Final Rule Limits Broker Compensation, Requires Important Plan Improvements

Late last week, the Centers for Medicare & Medicaid Services (CMS) finalized a rule for Medicare Advantage (MA) and Part D prescription drug plans that will have a number of positive effects for enrollees and the program. This includes limiting insurance broker payments to make rates more rational and the playing field between plans more even; curtailing sales of some beneficiary information between marketing organizations; improving network adequacy for behavioral health; boosting enrollee awareness of the supplemental benefits available to them; and strengthening alignment between Medicare and Medicaid in MA plans for people who are dually eligible for both programs.

As we noted in January, this final rule is a part of annual changes to how MA and Part D plans operate. We were largely supportive of the proposed updates and most of them were finalized as written.

The most noteworthy aspect of the final rule revolves around broker compensation. Brokers and agents receive commissions to sell MA and Part D plans. These amounts are capped, but MA plans found workarounds. One common practice is to pay brokers “administrative fees” on top of commissions, essentially rewarding them for steering. Starting with the Fall Open Enrollment period in 2024, the final rule eliminates these fees, leveling the playing field for MA plans and better centering beneficiary needs and preferences. While we supported this proposal, it does not address the enormous commission difference between selling MA plans and standalone Part D, with or without an accompanying Medigap policy. This leaves a significant incentive in place for brokers to steer people with Medicare toward MA plans, even when individuals would do better or prefer to stay in Original Medicare. We encourage CMS to address this imbalance.

Last year, we urged CMS to finalize a proposal that would bar third-party marketing organizations from selling a beneficiary’s contact information to other such marketers without their express consent. We were disappointed that CMS declined to do so. In our comments this year, we again asked CMS to move forward. In a surprise decision, the agency did so; this important policy will go into effect in time for Fall Open Enrollment. By limiting how beneficiary data can be shared between organizations, this new protection should better protect enrollee information and reduce the number of marketing calls they receive each year.  We applaud this decision.

The rule also establishes network adequacy standards for outpatient behavioral health to ensure that MA enrollees have meaningful access to care. We support this change and will continue to urge CMS to strengthen network adequacy standards program-wide, as well as improve beneficiary decision-making and coverage by requiring accurate and up-to-date provider directories and, ultimately, adding this information to Medicare Plan Finder.

Another important part of the final rule requires MA plans to notify enrollees midyear if they have not accessed supplemental benefits for which they qualify. We know that many people choose MA plans because of these benefits, but it remains unclear if people are using them, or getting the value they expected. With this new requirement, plans must send a personalized notice to each enrollee describing any benefits they have not used, including costs and how to access it. The timing of the notices—halfway through the coverage year—is intended to give enrollees time to act on this information. In our comments, we recommended additional plan outreach, which we continue to support.

In addition, the new rule requires plans to provide more justification for the supplemental benefits they choose to offer, to ensure the services are addressing real issues Medicare enrollees face and are not simply being used as a marketing tactic. Together, these are important changes to the supplemental benefit landscape that could result in improved care, better outcomes, lower costs, and heightened plan accountability.

Another finalized part of the rule will bolster requirements for MA Dual-Eligible Special Needs Plans (D-SNPs) to have better overlap between their Medicare and Medicaid service areas and better integration of services. We hope these changes will improve access to care, reduce confusion, and improve the well-being of people who are enrolled in both Medicare and Medicaid.

The rule also requires plans to conduct and make public health-equity analyses of prior authorization patterns to identify how these policies affect certain groups, including enrollees with disabilities, Part D low-income subsidy recipients, and dually eligible individuals. This is another proposal we strongly supported. We urged CMS to expand the analyses to other groups where disparities are possible and will continue to do so.

In all, we are appreciative of this final rule and will continue to press CMS to go further in future rulemaking to expand access to care and hold plans to account.

Read the final rule and fact sheet.

Read our comments on the proposed rule.

Read more about broker commissions.