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Regulators Aim to Curb Medicare Plan Lead-Generation Firms

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What You Need to Know

  • CMS has posted draft regulations that include a TPMO definition.
  • TPMOs would have to warn consumers about any limits on the range of Medicare plans they can sell and discuss.
  • The plan issuers would be responsible for any confusing or misleading TPMO activities.

The federal agency that oversees Medicare says some Medicare plan lead-generation firms are confusing and infuriating consumers.

The Centers for Medicare and Medicaid Services wants plan issuers to take charge of making third-party marketing organizations, or TPMOs, behave.

CMS — an arm of the U.S. Department of Health and Human Services — has included new TPMO rules in a set of draft regulations for the Medicare Advantage plan and Medicare Part D prescription drug plan markets.

What the Draft Rules Mean

For agents, brokers and other Medicare plan distribution players, the new CMS proposal means that they could start to face what amounts to a health insurance version of annuity sellers’ best-interest standard.

The guidelines could give traditional brick-and-mortar producers help competing with national, call center-based Medicare plan sellers.

For life insurance and annuity sellers, implementation of the proposal could eventually lead to the Medicare plan sales standards influencing the evolution of life and annuity sales standards.

Proposal Details

CMS plans to:

  • Define TPMOs as “organizations that are compensated to perform lead generation, marketing, sales, and enrollment related functions as a part of the chain of enrollment, that is the steps taken by a beneficiary from becoming aware of a plan or plans to making an enrollment decision.”
  • Require a TPMO to put the following standard disclaimer in a prominent place: “We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.”
  • Make Medicare plan issuers responsible for the activities of TPMOs in the same way that they are now responsible for the activities of agents, brokers and other “first tier, downstream or related entities.”

The Thinking

CMS officials say in the introduction to the draft regulations that they developed the new TPMO proposal because their agency has received hundreds of complaints from consumers who did not understand how Medicare plan marketing organizations that called them got their information.

CMS staffers reacted to the complaints by listening to recordings of TPMO sales calls.

“Many of these calls demonstrate that beneficiaries are confused by these TPMOs, including confusion regarding who they are speaking to, what plans the TPMOs represent, and that the beneficiary may be unaware that they are enrolling into a new plan during these phone conversations,” officials say. “CMS acknowledges that in some instances TPMOs can serve a role in helping beneficiaries find a plan that best meets their needs. However, CMS believes additional regulatory oversight is required to protect Medicare beneficiaries from bad actors in this space.”

Regulation Nuts and Bolts

The TPMO regulation proposal is part of a 360-page packet that includes many other proposals, such as a proposal for requiring plans to tell consumers, in the top 15 languages used in the United States, that interpreter services are available for free.

More on this topic

If implemented as written, the TPMO regulations would start to take effect during the 2023 Medicare plan coverage year.

The draft is set to appear in the Federal Register Jan. 12, and comments will be due March 7.

CMS lists Marna Metcalf-Akbar and Melissa Seeley as contact people for general questions, and Jacqueline Ford as a contact person for Medicare Advantage plan questions.

Medicare Plan Background

Medicare is a federal program that provides medical coverage for 57 million U.S. residents who are disabled; are on kidney dialysis or have received a kidney transplant; or are ages 65 or older.

The Medicare Advantage program gives health insurers, managed care companies and other coverage providers a chance to use a combination of federal money and enrollee premiums to provide what looks to the enrollee like an alternative to traditional Medicare coverage.

About 16 million people get drug benefits through their Medicare Advantage plans.

Another 25 million people have stand-alone Medicare Part D prescription drug coverage.

CMS has posted the current Medicare plan marketing guidelines here.

(Photo: bbernarnd/Shutterstock)