The Centers for Medicare & Medicaid Services (CMS) on Thursday issued a memo to state insurance departments after reports that regulators pressured Medicare Advantage (MA) plans to restore compensation cuts to agents, brokers, and third-party marketers.
CMS said in the December 4th memo that federal law likely preempts state laws regarding the MA program, including actions related to agent and broker compensation, communication and marketing requirements, and enrollment standards.
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The CMS memo comes in the wake of recent actions by several states to prevent MA insurers from cutting commissions to agents and brokers and limiting access of online applications to discourage new beneficiaries from signing up for their plans. For example, the state of Idaho issued a cease and desist order in October against UnitedHealthcare and Care Improvement Plus South-Central Insurance Companies for wrongfully limiting consumer and agents access to MA products in the state. And Modern Healthcare reports that insurance commissioners in Delaware, Idaho, Montana, Oklahoma, New Hampshire, and North Dakota are warning MA insurers against limiting MA enrollment..
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CMS pointed to provisions in the Social Security Act thar relate to state laws, indicating the standards supersede any state law or regulation (other than state licensing laws or state laws relating to plan solvency) with respect to MA plans offered by MA organizations.
The agency said that its regulation closely mirrors the statutory language. The regulations give CMS broad authority to regulate the use of agent and broker compensation. Furthermore, the agency said it has addressed compensation standards in regulation, defining compensation as well as setting limits on compensation.
MA organizations must submit specific rates or a range of compensation to CMS each year, including a minimum amount and a maximum amount (up to the limit published by CMS). However, CMS said that MA organizations and third-party marketers can negotiate compensation payments each year if the rates fall with the compensation range submitted to the agency.
The agency also clarified that it has broad authority to review marketing materials and that enrollment forms must be available on MA organization’s websites.