• The Centers for Medicare & Medicaid Services ("CMS") Issue Agent Compensation Requirements for Medicare Advantage and Prescription Drug Programs
  • December 22, 2008 | Authors: Joseph V. (Joe) Geraci; Mia C. Garcia
  • Law Firms: Brown McCarroll, L.L.P. - Austin Office ; Brown McCarroll, L.L.P. - Houston Office
  • On November 14, 2008, CMS published an interim final rule in the Federal Register (73 Fed. Reg. 67406) revising compensation requirements for sales agents and brokers who sell Medicare Advantage and prescription drug benefit plan options to Medicare recipients. The interim final rule with comment period modifies regulations issued by CMS on September 18, 2008, (73 Fed. Reg. 54208) by:

    • Specifying that all compensation paid to agents and brokers reflect fair market value based on the commissions paid in the past;
    • Requiring that renewal compensation be no more or no less than half of the compensation paid for that beneficiary in the initial year of the six-year compensation cycle established in the September 18, 2008 rule;
    • Imposing similar limits on payments to organizations, such as field marketing organizations;
    • Requiring plans to submit their compensation structures to CMS for the previous three years, plus the compensation structure they are implementing for 2009; and
    • To prevent churning, CMS is still requiring that plans initially pay renewal rate compensation in 2009 rather than the initial year compensation amounts for all plan changes.

    The rule became effective on November 10, 2008, and the other rules from the September 18, 2008 regulations still apply. Comments on the interim final rule must be submitted by 5 p.m. on December 15, 2008.