New 2019 Medicare Marketing Guidelines for Brokers

Man reviewing CMS guidelines

CMS has made some big changes to the 2019 Medicare Marketing Guidelines. The rules, now called the Medicare Communications and Marketing Guidelines (MCMGs), appear in a vastly new format. Excelsior has created the definitive guide for what brokers and agents need to know when marketing for the Annual Enrollment Period (AEP).

Which Medicare Marketing Rules Have Changed for 2019?

The following sections have changed:

What Medicare Marketing Rules Are New?

What Medicare Marketing Rules Are No Longer Present?

There are a few sections that our team noticed are no longer in the Medicare Communications and Marketing Guidelines.

We have explained what brokers need to know for the more detailed, complex changes. Any changes, modifications, and additions from the exact text are detailed in red.

Which Medicare Marketing Rules Have Changed for 2019?

Brokers Can Now Initiate Unsolicited Contact Through Email.

The Medicare Marketing Guidelines for 2019 have loosened the rules around unsolicited contact. Sections 30.6 and 40.2 allow brokers to initiate contact via email, conventional mail, and print media. This includes communication and marketing for sales and retention. The only caveat: If you are initiating contact via email, you’re required to include an opt-out opportunity.

Direct unsolicited contact, such as text and direct messaging over social media, falls into the same category as unsolicited phone calls and door-to-door solicitation. This means it is not permitted.

Electronic Communication Policy, Section 30.6, now reads:

30.6 – Electronic Communication Policy

42 CFR §§ 422.2268(b), 423.2268(b)

A Plan/Part D sponsor may initiate contact via email to prospective enrollees and to retain enrollment for current enrollees. Plans/Part D sponsors must include an opt-out process on each communication to elect to no longer receive emails. Note: Text messaging and other forms of electronic direct messaging (e.g., social media platforms) would fall under unsolicited contact and is not permitted.

Marketing Through Unsolicited Contacts, Section 40.2, now reads:

40.2 – Marketing Through Unsolicited Contacts

42 CFR §§ 422.2268(b)(13), 423.2268(b)(13)

Plans/Part D Sponsors may make unsolicited direct contact with potential enrollees using the following methods:

  • Conventional mail and other print media (e.g., advertisements, direct mail)
  • Email provided all emails contain an opt-out function

Plans/Part D sponsors may not:

  • Use door-to-door solicitation, including leaving information such as a leaflet or flyer at a residence;
  • Approach potential enrollees in common areas (e.g., parking lots, hallways, lobbies, sidewalks, etc.); or,
  • Use telephonic solicitation, including text messages and leaving electronic voicemail messages.

Note: Agents/brokers who have a pre-scheduled appointment with a potential enrollee who is a “no-show” may leave information at that potential enrollee’s residence. If a potential enrollee provides permission to be contacted, the contact must be event- specific, and may not be treated as open-ended permission for future contacts.

Brokers Can Do More With Attendees at Educational Events.

Section 50.1 of CMS’ Medicare Communication and Marketing Guidelines for 2019 now allow brokers to schedule future appointments during educational events. You may also hand out business cards and contact information to attendees. But brokers are still prohibited from distributing enrollment forms and any type of marketing materials at educational events.

Educational Events, Section 50.1, now reads:

“50.1 – Educational Events42 CFR §§ 422.2262, 422.2268(b)(7),(8), and (11),423.2262, 423.2268(b)(7),(8), and (11)Educational events are designed to inform beneficiaries about Medicare Advantage, Prescription Drug, or other Medicare programs. Educational eventsdi:

  • Must be explicitly advertised as educational;

  • May be hosted in a public venue by the Plan/Part D sponsor or an outside entity;

  • May include communication activities and distribution of communication materials;

  • May answer beneficiary initiated questions;

  • May set up a future marketing appointment, and distribute business cards and contact information for beneficiaries to initiate contact (this includes completing and collecting a Scope of Appointment (SOA) form);

  • Must not include marketing or sales activities or distribution of marketing materials or enrollment forms; and

  • May not conduct a marketing/sales event immediately following an educational event in the same general location (e.g., same hotel).”

You Can Ask for Referrals During a One-on-One Appointment.

Brokers rejoice! There is no longer language hindering you from asking for referrals during one-on-one appointments. Just remember: You are still required to fill out a Scope of Appointment (SOA) form before any one-on-one appointments where marketing activities will ensue.

Personal/Individual Marketing Appointments, Section 50.3, now reads:

“50.3 – Personal/Individual Marketing Appointments

42 CFR §§ 422.2268(b)(3-5),(11), 423.2268(b)(3-5) and (11)

Scope of Appointment (SOA) parameters (and documentation) are required for all one-on-one appointments, regardless of venue (e.g., home, telephone). During these appointments, discussions may only concern previously agreed upon plan products documented in the SOA, and may only market health-related products, and not, for example, annuities or life insurance. Individuals may not solicit/accept enrollment applications for a January 1 effective date until October 15 of the preceding calendar year, unless the beneficiary is entitled under another enrollment period.”

