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On January 5, President Tom Cothron submitted comments to the Centers for Medicare & Medicaid Services (CMS) on behalf of all NAIFA members to express concern over a proposed rule change regarding the Medicare Advantage and Medicare Part D programs.

 The proposed national agent/broker fixed compensation amount for MA is $642. This is an increase of $31 over the existing national compensation cap of $611, which CMS has stated would eliminate the current variability in payments and improve the predictability of compensation for agents and brokers. This proposal would generally prohibit insurers from paying volume based "bonuses" to third-party marketing organizations (TPMOs) now defined to include any field marketing organizations (FMOs) or individual, including independent agents and brokers.

The current compensation regulation allows for payments other than compensation so long as the amounts “are at or below the value of those services in the marketplace” or at fair market value. CMS registers concern in the proposed rule that “when the value of administrative payments offered to agents and brokers reaches the levels that CMS has observed in recent years, these payments may distort the process that agents and brokers are expected to engage in when they assist beneficiaries in weighing the merits of different available plans.” The proposed rule does not cite any quantitative data or analysis to indicate that CMS has undertaken a market review to assess whether the payments that exist in the MA market are in fact concerning, or whether they reflect the fair market value for the services undertaken to administer value-added programs necessary for the consumer-focused sale of MA plans.

Additionally, the proposed rule makes amendments to §422.2274(d)(2) requiring all payments to agents or brokers that fall within the following categories to be included under the regulatory definition of “compensation” and be regulated by the compensation requirements:

  1. Payments tied to enrollment.
  2. Payments related to an enrollment in an MA/PDP plan or product.
  3. Payments that are for services conducted as part of the relationship associated with the enrollment into an MA/PDP plan or product.

Lastly, the proposed rule includes substantial changes to §422.2274(e) regarding payments other than compensation such as administrative payments. As consumers shop, enroll, and access their benefits throughout the year, agents and brokers are on standby to answer key questions, enable plan usage, and monitor evolving consumer needs. NAIFA is concerned that CMS’s proposed rule will eliminate administrative payments to FMOs. This would lead to serious disruption in our healthcare industry and increased costs to beneficiaries in America.

NAIFA asked CMS to reconsider this proposal in its entirety and members urged their Congressional leaders to request CMS withdraw or to consider a more collaborative engagement with us, health plans, and others in the industry to develop relevant data to better assess the current state of the market and more carefully consider potential regulatory changes for future release.

Prospects: It is likely CMS will consider modifications, but it looks unlikely that the agency will withdraw it.

 NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.