Ritter Insurance Marketing, Craig Ritter

Clarification of CMS Broker Compensation Rules for Medicare Advantage

There are a couple of areas in CMS Marketing guidelines where there seems to be widespread confusion on what insurance companies are allowed to pay and REQUIRED to pay to brokers.

  1. Internally replacing an Existing Company product – If you bring a piece of business to a Medicare Advantage company which “Internally Replaces” an existing piece of their business (whether Medicare Supplement, Medicare Advantage or Employer Group), the insurance company is REQUIRED to pay broker compensation.  This is true whether or not you are the “broker of record” on the former piece of business.  This is true whether or not the former piece of business is a “house account”.
  2. Exception to Rapid Disenrollment Rule – If you write a piece of business during October, November or December and the member changes plans for January 1st of the following year, this IS NOT a rapid disenrollment because the member staying in the plan for the full plan year.  The chargeback should not be 100% of the advance, but only the unearned portion of the advance (9, 10 or 11 months, respectively).
  3. Replacement of “Like for Like” during Initial Year – If you do a “Like for Like” replacement during a Medicare Beneficiary’s “Initial Cycle Year”, you should receive INITIAL COMMISSIONS.  For example, if a Medicare Beneficiary “ages into” Medicare in April and enrolls into a Medicare Advantage plan (Company A) and you enroll them in different Medicare Advantage Plan in July (with Company A or with Company B, C, etc.), you should be paid the FULL INITIAL COMMISSION, even though you are replacing a Medicare Advantage plan.  The reason is that the Medicare Beneficiary is still in their Initial Cycle Year.  Whether it’s a Like for Like replacement or a Not Like for Like replacement doesn’t matter.  Initial Cycle year is paid Initial commission, period.  (This doesn’t happen frequently, however, the Medicare Beneficiary can switch using OEP-NEW or with an SEP like Low income subsidy or the SEP for an SPAP election or an SEP for a move out of the plan’s service area, etc.)

Posted by filed under All, CMS, News .

  • williamdrenik

    If an agent’s name is on the last application received by a plan during AEP and then an AOR change request is made by another agent, who does the commission got to, the original agent who enrolled the client or agent who made AOR request change?

  • Lyle R. Cunningham

    I have received a chargeback on a client who I enrolled for a June 1, effective date when they aged-in. He remained on the plan through the end of the contract year Dec 31. The company discontinued offering any plans in his county for the following year so my client was forced to enroll onto a different plan. Why am I being assessed a chargeback?

    • They could theoretically charge you back for 5 months if you were paid for the full 12 months back in June. This is what this new policy would prevent from happening in the future, but you would get less initially depending on when the enrollment occurs.

  • Kathleen

    speaking of commissions…I am the only person in my agency selling Med Advantage plans. I am already certified for 2012 and 2013 along with AHIP. The principle of my agency does not sell Medicare Advantage. Does he have to become certified since the commission checks are sent to the agency and not directly to me as the selling agent?

    • Kathleen:

      Most Insurance Companies are going to require that someone affiliated with the agency certify on behalf of the agency. This could be you acting on behalf of the agency. All companies are going to look at this differently, but the company is going to want a “live body” to certify on behalf of the entity!

  • Kathleen

    I am the only person in my agency who sells Medicare Advantage Plans. I have completed all of my certifications for each carrier and AHIP Does the principle of my agency also have to become certified? He does not sell Medicare plans

  • mike

    Is an FMO REQUIRED to pay an agent on business written (including renewals)? I was recently told by my FMO that they do not have to pay agents but that they choose to. This cannot be correct is it?

    • If the agent is in good standing (holds an insurance license, appointed with the company and certified with company), then it would be a marketing violation not to pay the agent (for the FMO and the insurance company as well).

  • Thanks Craig! As always, you provide answers and support to us “lowly” independent agents.

