to that interpretation?

    A: As is customary when federal agencies propose rule changes, the proposed language for the modifications to the regulations are accompanied by commentary or “press release” type language that provides additional detail surrounding the agency’s justification and motivation for the proposed rule changes.  It is important to remember that while the language in the release that accompanies the rule change is designed to help the impacted industry understand the conduct that the regulator is trying to regulate, the language that is binding on the industry is the language of the rule(s) being modified. That binding language is much more narrowly written than the commentary.

    Q: What is YourFMO doing to advance our industry’s and businesses’ interests as it relates to the proposed rules?

    A:  YourFMO is taking a comprehensive approach to evaluating the potential impact of the proposed CMS rule changes and advocate for favorable revisions. We formed an executive-level task force that meets multiple times each week; we are participating in a number of industry working groups to benchmark our impact analysis of the proposal and coordinate an industry-wide response; and we are working on a comment letter and other efforts to help educate CMS on our role in the Medicare Advantage distribution process and offer constructive criticism on the proposal to help ensure it does not negatively impact our marketplace.

    In addition, we have been meeting weekly with affiliate principals get their perspective on the proposal so we can incorporate their ideas into our advocacy efforts and communicate our interpretation of the proposal to them.

    Q: What can I do – or what should I say – to my partners and stakeholders about these proposed rules?

    A: It’s important to note that our interests our generally aligned with CMS’s stated goal of helping to ensure that beneficiaries purchase Medicare Advantage plans that are in the best interest of their health needs.  We believe that we provide services that help ensure that goal, and we don’t want CMS to believe that anyone is being unduly incented to sell one carrier’s product over another due to additional payments made to brokers or agents. With that said, we believe that capping administrative payments to brokers and agents at $31 will be disruptive to the sales process and may have the effect of reducing important services that brokers and agents provide to beneficiaries.

    Q: I’m an agent – how can I get involved?

    A: As a critical stakeholder, we encourage you to write a letter to CMS expressing the value that Agents and FMOs provide in MA distribution and post-enrollment support. Your efforts here can play a vital role in shaping the proposed rule from CMS. NOTE CMS discounts form letters – carbon copies or very similar letters are counted as one letter and only read once. So instead of a form letter we are providing detailed guidance for you to craft your own unique letter. Your CMS comments can be submitted here.

    General guidance for comment letters:

        • Draft with a positive and constructive tone
        • Acknowledge some of the positives CMS is seeking to achieve with its proposed rule – in this case, ensuring consumers are placed in the optimal plan for their needs
        • Educate CMS on how you are aligned to that goal – and describe a few pointed examples of how Agents and FMOs facilitate that objective
        • Note particular areas of the rule you are concerned with that may have unintended consequences

    To assist in drafting a letter, we have provided the below bullet points to consider:

        1. I am aligned with CMS in helping to ensure that consumers enroll in the MA and PDP plan that best serves their health care needs.
        2. Independent Agents and their FMOs provide the product choice across multiple carriers that CMS seeks through its rule proposal, and offer a more balanced sales approach than a captive-agent (carrier operated) sales force.
        3. The rule proposal appears to be driven by various isolated perceptions of abuse in the sales process that we don’t see as being prevalent, and in many cases, is already prohibited by CMS or carriers.
        4. Examples of agents and brokers seeking inappropriate reimbursement for travel expenses or receiving excessive payments for added services, such as Health Risk Assessments (HRAs) can be addressed in ways other than capping non-commission dollars at $31 per enrollment.
        5. It is unfair to consider reimbursements for legitimate business expenses to be “compensation”.
          1. We understand that CMS believes that abusive reimbursement practices are leading to excessive compensation to brokers, but the way to address this issue isn’t to consider reimbursement for travel and other legitimate business expenses as compensation.
          2. CMS should take steps to ensure there is integrity in the expense reimbursement processes, so agents don’t receive payment for expenses they haven’t incurred.
        6. If agents and brokers can’t get reimbursed for their expenses beyond $31 per enrollment, they certainly will not be able to market and educate consumers on MA and PDP products the same way that they do today, as the cost of acquiring leads, sending marketing material, and holding informational seminars far exceeds $31 per enrollment.
        7. In addition to the provisions directly impacting agents, there are portions of the rule that could impact FMO business models. FMOs are critical to my business and my independence from carriers. Agents rely on FMOs to provide the back and middle office functions required to run the business – allowing agents to focus on servicing the end customer and enabling consumer choice across carriers. Examples include:
            1. Licensing and appointments
            2. Customer complaint management
            3. Marketing material review
            4. Enrollment processes
            5. Product comparisons
            6. CRM
            7. Web Services
            8. Call-recording
            9. Call-monitoring
            10. Product training
            11. Access to leads
        8. Rather than assume that compensation practices are driving an increase in customer complaints, we encourage CMS to work with the industry to understand the root cause of complaints and work to address those issues and drive customer complaints lower.
        9. The enactment of this agent and broker compensation section of this rule proposal will unnecessarily disrupt the MA marketplace and is not predicated on business practices that are prevalent in the industry. Independent agents and brokers, along with their FMO partners provide the MA marketplace with the best selection of products across numerous national and regional carriers. This proposed regulation will have a detrimental impact on the MA distribution process and will result in less choice for consumers. Please remove this section from your proposed changes to the 2025 AEP.

     

    Q: What happens next?

    A: CMS is accepting comments on the rule proposal until January 5, 2024.  After that deadline, CMS will consider whether to make any modifications to the proposal after reading all of the comment letters it receives. Once it determines how the final rule should read, it will publish the final rule in the Federal Register and establish an effective date for the rule, which in this case will be in advance of AEP 2025.  Once we know what the final rule will require, we’ll communicate any changes that we’ll have to make to our business processes related to the distribution of Medicare Advantage plans and products to you.

    Click [here] view the FAQs pertaining to CMS’s updated rules for MA marketing issued on April 5, 2023.

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