The Centers for Medicare & Medicaid Services wants to make big changes to how brokers get paid.
CMS included broker comp proposals in a batch of regulations set to appear in the Federal Register this week.
In the regulations, CMS deals with matters such as the rules governing Medicare wellness program incentives and provisions meant to curb fraud.
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In the Medicare producer compensation sections, officials talk about how plans pay the brokers who sell Medicare Advantage plans and Medicare Part D plans.
CMS wants to come up with a "fair market value" limit for producer compensation every year, officials say in a preamble to the proposed regulations, suggesting something like $400 per year.
A plan could pay a first-year commission that was any amount less than or equal to the fair market value limit, officials say.
In the subsequent years, commissions could be up to 35 percent of the fair market value limit in effect during that calendar year. If a producer sold a plan in 2014, for example, and collected a commission equal to $400, or 100 percent of the fair market level, in 2014, and the fair market value level rose to $500 in 2015, the second-year commission would be $175, or 35 percent of $500, not 35 percent of $400, officials say.
Today, many plans pay a renewal commission of 50 percent of the first-year commission during policy years two through seven, then a renewal commission of 25 percent of the first-year commission in later years, officials say.
Setting all renewal commissions at 35 percent of the fair market value limit would simplify commission calculations.
Officials also say they want to cap producer referral fees at $100.
Today, carriers handle referral fees in different ways, and that creates an uneven playing field, officials argue.
Comments are due March 7.
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Allison Bell
Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.