    I was told by my FMO for Highmark (unfortunatley not you) that Highmark will not pay me commissions for replacement of their Med Supp business. After reading your blog, I asked them again and received the same answer. I have not written any such business with Highmark; but am wondering if there is any recourse for possible future MA business? As you too represent Highmark, please tell me – have you had any success in this situation?

    Also, I see that you’ve replied to another agent that this rule is likely only going forward. I wrote several cases with Amer Progressive and was not paid as they were Med Supp clients. So, guess there’s no point in trying to reverse that one?

    Thanks again!

  • Brenda Jo

    Thanks Craig. I think each company is interpreting differently and CMS could communicate better right up front on their intent and their interpretation of what is supposed to happen. Better yet, let’s go back to the old way where the carrier’s communicated what their comp was. You know, New and Renewal with New being New to that company. This has to be very frustrating for carriers to figure out how to get their accounting systems to pay the comp with the many scenarios for some beneficiaries. I’m thankful for the information you relay on this blog…

  • Kenneth Broyles

    I am still lost on section 3. What would happen if….

    Prospect is LIS and has that SEP to enroll in a MAPD. The a few months later he is qulified for a State Medicaid. Because of the extra benefits of a Dual Special Needs Plan, I enroll them in it.. so i get true-up then i get a charge back .. and lose true up. is this situation coverd?

    • Kenneth:

      If you put the prospect into an MAPD and received initial commission (First cycle year) and then, later in the year, you moved them to a D-SNP due to Dual eligibility, you would be charged back on the initial commission you got on the first advantage plan you wrote on a pro-rata basis(if in the first 3 months, 100% for rapid disenrollment), HOWEVER, you should get an initial commission on the REPLACEMENT of the MAPD with the D-SNP.

      My point is that most companies aren’t even aware of this.

      (I have documentation for those who need it!!)

      • Joe Cerqueira

        commission for plan changes in first year cycle.I have about ten cases in 2009-2010 where I switched a beneficiary in the first year and only received a renewal.If I understand this correctly this means that through the duration of the first twelve of a new to MA beneficiary’s enrollment whoever thPlease provide link to documentation concerning initial e agent of record is at any point in the first twelve months of enrollment a first year commission will be paid.( 403.00/12 or 33.58 each month vs 201.50/12 or 16.79)

        Also what if a beneficiary stays on an MA for only three month and then some time in future enrolls in another MA.Do they still generate 9 months off full commissions to a new or the same agent agent?

  • I have been told by several sources, including the folks at Medicare, that the OEP-NEW has been eliminated. There is a SEP – Trial/Leaving MAPD During 1st Year, that allows someone to disenroll from an MAPD during their first year but that just qualifies them for a PDP. In theory, they should be able to get a Med Supp Guaranteed Issue during the 1st year of an MAPD, but I have found that GI for a Med Supp only works if they enrolled in the MAPD for the first time when turning 65 – in other words, if they are under 65 or enrolled for the first time in an MAPD when older than 65 and have left a group plan, for example, they don’t seem to get GI for a Med Supp after the 6 month Open Enrollment Period. Seems not quite fair on several counts. Please correct me if this information is not accurate.

    • David:

      What you’re saying about OEP-NEW makes logical sense, I’ve not gotten a good source on it. However, the initial commission in first year would still hold in other SEP situations (moving, LIS, SPAP, etc.).

      I’d post something on OEP-NEW as well. Thanks for the heads up!

  • Phil

    Did these rules apply during 2009 or were they just clarified for cases going forward?

    • Phil:

      I picked this up in the CMS webex call for the June changes to CMS marketing guidelines, so I believe these are clarifications on a go forward basis.

      Based on my communication, it seems that all of these scenarios were CMS’ intent all along. I was hearing from Health Plans that “CMS was telling them they had to do things this way” and, based on my reading of the regulations, I didn’t see why they were saying that, so I went direct to CMS and sure enough they clarified some of this for me (in the broker’s favor, in most cases)!!


      PS Short answer: “I don’t know!”

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