Sen. Ron Wyden — the highest-ranking Democrat on the Senate Finance Committee — has released a report calling for big changes in Medicare Advantage program marketing efforts.
The federal agency that runs the program, the Centers for Medicare and Medicaid Services, should require plan issuers to pay agents and brokers a fixed, inflation-adjusted fee, rather than a commission; require the agents and brokers to be fiduciaries; and set tough new rules for Medicare plan marketing support organizations, such as companies that generate Medicare plan sales leads.
CMS has adopted several sets of Medicare plan market rule updates in recent years, but Wyden argues in the report that the program still relies on "a complex ecosystem of middlemen that evade oversight and regulation."
The current system costs too much and may steer people to the wrong plans, Wyden says.
Agents' and brokers' fees and commissions increased an average of 19% per year between 2018 and 2023, to $6.9 billion, while spending on "direct sales salaries and benefits" for salaried sales agents increased just 7% per year, to $2.2 billion, Wyden says, citing data from the 2024 Medicare trustees report.
What it means: If the Medicare Advantage program ends up adopting Wyden's recommendations, Medicare agents, brokers and market support organizations could face new restrictions on activities and limitations on fees.
Wyden has been active in efforts to update rules and oversight for other products, such as private placement life insurance, and the kind of analysis reflected in the report could eventually end up shaping efforts to analyze and change rules for other types of financial services products, such as life insurance, annuities and mutual funds.
Medicare Advantage plans: The Medicare Advantage program gives private insurers a chance to offer the 68 million Medicare enrollees a chance to offer plans that eliminate many of the deductibles and coinsurance payment requirements built into traditional Medicare coverage.
In exchange, the 35 million Medicare Advantage plan enrollees are expected to accept plan efforts to encourage them to see in-network providers and manage their use of care.
Wyden's $7.9 billion compensation figure for agent commissions and salaries implies an average producer compensation cost of $260 per Medicare Advantage plan enrollee.
The political landscape: Some Democrats support the Medicare Advantage program, but others, especially those who want the United States to move to a government-run, "single-payer" health finance system, have long opposed the program.
Wyden began work on the new report when he was chair of the Senate Finance Committee. Democrats then had a majority in the Senate.
Republicans now control the Senate, including the Finance Committee. Republicans have usually been warmer toward the Medicare Advantage program.
But Republicans and Democrats have found common ground on some health care and health finance issues, including efforts to support the Medicare Advantage programs.
Dr. Mehmet Oz, President Donald Trump's pick to be the Centers for Medicare and Medicaid Services administrator, said recently during a Senate Finance Committee nomination hearing that, although he supports the program, he believes that the program is spending too much on marketing and may be working with too many agents.
Oz himself has an active health insurance producer's license in New Jersey. He obtained the license while contemplating the idea of participating in a Medicare Advantage plan marketing program.
NABIP's view: Jessica Brooks-Woods, the chief executive officer of the National Association of Business and Insurance Professionals, welcomed the release of the Medicare plan marketing report.
Brooks-Woods noted in a statement that agents and brokers have been leaders in raising concerns about some national organizations' aggressive Medicare plan marketing practices.
NABIP thinks CMS should enforce existing Medicare Advantage television marketing regulations and work with the Federal Communications Commission to address complaints, Brooks-Woods said.
She said CMS regulations already limit the impact of marketing costs on taxpayers and that CMS imposes already much tougher regulations than those that apply to sellers of Medicare supplement insurance.
"We would welcome additional uniform standards across all Medicare products and better enforcement tools to address bad actors without penalizing the majority of agents who are compliant and consumer-focused," she said.
Sen. Ron Wyden, D-Ore. Credit: Wyden
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