The “clarification” for compensation structures takes effect November 10, 2008
Today, the Centers for Medicare and Medicaid Services (CMS) released an interim final rule adopting additional regulatory provisions for agent/broker compensation arrangements under the Medicare Advantage and Part D Programs. The changes, which take effect today, include the following:
CMS maintains the six-year compensation cycle but requires that aggregate compensation to an agent/broker during each of the five renewal years be fair market value and no more (and no less) than 50 percent of the aggregate compensation paid to the agent/broker for the beneficiary’s initial year of enrollment.
For 2009, all agents/brokers shall be paid as though the individual is in the first of the five “renewal” years within the six-year cycle. CMS may authorize Medicare Advantage Organizations/Part D Plan Sponsors to subsequently modify the compensation designation if CMS determines an enrollment is for a newly entitled Medicare beneficiary or an individual who switched from original Medicare.
Overall, agent/broker compensation arrangements must meet one of two regulatory standards: (i) compensation may equal that paid by the Medicare Advantage Organization/Part D Plan Sponsor for that product in 2006 (adjusted for inflation), or (ii) the renewal compensation must be 50 percent of the market rate for initial enrollments paid by all organizations in the geographic area for that product in 2006 and 2007 (adjusted for inflation). Future compensation structures must be based on the prior year’s compensation, adjusted for inflation.
Compensation structures must be posted by November 17, 2008, and other reporting requirements also are being adopted.
The final rules will be published in the Federal Register on November 14, 2008, and in the meantime will be available here. Comments on the interim final rule are due on December 15, 2008.