White House joins CMS in targeting broker compensation, FMO services in Medicare Advantage Market

The White House just made it clear: they think carriers and FMOs are putting their thumbs on the scale, causing you to sell ill-fitting Medicare Advantage plans.

Straight from the horse’s mouth:

“HHS, through CMS, proposed a rule that would, if finalized as proposed, stop large insurance plans from offering brokers and agents lavish compensation – such as cash bonuses, volume bonuses, and perks – and working with marketing middlemen who are more likely to contract with larger insurers, leading to steerage of patients to plans based on compensation to the broker or agent, rather than the based on the patients’ best interests.”

Curious about what CMS is cooking up? Let’s dig in:

Limitations on contracts between carriers and field marketing organizations

In short, CMS will prohibit contract provisions that would either directly or indirectly incentivize agents to steer beneficiaries to a given plan or carrier.

Some named behaviors this provision would target:

• making the renewal of a contract between the carrier and FMO dependent on preferentially higher enrollment rates;
• outlawing FMOs reimbursing agents for marketing activities if that reimbursement is tied to enrollment quotas;
• implicit or explicit “pass-throughs” where compensation flows through the FMO directly to the broker based on enrollment volumes;
• and for FMOs to provide leads or other incentives based on enrolling beneficiaries in specific plans

Good news – if this portion of the rule becomes a reality, your connection with Action Benefits stays rock solid. No changes here. Our programs are available to every agent partner, regardless of your production numbers or your carrier partners.

Compensation Rates

Many, but not all, carriers pay commissions for Medicare Advantage plans at the maximum fair market value for that year. But, given the choice between a carrier paying the CMS maximum commission and one that doesn’t, CMS thinks you’ll steer the beneficiary into the highest-paying plan – even if it’s not a great fit for the beneficiary.

To keep things fair, CMS would require all Medicare Advantage plans to pay at a new, higher commission rate. Commissions paid through an FMO would also be subject to this rate.

Nothing about your relationship with Action Benefits would change under this proposal, either. You’re always paid directly by the carrier on any commissions you earn in this market. And, especially with this increased scrutiny, we never have (and never will) tack on anything the law does not allow.

Administrative payments

Previous rules divide agent/broker compensation into two main categories: commissions and administrative fees. Generally, carriers and FMOs adhere to that commission line item as intended.

Yet, CMS fears both carriers and FMOs are circumventing the law with “administrative fees.” Carriers pay varying rates for things like Health Risk Assessments, travel reimbursements to make an enrollment, and other such items. HRAs in particular are called out – some plans offer agents up to an additional $125 for completing an HRA at enrollment, far outpacing the $12.50 CMS has pegged as fair market value for that service. CMS believes payments from carriers for training and testing also seem to be growing at an unusually high pace, further cementing their contention that these admin fees are being used to get around the cap.

To remedy this, CMS intends to remove the rules allowing administrative fees, and instead, bundle all of these payments into its single definition of compensation. To offset legitimate dollars agents may lose under this arrangement, the compensation cap for 2024 would bump by a large amount – an additional $41 per first-time enrollment.

But, beware: this regulation would also remove carriers and FMO’s ability to reimburse agents for items like a customer relationship management system, leads purchases, and related items that leave your commission dollars intact.

What you can do

CMS is seeking comment on these proposals and the entire proposed rule through January 5, 2024. While your relationship with Action would largely be unaffected by the first two proposals, programs like our marketing expense reimbursement, Medicare Advantage certification reimbursement, and others could be put at risk by the last one. Tell Uncle Sam what you think today.