NAIFA has submitted comments urging the Centers for Medicare & Medicaid Services to withdraw proposed regulations that would fundamentally alter Medicare Advantage plans and the Medicare Part D prescription drug program.
Of particular concern to NAIFA is a section of the CMS proposal that would change the rules for agent and broker compensation and likely reduce consumer access to professional advice on Medicare Advantage and Part D plans.
Currently, for the first five years a Medicaid Advantage or Medicaid Part D plan is renewed, plan sponsors may pay agents and brokers up to 50 percent of a “fair market value” (FMV) amount set by CMS during the plan’s initial year. Last year, CMS said that plan sponsors could continue to pay the 50 percent renewal rate for one additional renewal year. At that time, CMS said it intended to propose a rule allowing sponsors to continue paying the renewal compensation rate for additional years into the future.
However, when the proposal finally arrived, CMS had radically changed the compensation structure. Under the new proposal, the maximum amount of compensation sponsors could give agents and brokers for renewals would be 35 percent of that particular year’s FMV.
CMS says it is trying to simplify the compensation structure and reduce incentives for agents and brokers to advise clients to jump from plan to plan. In reality, their proposal would likely have the opposite effect.
Today, maximum agent compensation for renewal years is 50 percent of an FMV that is established in the first year of a plan and does not change. The proposed rule would set the maximum at 35 percent of a number that changes from year to year.
“It requires some strained logic to argue that the proposal is simpler than what we have now,” said NAIFA President John Nichols.
The proposal also would have little effect on the hypothetical problem of agents and brokers switching clients in and out of plans for personal gain.
“We’ve seen no evidence that agents and brokers are urging beneficiaries to switch plans based on the agents’ compensation,” said Nichols. “In fact, in NAIFA’s comment letter to CMS, we demonstrate that such a strategy would not be cost effective. Given the time and resources agents must devote to clients who switch plans, agents could find themselves being compensated for such efforts at a rate lower than the federal minimum wage.”
Ultimately, though, NAIFA is concerned that the CMS proposal will harm consumers. It will effectively lower renewal compensation for agents and brokers, making it financially difficult for them to continue serving their existing clients.
“The proposed changes will diminish the incentives for agents and brokers to stay involved in advising their clients on the critical Medicare Advantage and Medicare Part D plan choices they must make every year,” NAIFA explains in its comments to CMS.