The CMS said it is rescinding a critical part of its Oct. 8 Medicare Advantage guidance letter that deals with sales commissions after several payers boosted commission rates as an end-around to new sales and marketing regulations.
"CMS is aware that there is significant concern about agent/broker commissions for benefit year 2009," CMS acting Administrator Kerry Weems said in a written statement. "We will address the concern and expect to take regulatory action next week. CMS is strongly suggesting that plans keep this in mind as they contemplate making any final arrangements regarding commission structures."
On Oct. 23, Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means Health Subcommittee, called on the CMS to cap Medicare Advantage sales commissions after reports that some health plans are paying higher broker commissions in a move that he said runs counter to new federal regulations. On Oct. 24, influential Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, also called on the federal agency "to take immediate action" to stem the pay problems.
Stark's office said it had discovered instances where some health plans offered sales commissions four times higher than they have in previous years, which could "lead to an unprecedented amount of churning of beneficiary enrollment this year in a way that is disruptive to their care and detrimental to their coverage."
New regulations passed in September require the amount of money paid as a commission stay the same over five years. Before the new regulation, a plan could pay an agent $300 for signing up a new beneficiary and $100 for every year that person stays in the plan, Stark said. Over five years, the sales agent would make $700. -- by Matthew DoBias