Reed Smith In-depth

Key takeaways

  • CMS's Final Rule alters Medicare Advantage and Part D programs, including agent and broker compensation adjustments, to improve transparency and change
  • Changes to the RADV audit appeal process streamline procedures, mandating MAOs to complete all appeal levels for medical record reviews before payment error calculations, thereby reducing administrative burdens.
  • Updates to the Stars reconsideration process shift the burden of proof to MAOs, enhancing fairness but introducing a step allowing CMS administrators to review and modify decisions, potentially affecting MAOs' perceptions of its effectiveness.


On April 4, 2024, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that revises the Medicare Advantage and Part D programs in significant ways (the Final Rule). The Final Rule stems from the CY 2025 Medicare Advantage and Part D proposed rules issued in November 2023 and CY 2024 Medicare Advantage and Part D proposed rules published on December 14, 2022. It continues the trend of regulatory enhancements to the Medicare Advantage and Part D programs and in practice creates additional administrative requirements for Medicare Advantage organizations (MAOs) and Part D plans. Below are summaries of some of the key provisions.

1. Changes to agent and broker compensation and TPMO requirements

In what may be the most impactful change to the industry as a whole, the Final Rule makes significant changes to the compensation payable to agents and brokers beginning in the upcoming Annual Enrollment Period. Historically, MAOs have been able to compensate agents and brokers for enrollment activities and administrative services. While compensation for enrollment activities was capped via regulation, payments for administrative services (which were very loosely defined) needed to align with fair market value. Agent and broker compensation, especially payments for administrative services, has been subject to scrutiny and criticism, as some believed MAOs were using payments for administrative services as a loophole to provide excessive compensation to agents and brokers to incentivize member enrollments.

The Final Rule eliminates separate administrative services payments and, instead, sets a fixed amount that MAOs may pay agents and brokers for enrollments, which may be adjusted in future years by CMS. To balance the elimination of administrative services payments, CMS is increasing the per-enrollment fee by $100 and allowing MAOs to compensate brokers for renewal enrollments at 50% of the new base enrollment fee.

Notably, this new requirement does not expressly apply to payments from MAOs to third party marketing organizations (TPMOs). In responding to comments, CMS stated “[t]his proposal, and all agent broker compensation rules at §422.2274(d) are limited to independent agents and brokers, and do not extend to TMPOs more generally. Therefore, this policy represents a limitation on payments in excess of those paid under “compensation” only for commissions paid for enrollments to independent agents and brokers. Though we are continuing to consider future rulemaking in this space, our current policy does not extend to placing limitations on payments from an MAO to a TPMO who is not an independent agent or broker for activities that are not undertaken as part of an enrollment by an independent agent or broker.”

At the same time, the rule contains restrictions on contract terms between MAOs and TPMOs to prevent TPMOs from directly or indirectly being incentivized to inhibit an agent or broker’s ability to objectively assess and recommend the plan that is best suited to a potential enrollee’s needs. This is a broad restriction and CMS provided numerous examples of prohibited contract terms, such as provisions offering volume-based bonuses for enrollment into certain plans.

This is likely to be a seismic change for agents and brokers, which are often compensated through commissions and administrative services payments. It also has the potential to level the playing field for smaller plans that offer competitive benefits and plan design but do not have the volume of larger plans. MAOs should update their relevant agreements are updated compliance starting October 1, 2024.