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Background

On April 4, 2024, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that revises the Medicare Advantage Program, Medicare Prescription Drug Benefit Program (Medicare Part D), Medicare Cost Plan Program, Programs of All-Inclusive Care for the Elderly (PACE), and Health Information Technology Standards and Implementation Specifications.

Additionally, this final rule addresses several key provisions that remain from the CY 2024 Medicare Advantage and Part D proposed rule, CMS-4201-P, published on December 14, 2022. Together, the changes in this final rule build on existing Biden-Harris Administration policies to strengthen protections and guardrails, promote healthy competition, and ensure Medicare Advantage and Part D plans best meet the needs of enrollees. In addition, these policies promote access to behavioral health care providers, promote equity in coverage, and improve supplemental benefits. 

This fact sheet discusses the major provisions of the 2025 final rule which can be downloaded here: https://www.federalregister.gov/public-inspection/2024-07105/medicare-program-medicare-advantage-and-the-medicare-prescription-drug-benefit-program-for-contract

Many individuals with Medicare rely on agents and brokers to help navigate complex Medicare choices as they comparison shop for coverage options. The Medicare statute requires that CMS must establish guidelines to ensure that the use of compensation creates incentives for agents and brokers to enroll individuals in the Medicare Advantage or Part D plan intended to best meet the prospective enrollee’s health care needs. However, excessive compensation, and other bonus arrangements, offered by plans to agents and brokers can result in individuals being steered to some Medicare Advantage and Part D plans over others based on the agent or broker’s financial interests, rather than the prospective enrollee’s health care needs. 

CMS is cracking down on that. Specifically, CMS is finalizing requirements that redefine “compensation” to set a clear, fixed amount that agents and brokers can be paid regardless of the plan the individual enrolls in, addressing loopholes that result in commissions above this amount that create anti-competitive and anti-consumer steering incentives. The provisions of this final rule, which are applicable beginning with the upcoming Annual Enrollment Period, ensure that agent and broker compensation reflect only the legitimate activities required of agents and brokers, by broadening the scope of the regulatory definition of “compensation,” so that it is inclusive of all activities associated with the sales to/enrollment of an individual into a Medicare Advantage or Part D plan.

In response to feedback from stakeholders, CMS is increasing the final national agent/broker fixed compensation amount for initial enrollments into a Medicare Advantage or Part D plan by $100, which is an amount higher than what was proposed ($31). CMS believes this increase will provide agents and brokers with sufficient funds to serve individuals with Medicare. This increase will eliminate variability in payments and improve the predictability of compensation for agents and brokers. This increase will be added to agent and broker compensation payments for the Annual Election Period in Fall 2024 and applied to all enrollments effective in CY2025 and future contract years. 

Additionally, the final rule generally prohibits contract terms between Medicare Advantage organizations/Part D sponsors and middleman Third Party Marketing Organizations (TPMOs), such as field marketing organizations, which may directly or indirectly create an incentive to inhibit an agent or broker’s ability to objectively assess and recommend the plan that is best suited to a potential enrollee’s needs. In the final rule, CMS provides several examples of contract terms that will be impermissible under this prohibition, including provisions offering volume-based bonuses for enrollment into certain plans.

These final policies advance the goals of President Biden’s historic Competition Council and Executive Order signed in July 2021, by helping to ensure a robust and competitive Medicare Advantage marketplace.