Charles Baker, VP, Compliance Solutions
On July 3, 2024, the U.S. District Court for the Northern District of Texas issued a preliminary injunction, halting the implementation of certain provisions within the CMS Final Rule for Contract Year 2025. This rule aimed to overhaul the compensation arrangements between health plans and Field Marketing Organizations (FMOs), particularly concerning administrative payments.
Background and Legal Challenge
The CMS Final Rule included a controversial provision that capped administrative payments for agents and brokers at $100 per new enrollment. This cap was intended to standardize compensation and reduce financial incentives that might influence plan recommendations.
FMOs and other entities providing agent and broker services challenged the rule, arguing that it would significantly reduce their revenue and adversely affect their business operations. They contended that CMS overstepped its statutory authority under the Social Security Act and acted arbitrarily by not providing sufficient justification for the new rules. They also argued that CMS failed to follow proper procedural requirements under the Administrative Procedure Act, particularly concerning the reliance interests of agents and brokers who depend on these payments for their livelihood.
Court’s Ruling and Impact
The court granted a preliminary injunction, suspending the enforcement of the contract-term restrictions and the $100 cap on administrative payments. This injunction effectively maintains the status quo, allowing FMOs and other entities to continue their existing compensation practices without the new restrictions.
On July 18, CMS reaffirmed this position in a memo through the Health Plan Management System (HPMS), confirming that the implementation of certain aspects of the 2025 Final Rule, specifically the changes to administrative payments, would be halted.
Next Steps for Plans
Health plans should finalize their agent and broker commission structures based on the updated rates provided in the July 18 HPMS memo. They should also review and evaluate payment programs, including payments for Health Risk Assessment completion and administrative fees to FMOs and brokerages. CMS continues to emphasize that administrative payments should be substantiated with appropriate documentation and used solely for administrative activities, not as inducements for enrollment.
Don’t let the changing tides in Medicare Advantage compliance jeopardize your plan’s financial health and market position. Talk with an ATTAC compliance expert about how we can help your plan craft its strategy for success.
About ATTAC Consulting Group
ATTAC Consulting Group is nationally recognized as an expert in regulatory interpretation, design, and operation of effective compliance programs for Medicare, Medicaid and commercial health plans, PDPs, ACA plans, ACOs, IPAs, medical groups, dental and vision plans.
