Medicare Advantage and Part D Commission Rates
FROM: Kathryn A. Coleman / Director
SUBJECT: Contract Year 2020 Agent and Broker Compensation Rate, Referral/Finder’s Fees, Submissions, and Training and Testing Requirements
This memorandum provides contract year (CY) 2020 compensation and referral/finder’s fee limits for agents and brokers, directions for submitting amounts into the Health Plan Management System (HPMS), as well as training and testing requirements.
Compensation Rates and Referral/Finder’s Fees for CY 2020
As provided in 42 C.F.R. §§422.2274(b)(1) and 423.2274(b), the compensation amount an organization pays to an independent agent or broker for an enrollment must be at or below the fair market value (FMV) cut-off amounts published yearly by the Center for Medicare and Medicaid Services (CMS).
42 C.F.R. §§422.2274(h) and 423.2274(h) states that referral/finder’s fees paid to independent, captive, or employed agents may not exceed a CMS specified amount. Additionally, referral/finder’s fees paid to independent agents/brokers must be included in FMV for that CY.
The CY 2020 FMV cut-off amounts for all organizations and referral/finder’s fees are as follows:
The renewal amount is the maximum allowable amount that organizations may pay for enrollments during compensation cycle-years 2 and beyond.
Compensation Rate Submission for CY 2020
As in past years, all organizations must inform CMS via HPMS whether they are using employed, captive, or independent agents.
Organizations that use independent agents must provide the initial and renewal compensation amount or range of amounts paid to these agents.
Additionally, if an organization pays referral/finder’s fees, the organization must disclose the amount. CMS has provided instructions for data entry in the HPMS Marketing Module User Guide.
Organizations must submit their agent/broker information in the HPMS Marketing Module between June 1, 2019 and July 26, 2019, 11:59 pm EST. Please note that CMS does not consider the submission process complete until the organization’s CEO, COO, or CFO has completed the attestation in HPMS.
Organizations that fail to submit and attest to their agent and broker compensation data by July 26, 2019 will be out of compliance with CMS requirements.
Organizations will not be able to make changes to those submissions after the July 26, 2019 deadline.
CMS expects organizations to keep full records documenting that they are updating compensation schedules and paying agents and brokers according to CMS requirements.
Please note that CMS will make the CY 2020 organization-submitted compensation information available for the public to view on www.cms.gov prior to the annual election period for CY 2020.
Curricula for Training and Testing Agents and Brokers for CY 2020
Regulations at 42 C.F.R. §§422.2274 and 423.2274 require that organizations train and test all agents and brokers selling Medicare products, including employees, subcontractors, downstream entities, and/or delegated entities annually on Medicare Parts A, B, C, D, and plan specific information.
CMS further requires that all agents and brokers obtain an 85% passing rate on the test.
In order to ensure the quality of agent and broker training and testing programs, CMS annually provides minimum training and testing requirements to organizations.
Organizations should review these requirements before developing their own agent and broker training and testing programs to ensure compliance with CMS requirements.
CMS permits and encourages organizations and third-party training and testing vendors to include other relevant topics, in addition to the minimum required elements.
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New Medicare Advantage Rules Hold
Improving health outcomes using population health strategies could get a major boost with a new Medicare Advantage rule taking effect this week.
The rule could see an array of new benefits aimed at improving health outcomes by addressing issues such as housing and food insecurity, transportation, social isolation and home health aides.
Potential benefits include ride-hailing services, home visits, nutritional support, air conditioners for people with asthma, home renovations such as grab bars and other accommodations to prevent falls.
More than 17.3 million people were enrolled in Medicare Advantage plans as of March 2015. Year over year, total Medicare Advantage enrollment increased by more than 1.3 million as managed Medicare continues to be an attractive growth market for health insurance companies. The latest CMS (Centers for Medicare and Medicaid Services) reports indicate 54.3 million are eligible for Medicare in the United States and U.S. territories. Medicare Advantage (MA), with an unpenetrated market of 37 million and growing, is big business for many health plans. UnitedHealth and Humana lead the segment and each leader enrolls more than 3 million MA members. Kaiser Permanente and Aetna also command significant market share with more than 1.2 million MA enrolled.
Medicare Advantage (MA) enrollment stands at 17.3 million, which represents an 8% increase year-over-year. Ten companies, each with more than 250,000 members, have a sizeable stake in this segment and collectively they provide coverage for 67% of the market. Per the reference table below, all leading MA companies realized growth from March 2014 to March 2015 except for Anthem and Highmark. The aggregate net gain for the leading companies, year-over-year, was 8.2% and segment growth for all other MA companies was on par.
UnitedHealth retains its position as the top Medicare Advantage organization in the country; with 3.4 million enrolled, UnitedHealth owns 20% of the market. Humana ranks a strong second with 18% share and 3.1 million lives. Kaiser Permanente is positioned as third on the leader board, enrolling 7.5% of the total market or 1.3 million. Aetna trails closely behind Kaiser Permanente owning 7.2% of the market and more than 1.2 million lives.
Each year, Medicare Advantage plans rely on February and March enrollment reports to not only evaluate their standing but also assess which competitors gained and lost members during the last AEP (Annual Election Period). The AEP occurs between October 15 and December 7 each year and is also referred to as the Open Enrollment Period for Medicare Advantage and prescription drug plans.
This year, Humana experienced the largest gain in terms of membership, adding 369,747 members for a net gain of 13.2%. UnitedHealth's MA enrollment grew by 271,245 for a net gain of 8.5%. Aetna saw a net gain of 13.9%, adding 152,780 members to its MA book in the last year. Per the reference table below, membership gains were fairly substantial for other growth leaders in this segment, ranging from 83,365 for Kaiser Permanente to 32,729 for Blue Cross Blue Shield of Minnesota.
The majority of people with Medicare Advantage purchased a plan directly from the company and this is referred to as individual or direct purchase enrollment. As of March 2015, about 82% (approximately 14 million) of MA membership was individual. This speaks to why plans invest considerable time to devise market and selling strategies in preparation for the AEP every year.
Only 18% of total MA membership (slightly more than 3 million) originated through an employer group health plan or retirement health benefit. Nonetheless, group membership grew by 6% year-over-year primarily driven by UnitedHealth plan gains. Some companies strategically target group MA business because employers are interested in the cost savings MA plans can offer. Note that 57% of Aetna's MA membership is through group plans. Though many employers are shifting away from providing retirement benefits, larger volumes of people retiring may continue to sustain group Medicare Advantage opportunities over the next few years.
It is important to note that individual and group enrollment counts are slightly lower than total segment enrollment due to different reporting requirements.