The Centers for Medicare and Medicaid Services last week proposed new regulations that considerably toughen marketing and operations oversight on insurers offering Medicare Advantage and prescription programs under Part D of Medicare.
The proposal would also impose stringent standards on the conduct of agents selling Medicare Advantage programs and subject them to state oversight. It would also give the agency the authority to fine an insurer up to $25,000 per beneficiary if an agent is found to violate the new rules.
The CMS also wants to revise procedures affecting how carriers handle low-income prescription drug plan members, or other special needs plans.
Regarding marketing, the proposal would require that insurers using independent agents to sell MA and prescription drug programs under Medicare use state-licensed agents for such marketing. And, it would require MA organizations to report to states “in a manner consistent with state appointment laws” that they are using with those agents.
The proposed regulations would also bar door-to-door marketing and cold-calling.
And, going beyond an agreement that members of America’s Health Insurance Plans proposed in March with members of the Senate Finance Committee, the regulations tighten guidelines on broker/agent commissions that insurers can pay to independent agents.
In comments to reporters, Kerry Weems, acting administrator of CMS, said the proposed rules “build on CMS’ experience” in administering the MA and Part D programs since 2006 and “strengthens” their authority.
Most of this has already been put into place through operational guidance, and Weems said “hopefully the rule will be in place” and finalized in time for the open enrollment period this year that begins Oct. 1.
In terms of the agents, and the states, the rules impose restrictions or build on existing ones, such as not allowing agents to wait in the parking lot of a senior center for example, or in any place, like a waiting room, where a senior intends to receive healthcare. It also limits the value of promotional items given to a potential client, such as snacks, water bottles, etc., to $15.
Regarding the new authority for states to oversee agents selling MA plans, Weems said the rules do not give states any regulatory authority to take action against agents in response to a complaint, but that CMS has a “memorandum of understanding with almost every state” that would have the state forward any complaints they receive to CMS.
He acknowledged that CMS was acting under pressure, especially from the Senate Finance Committee. “Clearly this is an area where they have had some concerns” regarding Medicare Advantage reform overall. Weems said the committee would be briefed about the new rules, adding “we’ll see if this is enough” to satisfy their concerns.
Another change made by the rules would require plans to level out their commissions among products and years.
Abby Block, director of the Center for Beneficiary Choices and Medicaid Services at CMS, said this was done in an effort to prevent “churning” by agents and brokers.
“What we have done is we have created a rule that would ensure there was stability in the market,” she said, explaining that it would help ensure that seniors would not be moved by agents or brokers from plan to plan to enhance their own commissions.
“There won’t be the kinds of incentives in the market that there are now for brokers and agents” to try and convince their clients to change plans, she said.