42 CFR 423.2274 - Broker and agent requirements.

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There are 2 Updates appearing in the Federal Register for 42 CFR 423. View below or at eCFR (GPOAccess)
§ 423.2274 Broker and agent requirements.
For purposes of this section “compensation” includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of a policy including, but not limited to, commissions, bonuses, gifts, prizes, awards, and finder's fees. “Compensation” does not include the payment of fees to comply with State appointment laws, training, certification, and testing costs; reimbursement for mileage to, and from, appointments with beneficiaries; or reimbursement for actual costs associated with beneficiary sales appointments such as venue rent, snacks, and materials. If a Part D sponsor markets through independent (that is, non-employee) brokers or agents, the requirements in paragraph (a) of this section must be met. The requirements in paragraphs (b) through (e) of this section must be met if a Part D sponsor markets through any broker or agent, whether independent (that is, non-employee) or employed.
(a) Agents and brokers must be compensated as follows:
(1) A Part D sponsor (or other entity on its behalf) may provide compensation to a broker or agent for the sale of a Part D plan only if the following requirements are met:
(i) The compensation amount paid by plan sponsors to an independent broker or agent—
(A) For an initial enrollment of a Medicare beneficiary into a PDP must be at or below the fair market value (FMV) cut-off amounts published annually by CMS; or
(B) For renewals, must be an amount equal to 50 percent of the initial compensation in paragraph (a)(1)(i)(A) of this section.
(ii) [Reserved]
(iii) The independent broker or agent is paid a renewal compensation for each of the next 5 years that the enrollee remains in the plan in an amount equal to 50 percent of the initial year compensation paid (creating a 6-year compensation cycle).
(iv) If the Part D sponsor contracts with a third party entity such as a Field Marketing Organization or similar type entity to sell its insurance products or perform services (for example, training, customer service, or agent recruitment)—
(A) The total amount paid by the Part D sponsor to the third party and its agents for enrollment of a beneficiary into a plan, if any, must be made in accordance with paragraph (a)(1) of this section; and
(B) The amount paid to the third party for services other than selling insurance products, if any, must be fair-market value and must not exceed an amount that is commensurate with the amounts paid by the Part D sponsor to a third party for similar services during each of the previous 2 years.
(2) [Reserved]
(3) No entity shall provide aggregate compensation to its agents or brokers and no agent or broker shall receive aggregate compensation greater than the renewal compensation payable by the replacing plan on renewal policies if an existing policy is replaced with a like plan type during the first year and 5 renewal years (6-year compensation cycle).
(i) For purposes of this section, “like plan type” means PDP replaced with another PDP, MA or MA-PD replaced with another MA or MA-PD, or cost plan replaced with another cost plan.
(ii) Replacements between different plan types (for which a new compensation is paid) include—PDP and MA-PD, PDP and cost plans, or MA-PD and cost plans.
(iii) When a PDP is added to an MA-only plan, a new commission would be paid for the enrollment in the PDP during the first year.
(4) Compensation may only be paid for the beneficiary's months of enrollment during a plan year (that is, January through December).
(i) Subject to paragraph (a)(4)(ii) of this section, compensation payments may be made up front for the entire current plan year or in installments throughout the year.
(ii) When a beneficiary disenrolls from a plan during the—
(A) First 3 months of enrollment, the plan must recover all compensation paid to agents and brokers.
(B) Fourth through 12th month of their enrollment (within a single plan year), the plan must recover compensation paid to agents and brokers for those months of the plan year for which the beneficiary is not enrolled.
(5) Organizations and sponsors must establish a compensation structure for new and replacement enrollments and renewals effective in a given plan year. Compensation structures must be in place by the beginning of the marketing period, October 1.
(6) Compensation structures must be available upon CMS request including for audits, investigations, and to resolve complaints.
(b) It must ensure that all agents selling Medicare products are trained annually, through a CMS endorsed or approved training program or as specified by CMS, on Medicare rules and regulations specific to the plan products they intend to sell.
(c) It must ensure agents selling Medicare products are tested annually by CMS endorsed or approved training program or as specified by CMS.
(d) Upon CMS' request, the organization must provide to CMS, in a form consistent with current CMS guidance, the information necessary for it to conduct oversight of marketing activities.
(e) It must comply with State requests for information about the performance of a licensed agent or broker as part of a state investigation into the individual's conduct. CMS will establish and maintain a memorandum of understanding (MOU) to share compliance and oversight information with States that agree to the MOU.
(f) Plan sponsor must report annually, as directed by CMS the following:
(1) Whether it intends to use independent agents or brokers or both in the upcoming plan year.
(2) If applicable, the specific amount or range of amounts independent agents or brokers or both will be paid.
[73 FR 54253, Sept. 18, 2008, as amended at 73 FR 67413, Nov. 14, 2008; 76 FR 21577, Apr. 15, 2011; 76 FR 54635, Sept. 1, 2011; 77 FR 22171, Apr. 12, 2012]

Title 42 published on 2013-10-01

The following are only the Rules published in the Federal Register after the published date of Title 42.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2014-05-23; vol. 79 # 100 - Friday, May 23, 2014
    1. 79 FR 29844 - Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs
      GPO FDSys XML | Text
      DEPARTMENT OF HEALTH AND HUMAN SERVICES, Centers for Medicare & Medicaid Services
      Final rule.
      Effective Dates: These regulations are effective on July 22, 2014 except for the amendment in instruction 27 to § 423.100, the amendment in instruction 30 to § 423.501, and the amendment in instruction 34 to § 423.505, which are effective on January 1, 2016. Applicability Dates: In the SUPPLEMENTARY INFORMATION section of this final rule, we provide a table (Table 1) which lists key changes in this final rule that have an applicability date other than the effective date of this final rule.
      42 CFR Parts 417, 422, 423, and 424

Title 42 published on 2013-10-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 42 CFR 423 after this date.

  • 2014-07-14; vol. 79 # 134 - Monday, July 14, 2014
    1. 79 FR 40916 - Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Physician-Owned Hospitals: Data Sources for Expansion Exception; Physician Certification of Inpatient Hospital Services; Medicare Advantage Organizations and Part D Sponsors: Appeals Process for Overpayments Associated With Submitted Data
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      DEPARTMENT OF HEALTH AND HUMAN SERVICES, Centers for Medicare & Medicaid Services
      Proposed rule.
      Comment Period: To be assured consideration, comments on all sections of this proposed rule must be received at one of the addresses provided in the ADDRESSES section no later than 5 p.m. EST on September 2, 2014.
      42 CFR Parts 411, 412, 416, 419, 422, 423, and 424