CMS Issues Guidance for Agent/Broker Compensation Processes

The Centers for Medicare and Medicaid Services has recently provided guidance to Section 120.4.2 of the Medicare Marketing Guidelines regarding agent/broker compensation.  This guidance specifies when a carrier can pay full or pro-rated initial compensation.

CMS states:

There are three scenarios affecting how an organization may pay full or pro-rated initial compensation.

• For a beneficiary’s first year of enrollment in a plan in which the MARx report lists the prior plan type as “none”, organizations may pay full or pro-rated initial compensation.

• When a beneficiary moves from an employer group to a non-employer group plan in which the MARx report lists the prior plan type as “none”, organizations may pay full or pro- rated initial compensation for a beneficiary’s first year of enrollment in a plan.

• For unlike plan changes (e.g., MA-PD to PDP or PDP to Cost Plan) occurring after January 1 in which the MARx report indicates the beneficiary had prior plan history (regardless of plan type), organizations must pay pro-rated initial compensation according to the number of months in the plan. For example, a change from a PDP to an MA-PD effective May 1 is an unlike plan change resulting in a pro-rated initial compensation of 8/12 (May through December) of the MA-PD initial compensation rate.

CMS has requested immediate updates to the carrier’s processes in order to be in compliance.

MARx report is the CMS Agent/Broker Compensation Report.

How does this affect agent commissions?

If a beneficiary is new to Medicare with no prior plan history, the agent will be paid the full or pro-rated initial compensation.

If a beneficiary has an unlike plan change, for example an MA or MAPD to a PDP plan, the agent will be paid the pro-rated initial compensation based on the number of months in the plan.

If a beneficiary has a like plan change, for example an MA to another MA plan, the agent will be paid the pro-rated renewal compensation based on the number of months in the plan.

If a beneficiary moves from an Employer Group Plan to a Non-Employer Group Plan, the agent will be paid the full initial compensation if there is no prior plan history.  If there is plan history, the compensation will be pro-rated based on the number of months in the plan.