Legislative Information

On Thursday, April 4, the Centers for Medicare and Medicaid Services (CMS) released the much-anticipated final rulemaking titled “Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Program for Contract Year 2024 – Remaining Provisions and Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Program…”. This rulemaking was expected to address several critical topics, including agent compensation and FMO funding and compensation. 

NABIP’s lobbying over the past several months has paid off in the final rule by allowing FMOs to contract with carriers to continue to provide the services essential to allowing agents to successfully place beneficiaries in the plan that best suits their needs. It also increases the agent compensation base rates per enrollee by $100. Additionally, CMS will be eliminating administrative payments for prescription drug plans (PDPs), in favor of increasing their base rate by $100. Each renewal will result in agents and brokers receiving compensation equal up to 50 percent of the compensation rate, resulting in MA and PDP enrollees’ agents and brokers receiving up to $50 more per enrollee renewal.  

CMS claims that this practice will achieve the goal of providing sufficient funds to legitimate MA and PDP enrollment, while discouraging excessive funding being used for “other purposes”. CMS acknowledges that the flat $100 increase will not cover the full cost of administrative payments, which CMS intends to address by classifying this $100 payment as a transfer, rather than as a new cost.  

In the rulemaking, CMS expressed concerns with increases in fees being paid to larger FMOs, which have resulted in a “bidding war” among MA plans to secure what CMS calls “anti-competitive contract terms with FMOs and their affiliated agents and brokers”. CMS expressed that if this “bidding war” is left unaddressed, it will continue to escalate with anti-competitive results, causing smaller and regional plans to lose enrollees as a result of being unable to pay “exorbitant fees” to FMOs, ultimately losing out to large national plans who can afford these “exorbitant fees”.  

The final rulemaking focuses on current payment structures, including the use of administrative payments among MA organizations, agents, brokers, and FMOs. Specifically, CMS seeks to eliminate the practice of FMOs incentivizing some agents and brokers to “emphasize or prioritize one plan over another, irrespective of the beneficiary’s needs, leading to enrollment in a plan that does not best fit the beneficiary’s needs and a distortion of the competitive process.” Additionally, CMS expressed concerns with FMOs that provide MA organizations with both lead generation and brokering services, claiming that these arrangements will “trickle down” to influence agents and brokers into enrolling more beneficiaries into those plans that also provide the agents and brokers with leads, without taking into account the needs of the beneficiary. It is important to note, however, that newer agents rely on FMOs to provide one-time leads as they build their book of business.  

The rule clarified contracting language, as it generally prohibits contract terms between MA organizations and agents, and brokers or other TPMOs, including FMOs, for the purpose of ensuring that the TPMO does not influence the agent’s or broker’s ability to “objectively assess and recommend the plan that best fits a beneficiary’s healthcare needs”. We believe that removing volume-based incentives will not fundamentally affect the enrollment of beneficiaries to the best plan for that individual.  

CMS already regulates agent compensation using fair market value to set their compensation so there is no incentive to “game the system”. The current system with built-in checks and balances benefits all involved parties, the better an agent does, the more referrals and renewals they get, and the enrollee gets the best possible plan for their needs. Under the new rules, CMS seeks to level the playing field in terms of enrollment in plans, whether national or regional plans, by creating uniform payments to agents.  

NABIP will work with CMS, Capitol Hill and other stakeholders to fully understand the new rule and consider next steps as necessary to ensure the continued success of our members. 

Read NABIP’s press release on the final rule here.