As of May 2024, several organizations including: the Americans for Beneficiary Choice, the National Association of Benefits and Insurance Professionals, the Council for Medicare Choice, and the Fort Worth Association of Health Underwriters filed a lawsuit to block CMS Final Rule. The organizations argued that CMS does not have the authority to put limits on their compensation.
As of July 3, 2024; the U.S. District Court for the Northern District of TX ordered a stay against the CMS Final Rule. Organizations claiming the Final Rule exceeds CMS’s statutory authority filed the lawsuit. Although the outcome of the Final Rule is yet to be decided, the stay provides Medicare Advantage insurers and marketers a little relief for the near future of their businesses.
What happens next
The plaintiffs in this case requested a ruling by the end of this month. When Judge Reed O’Connor granted the stay, he included his intention to provide a ruling as requested.
Whatever the judge decides, both parties are able to appeal the decision. If this is the case, it will cause a greater delay in the final outcome and more uncertainty.
2025 AEP
This year has not been easy with all the uncertainty the proposal of the Final Rule has caused. That has not changed with the outcome still undecided. Until there is a resolution, this year’s AEP continues to raise questions for all involved.
CMS Final Rule and the carriers
Carriers will have to scramble to decide what benefits to offer and how to navigate plan designs and whether to move forward with the proposed benefit cuts. The recalculations of the star ratings are also cause for concern with the carriers. Getting a handle on all the moving parts is tricky to say the least.
Because the Medicare AEP starts October 15th, Medicare Advantage insurers who decide to go back to paying compensation the way they did before may face the challenge of last-minute changes in the event the court rules in CMS’s favor.
Some Medicare carriers are considering a reduction in benefits as well as their service areas as an answer to growing medical costs and regulatory changes. While others may exit the market altogether. On the other hand, a few hope to gain a greater market share where others pull back.
Many carriers have outlined their strategy based on the implementation of the Final Rule. At this point, adding to third-party marketing spending contradicts their plans. It remains to be seen if insurers will implement a work around and provide incentives to agents/brokers for greater sales.
The effect of the Final Rule on Brokers/Agents
CMS designed specific policies to pull back some MA/MAPD plan marketing. The reason behind this is to lessen incentives that may cause brokers/agents to be biased and sell based solely on compensation instead of what’s best for the client. There is also the idea that this gives smaller companies, who cannot afford to pay as much in marketing incentives, an opportunity to compete on a more level playing field. CMS rules also state brokers/agents must keep records of all interactions with potential clients to protect them from unlawful practices.
Click here to learn more about the proposed compensation changes
Because Carriers are held accountable for the actions of anyone marketing their plans, all advertising must pass strict CMS guidelines before it is approved for use. Many carriers may lean more towards using in-house agents than independent agents as they are easier to manage.
So far, there has been no comment by CMS about the ongoing litigation.