CMS Issues Agent Compensation Requirements for Medicare Advantage & Prescription Drug Programs

In a second round of rulemaking since September, the Centers for Medicare & Medicaid Services (CMS) has revised requirements for how Medicare Advantage and Medicare prescription drug plans can compensate sales and marketing agents.

The new Interim Final Rule with Comment Period revises guidelines that were issued on Nov. 10.  Compensation levels under the new scheme must meet one of the following two standards:  

1. For organizations that offered plans in 2006, and used agents and brokers the “initial year” compensation under the six-year cycle is the same—adjusted for inflation—that was paid for the same plan type in the same area in 2006. The inflation adjustment will be based on the average change in MA growth rates and Part D growth rates as published in the MA and Part D rate announcements published on the first Monday in April.  Organizations are to pay 50% of the inflation adjusted amount of the initial enrollment compensation it paid in 2006.
2. This is the only option for organizations that did not offer a plan of the type in question in 2006 and may be used as an option for organizations that did offer a plan in 2006 – Renewal compensation initially paid in 2009 must be 50% of an initial rate that was determined, based on market analysis to be commensurate with the “market” rates paid by all organizations in the geographic area for an initial enrollment in the plan type in question during 2006 and 2007, also adjusted for inflation based on changes in MA and Part D growth rates.  

It is also important to note that CMS does not have the administrative capability to notify plans whether an individual enrolling in a plan in 2009 is a new enrollee as part of its enrollment acceptance.  This means agents will initially be paid the renewal compensation amount for all enrollees. CMS will run reports “several times” in 2009 and will notify organizations which agents would be entitled to an initial compensation amount.

While CMS will accept comments on the rule until December 15, plans must incorporate the latest requirements into their sales compensation structures no later than Nov. 15, when open enrollment begins for the 2009 plan year. All provisions in the Sept. 18 rule not revised in the new rule remain unchanged and still are effective.
 
AHIA-NAIFA Health & Employee Benefits continues to have concerns with the new guidelines and will be submitting additional comments to CMS. 

NAIFA/AHIA Staff Contact:  Diane Boyle, AHIA Executive Vice President, at 703-770-8252.