The Centers for Medicare & Medicaid Services has revised compensation requirements for sales agents and brokers who sell Medicare Advantage and prescription drug benefit plan options.
"The steps we are taking should help to make sure that brokers and agents are selling health or drug plans that best meet beneficiaries' needs when open enrollment begins on November 15," said CMS Acting Administrator Kerry Weems.
The CMS interim final rule modifies regulations issued on Sept. 18, 2008. According to company officials, those regulations established how health and drug plans should structure the compensation for agents and brokers by reducing existing financial incentives to enroll a beneficiary in a new plan based on the agent's or broker's financial interests rather than the beneficiary's healthcare needs.
The original regulations required that compensation be paid on a six-year cycle, comprised of an initial enrollment year and five renewal years, and that the renewal rate be paid for a beneficiary changing plans during the renewal years. Compensation includes commissions and bonuses as well as other incentives, such as sales awards.
"The (new) rule we are issuing will help to resolve any confusion about how the private plans should implement compensation structures to meet those needs," said Weems.
The rule, issued November 10, revises the September 18 regulations by:
- specifying that all compensation paid to agents and brokers reflect fair-market value based on the commissions paid in the past, adjusted for inflation for similar products in the same geographic area;
- requiring that renewal compensation be no more or less than half of the compensation paid for that beneficiary in the initial year of the six-year compensation cycle established in the September 18 rule;
- imposing similar limits on payments to organizations such as field marketing organizations;
- requiring plans to submit to CMS their compensation structures for the previous three years plus the compensation structure they are implementing for 2009 (That information must also be provided to agents, brokers and other third parties under contract to sell their plans);
- and, to prevent churning, requiring that plans initially pay renewal rate compensation in 2009 rather than the initial year compensation amounts for all plan changes.
The rule will be was published in the Federal Register on Nov. 14, 2008, and comments must be submitted by 5 p.m. Eastern Standard Time on Dec. 15, 2008.