A Review of the Proposed 2025 CMS Changes for Medicare Advantage Plans, Compensation, & FMO Contracts

There has been a lot of discussion lately about the recently proposed rule by the Centers for Medicare & Medicaid Services (CMS) that affects Medicare Advantage plans. Much of the conversation has related to the changes in commission structure, which includes capped commission payments for agents/brokers and potential impacts to upline organizations, like Field Marketing Organizations (FMOs).

In this article, we’ll focus mainly on the summary of the proposed ruling and the changes to compensation for both agents/brokers and FMOs. To read the ruling in its entirety, see the CMS Newsroom Fact Sheet.

A summary of the proposed ruling reads: “On November 6, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would revise the Medicare Advantage Program (MA), Medicare Prescription Drug Benefit Program (Part D), Medicare Cost Plan Program, Programs of All-Inclusive Care for the Elderly (PACE), and Health Information Technology Standards and Implementation Specifications. The proposed policies build on existing Biden-Harris policies to strengthen beneficiary protections and guardrails to promote healthy competition and ensure Medicare Advantage plans best meet the needs of beneficiaries. In addition, these proposed policies would promote access to behavioral health care providers, promote equity in coverage, and improve supplemental benefits.”

When it comes to the conversation about compensation, the proposed rule has mixed reviews. CMS suggests the rule would “set a clear, fixed amount that agents and brokers can be paid regardless of the plan the beneficiary enrolls in, addressing loopholes that result in commissions above this amount that create anti-competitive and anti-consumer steering incentives.” Specifically, the proposed rule would set the national compensation amount at $642, which they state would increase transparency for agents and brokers and improve the predictability of their potential compensation. This change would go into effect with the 2025 plan year.

However, the main discussion happening online regarding compensation highlights uplines more specifically. As CMS states in their proposed ruling: “The proposed rule would generally prohibit contract terms between Medicare Advantage plan organizations and marketing middlemen, such as field marketing organizations, that result in things such as volume-based bonuses for enrollment into certain plans, which may interfere with the ability of agents or brokers to assist the enrollee in finding the plan that is best suited to their needs.”

On January 17, 2024, the National Association of Benefits and Insurance Professionals (NABIP) released a letter calling for clarity on the proposed rule and the impact it will have. In their letter, they state: “Field Marketing Organizations (FMOs) play a pivotal role in this ecosystem by lowering overall costs to the Trust Fund. They support independent agents by providing essential services like credentialing, compliance assistance, and technology support. The proposed rule by CMS could significantly affect Medicare beneficiaries, FMOs, and the numerous agents and brokers who assist millions of seniors in understanding their Medicare plan options.?Without the general support of FMOs, insurance carriers would need to provide these services, raising their administrative costs and premiums to Medicare beneficiaries.”

As of 2023, more than half (51%) of eligible Medicare beneficiaries are enrolled in a Medicare Advantage plan. In total, there are 30.8 million people enrolled in a Medicare Advantage plan. There are currently 43 Medicare Advantage plans available and it accounts for $454 billion and 54% of total federal Medicare spending.

Currently, CMS is still reviewing comments and proposed changes from organizations like NABIP.

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Posted by Allison Babberl on Tuesday, January 30, 2024 in Senior Market Insurance

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About The Author

Allison Babberl

Allison is the Content Lead at AgencyBloc. She manages the creation and schedule of all educational content for our BlocTalk and Member communities. Favorite quote: “Conversation is the bedrock of relationships. Without it, our relationships are devoid of substance.” -Maribeth Ku ... read more