Medicare Managers Hope to Lift Agent Referral Fee Cap
Medicare program managers want to give health insurers more flexibility over pay for agents and brokers.
Officials at the Centers for Medicare and Medicaid Services (CMS) have proposed lifting the current $100 limit on Medicare Advantage plan enrollment fees.
Instead, an insurer would have to keep a producer’s total Medicare plan sales compensation under the “fair market value” compensation limit for the year. This year, for example, the annual producer compensation limit for a Medicare Advantage plan enrollment in most of the country is $510 for a new sale and $255 for a renewal sale.
A link to a preview version of the proposed regulations is available here.
Links to Medicare Communications & Marketing Guidelines documents are available here.
An article about Medicare Advantage plan agent and broker compensation summary data is available here.
CMS would lift the prescription drug plan referral fee limit, which is now $25.
Instead, a Medicare drug plan issuer would have to keep all producer compensation for a sale, including referral fee payments, under the fair market value limit, which is $78 per year for a new sale, and $39 per year for a renewal sale.
CMS announced the proposal last week, in an 895-page packet of Medicare program draft regulations and regulation notes.
Along with the producer comp provisions, the packet includes:
Rules related to fighting opioid abuse.
Rules governing the creation of new Medicare plan options for people with severe kidney disease.
An effort to increase the importance of patient ratings and patient complaints in the Medicare Advantage and Medicare drug plan quality rating programs.
A rule that will let a Medicare Advantage plan make some of use of telehealth services providers to meet provider network adequacy standards for enrollee access to dermatologists, cardiologists, neurologists, ear doctors, and psychiatrists.
A requirement that each Medicare drug plan issuer offer a ”beneficiary real-time benefit tool” by Jan. 1, 2022.
The real-time benefit tool would give a drug plan enrollee a simplified version of the drug benefits information that the enrollee’s doctor sees.
CMS is preparing to publish the packet in the Federal Register, the government’s official rulemaking publication, Feb. 18.
Comments on the draft regulations are due April 6.
The Medicare Part A program covers enrollees inpatient hospital bills.
The Medicare Part B program pays physician and outpatient services bills.
Medicare Part C lets private insurers offer consumers alternatives to using Original Medicare Part A and Part B coverage as is. The biggest Medicare Part C program, the Medicare Advantage program, provides access to plans that look somewhat like employer-sponsored health maintenance organization, preferred provider organization and fee-for-service plans.
The Medicare Part D program lets private plans offer Medicare enrollees prescription drug coverage.
Medicare Producer Compensation
CMS uses the terms “referral fee” and “finder’s fee” to refer to money paid to an agent or broker in exchange for the producer’s help with locating someone who needs Medicare coverage, without the producer having to complete a sale.
CMS officials say in the introduction to the new draft regulations that CMS uses the term “compensation” to refer to commissions, bonuses, gifts, prizes, awards, and referral or finder fees.
“By eliminating the individual referral fee limit, we are restructuring the regulation to only provide for referral fees within the scope of fair market value,” officials say.
Officials acknowledge that efforts to regulate referral fees generated a great deal of discussion in 2009, when they were developing the official Medicare Advantage “call letter” for 2010.
“We solicit comment on whether removing the limit on referral/finder’s fees would generate concerns such as those” that cropped up in 2009, officials say.
“Fair Market Value”
Officials explain in the introduction to the new draft regulations what the term “fair market value” means in connection with Medicare plan producer compensation.
Medicare program managers based the original Medicare Advantage fair market value producer comp caps on 19,000 producer compensation 2006 and 2007 records that plans submitted around 2008, according to CMS.
The original Medicare Advantage plan cap was $400 per year in most of the country.
Since then, CMS has adjusted the producer comp caps for inflation using a Medicare Advantage “growth rate,” or inflation adjustment rate.
CMS started out setting the Medicare drug plan fair market value limit at $50 per year, and it has used a Medicare drug plan inflation adjustment rate to adjust the drug plan fair market value limit for inflation, officials say.
Medicare Communications & Marketing Guidelines
CMS officials say they also want to put a reorganized version of marketing rules given in a manual, the Medicare Communications & Marketing Guidelines, into federal regulations.
“CMS does not intend to change policy expressed in those regulations,” officials say.
But officials do define the term “marketing” in the proposed regulations, and they list information about enrollee rewards and incentives programs as a type of content that must comply with CMS Medicare plan marketing guidelines.
The Medicare plan marketing guidelines apply to any communications developed by the insurers’ “downstream entities,” such as distributors or agents, but only the insurers, not the downstream entities, can submit materials to CMS for review and approval for use, officials say.
CMS already has a regulation that keeps agents and others from making unsolicited calls to Medicare plan enrollees. Officials say they want to update that regulation to apply to unsolicited direct messages from social media platforms.
In a section that updates the rules for Medicare Advantage-related events and marketing appointments, CMS seems to make room for Medicare Advantage agents to provide holistic reviews of consumers’ needs.
A Medicare Advantage agent may not “market non-health-related products, such as annuities,” to consumers, according to the draft regulations.
But an agent who has a personal marketing appointment with a consumer may “review the individual needs of the beneficiary including, but not limited to, health care needs and history, commonly used medications, and financial concerns,” according to the draft regulations.