Agent Commission: Don’t find yourself on the wrong end of the tipping point
Agent compensation for Medicare Advantage has changed drastically since the implementation of the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008. MIPPA included regulations, for the first time, around Agent/Broker Commission – among many other things. The goal of implementing commission requirements was to ensure there was a level playing field between plans by implementing the Fair Market Value (FMV) limits, thereby removing the incentive for agents/brokers to enroll a beneficiary into the top-paying plan or to churn beneficiaries from one plan to another. Rather, the goal was to ensure the beneficiary was enrolled in the plan that best fit his/her needs.
So, how did it work? Well, for the most part, we have seen the requirements implemented and The Centers for Medicare & Medicaid Services (CMS) prescribed processes followed. However, we’ve also seen an increasing amount of instances in which plans are trying to get around CMS requirements. For example, by paying exorbitant “override fees” to the Third-Party Marketing Organization (TMO) for little to no actual services in exchange or by not pro-rating commissions per CMS instructions, an issue which we saw addressed twice by CMS via Health Plan Management System (HPMS) memo this Annual Election Period (AEP). See HPMS memos titled, “Agent/Broker Compensation,” released on October 30, 2015 and November 20, 2015.
The reality is that CMS has been focusing their Program Audits in recent years on those issues which have direct impact on beneficiary access to care and has not routinely audited agent commission requirements for several years. Have plans taken advantage of the fact CMS has been focusing efforts elsewhere? Yes, we believe so. However, it appears CMS is becoming aware of the non-compliance around agent commission that is pervasive and even standard in the industry, evidenced by the multiple HPMS memos released this AEP addressing issues of non-compliance.
We know that in the past several years, CMS has exercised its authority by handing down Enrollment Sanctions and Civil Money Penalties (CMPs) for non-compliance. In fact, we see the current year-to-date total CMP amount at $4,719,220 — up from $1,131,505 in 2013.
So, the question is not if CMS will take action to address non-compliance around agent commission, the question is when. More importantly, when CMS does take action, on which side of the tipping point will your Organization land?
If you’re not sure where to start, here are some recommendations:
- Review your agent/broker and TMO contracts to ensure the contract language is in compliance with CMS requirements — pay particular attention to the “admin fees” being paid to the TMO.
- Review actual payments made to agents/brokers to ensure the payment system is calculating the accurate amount based on current compensation schedules on file with CMS.
- Review actual payments made to agents/brokers when the amount should have been pro-rated to ensure the payment system is calculating the amount accurately.
If you have questions or need clarification regarding any of the information listed above, contact us here and a team member will be in touch with you shortly.
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