CMS Caps Broker Payments In Medicare Advantage

Dive Brief:

• The Biden administration has capped how much Medicare Advantage plans can compensate brokers in a bid to curb predatory marketing.
• The rule finalized Thursday broadens Medicare’s definition of compensation 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 fees that aren’t subject to the government’s compensation cap, beginning with the upcoming annual enrollment period this fall, according to regulators.
• The rule also hikes fixed compensation amounts for brokers who enroll beneficiaries in plans by $100, significantly higher than the $31 increase originally proposed in November.

Dive Insight:

The 1,327-page rule aims to stop brokers from steering beneficiaries to certain plans in exchange for higher reimbursement from insurers, while giving them more predictable compensation, the CMS said in a fact sheet on the rule.

Curbing predatory marketing is important for Medicare enrollees, as it’s common to rely on brokers when selecting coverage. Roughly a third of MA beneficiaries use the intermediaries to help them shop between plans, according to the Commonwealth Fund.

In return, agents receive a fixed amount from Medicare — currently, up to $611 for initial sales and $306 for renewals — along with add-on payments from health plans for services like marketing or health risk adjustments.

As a result, 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 broker oversight.

That financial incentive, coupled with the fact that brokers aren’t required to inform consumers about all plans available in their area, has resulted in beneficiaries being steered to plans that aren’t best for their needs, according to patient advocates and legislators.

When the regulation was first proposed in November, analysts said removing the incentive could also help smaller health plans with fewer marketing resources compete for members against larger health plans that might have more money to pay brokers.

UnitedHealth and Humana, the two largest MA plans in the U.S., said they were against a universal broker compensation amount in comments on the rule, according to TD Cowen analyst Gary Taylor.

However, “we’re not sure how disruptive this will be nor how much it might level the playing field,” Taylor wrote in a note Friday.

The final rule also prohibits contracts between MA plans and marketing middlemen like field marketing organizations that result in things like volume-based bonuses for enrollment into certain plans. Marketing organizations are also no longer allowed to share beneficiary information with each other unless they receive that beneficiary’s written consent.

The rule is the CMS’ latest action to curb MA marketing misconduct, after regulators banned misleading TV ads last 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 beneficiaries were sometimes enrolled in plans without their consent, or had their coverage switched to a plan that didn’t cover their doctors.

The final rule also includes other provisions geared toward increasing the use of supplemental benefits, including requiring plans to send out mid-year notices informing beneficiaries of the benefits available to them.

Supplemental benefits like dental coverage and subsidized gym memberships are cited heavily in plan marketing, but some payers have indicated that enrollee utilization of the benefits is low, the CMS said. 

The push is important to ensure the more than $65 billion in taxpayer dollars paid to MA plans in rebates each year “will not be used just for marketing,” regulators said in a press release on the rule.

The rule also requires MA plans to provide research backing up assertions that particular supplemental benefits actually improve the health of chronically ill enrollees.

And it requires MA payers to analyze their plans’ policies for health equity once a year, to identify inappropriate care denials or delays for disabled or low-income enrollees.