The CMS 2025 proposed rule details a number of concerns related to the need to address payments from MA organizations that may encourage agents, brokers, or TMPOs to “steer” clients based on compensation.
Eliminating Administrative Payments to Prevent Sales Bias
From the Proposed Rule:
“Proposes adding a provision to prohibit contract terms that create incentives inhibiting an agent or broker’s objective assessment and recommendation of the plan for individuals.
Proposes “…removing administrative payments to TPMOs and increasing the per plan compensation rate by $31 per year.”
“Prohibit contract terms between MA organizations and agents, brokers or other TPMOs that may interfere with the agent’s or broker’s ability to objectively assess and recommend the plan that best fits a beneficiary’s health care needs.
“Competitive contract terms with FMOs potential disadvantage smaller plans, impacting competition.”
“…creating financial incentives that could lead FMOs to encourage sales agent to enroll Medicare beneficiaries in plans that do not meet their healthcare needs.
“Beginning in 2010, there has been a steep increase in administrative payments made to FMOs by MA payors.”
“Financial incentives paid by MA organizations to FMOs may have on agents and brokers, they also create a situation where there is an unlevel playing field among plans.”
Concerns About Disassembling an Efficient Solution:
CMS has rightly emphasized improving the clarity of communication with consumers. The proposed rule would further increase the number of mandated marketing touches as it “...requires Medicare Advantage plans to engage in outreach efforts informing beneficiaries about the supplemental benefits available to them”. To which we say, “All good!”
Specialized and highly efficient TMPOs have risen to these challenges, supplementing health plans’ outreach capabilities. Health plans frequently outsource these campaigns because a) Third parties can administer them more efficiently, and b) Outsourcing allows the health plan to maximize their focus on plan benefits that directly impact the client’s health and wellness. Respectfully submitted, arguing against outsourcing ignores proven economics. While many large plans outsource marketing and data collection, smaller plans, who have fewer resources, do as well. While larger plans could theoretically staff marketing efforts internally, this added overhead would again discriminate against smaller plans that can less afford the overhead.
Concerns About Unintended Consequences:
We submit that eliminating administrative payments to TMPOs and capping payments with a $31 increase will not increase equity between larger and smaller plans and will not prevent steering clients toward preferred plans. In fact, a likely unintended consequence of capping payments would be a significant increase in the urgency for increased volume. To maintain income with capped reimbursements, agents or brokers would be forced to close more policies in the same limited period of time.
When reimbursements are capped, the marketplace will naturally seek out volume. As such, a likely unintended (and very negative) consequence would be increased pressure on “quick closes”. This does nothing to increase the emphasis on tailoring the health plan toward the client’s specific health needs; we argue it does the opposite.
Concerns about the Negative Impacts on Technology Investments:
“Agents and brokers may steer beneficiaries toward plans that provide significant compensation
rather than those that meet the beneficiary’s health needs.”
The marketplace is excellently addressing this concern—enrollment technologies such as Sunfire, Connecture, Trusty.Care, Spark do an impressive job identifying client’s diagnoses, comorbidities, prescriptions, and financial status, instantly curating a list of MA plans that best serve each scenario.
The solution to the abovementioned problem exists, but the proposed rule would severely limit its expansion in the market. The proposed rule discusses, “…. the cost of a CRM system…is about $50 per month.” It is essential to recognize that the powerful enrollment software discussed above is often thousands or even tens of thousands of dollars per year for each user seat.
Capping reimbursement with a $31 increase will discourage investment in technology, worsening the agent/brokers’ ability to match health plans with each client’s unique health needs. We recommend an environment that encourages further investment in technology.
Concerns About Eroding the Progress That Prior CMS Emphases Have Achieved
“The need to eliminate unfair competition that favors large MA plans over smaller.”
On the surface, the above is common sense. Everyone wants a level competitive playing field.
But when analyzing how Part C payors have evolved over the past decades, a clear cause and effect can be seen. CMS has done an excellent job of innovating the star ratings system. This stick-and-carrot approach encourages payors to comply with CMS priorities. It’s not surprising to anyone that high-star plans are gaining market share. In fact, it is estimated that every ½ point increase in star ratings adds 4% to 6% enrollment to the health plan’s membership. By design, market share is migrating to high-star plans. This is a great success.
Based on CMS data, plan membership for different star-rated plans is:
In many ways, removing economies of scale created by larger plans would promote lower quality (low-star) plans, the exact opposite effect that CMS wants to have on the marketplace.
Why plans with higher star ratings have greater market share is easy to understand. We believe this should be celebrated, not punished.
Recommendations: A Fair, Scalable Solution:
We applaud CMS’s emphasis on ensuring that each health plan is tailored to its unique beneficiary, and we believe the market is well on its way to achieving this. Simple adjustments to technologies could quickly deliver the desired results.
We recommend that CMS consider adding a new star rating: “Plan applicability and utilization.”
“Applicability” would relate to the quantification of how many unique plan benefits/ services directly support each beneficiary’s health needs. This quantification already exists in the enrollee technologies discussed earlier. Automated reporting to CMS would be simple.
“Utilization” would be reported by the payor. The star rating would be based on the extent of the actual utilization of unique benefits/services.
This simple approach enables CMS to quantify the extent to which agents, brokers, and TMPOs match plans to their clients’ health needs while verifying that those identified benefits and services are being utilized. The well-proven motivational impact of star ratings would naturally encourage sales entities and health plans to achieve CMS’s vision.
This approach could succeed without discriminating against any type of plan, large or small.
Thank you for the opportunity to comment on the 2025 proposed rule, CMS-4205-P. Please feel free to contact us if you have any questions.
Chief Product Officer