- Medicare Advantage brokers could have their extra payments from health plans capped under a new Biden administration proposal.
- The CMS proposed a rule on Monday that would create a ceiling for total compensation that agents and brokers can be paid, regardless of the plan a beneficiary enrolls in.
- The goal of the rule is to stop brokers from steering beneficiaries to plans based on excessive compensation. If finalized, it should curb predatory marketing and level the playing field between large and small health plans with fewer marketing resources, regulators said.
About one-third of MA beneficiaries rely on brokers to help them navigate comparison shopping between health plans, according to the Commonwealth Fund. For this, brokers receive a fixed amount from Medicare — up to $611 for initial sales and $306 for renewals for 2024 — along with add-on payments from health plans themselves for services like marketing or health risk adjustments.
As a result of these additional commissions, brokers can collect upwards of $1,300 per enrollee each year — more than double the maximum commission set by the government, according to the Alliance of Community Health Plans, a nonprofit plan association that advocates for more oversight of MA broker payments.
Brokers are also not required to tell consumers about all plans available in their area or promote plans with the highest quality performance. Patient advocates and legislators have said the lack of such guardrails — coupled with hefty financial incentives for brokers — results in beneficiaries being steered not to the plan that’s best for their needs, but to the plan that pays brokers the most.
The CMS now wants to redefine how Medicare views compensation, broadening the regulatory scope of the definition to include all actions associated with the sale to or enrollment of a beneficiary in an MA plan.
As a result, insurers will no longer be able to pay brokers additional administrative fees that aren’t subject to the CMS’ national compensation cap, according to the CMS.
The CMS also proposed raising that fixed compensation amount for agents and brokers to $632 for initial sales, up from $611. That would eliminate the current variability in payments and improve payment predictability for brokers, regulators said.
The proposed rule would also prohibit contracts between MA plans and marketing middlemen like field marketing organizations that result in things like volume-based bonuses for enrollment into certain plans.
“If finalized in April 2024, we anticipate the largest MA plans ([UnitedHealthcare and Humana] in particular) could lose one source of competitive advantage as CMS seeks to level the playing field for smaller plans,” said TD Cowen analyst Gary Taylor in a note on the rule.
The rule is the CMS’ latest action to curb MA marketing misconduct. Regulators banned misleading TV ads earlier this year.
Beneficiary complaints of inappropriate MA marketing more than doubled from 2020 to 2021, according to an investigation by Senate Finance Committee Democrats. The report found instances like beneficiaries being enrolled in plans without their consent, or having their coverage switched to a plan that doesn’t cover their doctors.
Concerns about such practices have mounted as more seniors enroll in the privately-administered MA plans — the program currently covers more than half of all Medicare beneficiaries.
Congress has been calling on regulators to do more to check MA brokers and protect seniors from unscrupulous marketing practices. In committee hearings this fall, lawmakers in the House and Senate urged the CMS to increase oversight of broker compensation.