Required Disclaimers, and Their Location, Have Changed. (And Some Are Gone!)

Disclaimers are now located in Appendix 2. They resemble the 2018 Appendix format for disclaimers, but much of the language has been shortened or simplified. Brokers may also notice that some required disclaimers from the past years are no longer present:


  • Disclaimers about sales persons being present on advertisements and invitations to sales/marketing events are not in the 2019 MCMG.
    • Brokers can erase the following disclaimers from their materials:
      • “A sales person will be present with information and applications.”
  • You can finally stop including “Marketing” in email subject lines.
    • Brokers can erase the following disclaimer from their email subject lines:
      • “Marketing”
  • Advertising pieces don’t have to state that they are…advertising pieces.
    • Brokers can erase the following disclaimer from their materials:
      • “This is an advertisement”
  • Brokers sending non-health and non-wellness information can also stop stating that these pieces are non-health and non-wellness.
      • Brokers can erase the following disclaimer from their materials:
        • “Non- health or non-plan related information”
  • You do not have to state the Medicare has not approved of your communications materials.
    • Brokers can erase the following disclaimer from their materials:
      • “Medicare has neither reviewed nor endorsed this information.”

Imagine you are emailing your client list to invite them to an open house you’re having at a local doctor’s office. The email does not include any specific plan information, so it can be considered a communication rather than marketing. For this email, you would not have to include the word “marketing” in the subject line of your email.

Alternatively, if you were sending out direct mail, the same four disclaimers would still need to be included somewhere on the mail piece.

Disclaimers are not required on the following material types:

  • ID cards
  • Banners and banner-like ads
  • Envelopes
  • Outdoor advertising
  • Text messages
  • Social media

To see the full list of disclaimers, see Appendix 2 in the MCMG.

What Medicare Marketing Rules Are New?

The 2019 Medicare Communications and Marketing Guidelines is a complete re-working of the MMGs we’re all used to. Old and new guidance is organized in areas unfamiliar to brokers. Here are a few of those new sections that specifically concern brokers:

  • Communications and Marketing Definitions
  • Prohibition of Open Enrollment Period Marketing
  • Agent/Broker Activities, Oversight, and Compensation Requirements
‘Communications’ Do Not Have to Follow Marketing Guidelines.

Section 20 of the 2019 Medicare Communications and Marketing Guidelines clearly defines communications and marketing, which are determined both by the intent and content of the message.

  • “Communications means activities and use of materials to provide information to current and prospective enrollees.”
  • Marketing, on the other hand, “includes activities and use of materials that are conducted by the Plan/Part D sponsor with the intent to draw a beneficiary’s attention to a MA plan or plans and to influence a beneficiary’s decision-making process when selecting a MA plan for enrollment or deciding to stay enrolled in a plan (that is, retention-based marketing). Additionally, marketing contains information about the plan’s benefit structure, cost sharing, and measuring or ranking standards.”

What does this mean for brokers?

If your content does not fall within CMS’ definition of marketing, you do not have to follow marketing guidelines. However, the communication guidelines still apply. For example: emails, fliers, or a Facebook post about an upcoming educational event you’re hosting would not need to be reviewed because the intent is to provide information — not sell a specific plan.

Marketing content, or content that includes plan details or the intent to influence a beneficiary’s purchase, does have to follow CMS’ Medicare Marketing Guidelines for 2019. For example, a broker creates a brochure that has the following statement: “I can help you find a $0 premium plan in your area.” This material would be considered marketing material because it is trying to draw an enrollee’s attention to a plan and mentions a specific amount. This material would have to be reviewed and approved.

Communications and Marketing Definitions, Section 20 and subsequent defining subsections, read:

20 – Communications and Marketing Definitions

42 CFR §§ 422.2260, 423.2260

Communications means activities and use of materials to provide information to current and prospective enrollees. This means that all activities and materials aimed at prospective and current enrollees, including their caregivers and other decision makers associated with a prospective or current enrollee, are “communications” within the scope of the regulations at 42 C.F.R. Parts 422, 423 and 417.

Marketing is a subset of communications and includes activities and use of materials that are conducted by the Plan/Part D sponsor with the intent to draw a beneficiary’s attention to a MA plan or plans and to influence a beneficiary’s decision-making process when selecting a MA plan for enrollment or deciding to stay enrolled in a plan (that is, retention-based marketing).

Additionally, marketing contains information about the plan’s benefit structure, cost sharing, and measuring or ranking standards.

However, CMS excludes materials that might meet the definition of marketing based on content, but do not meet the intent requirements of marketing. Additionally, CMS excludes certain required materials (as outlined under section 100), and reserves the ability to exclude additional materials based on their use or purpose.

The MCMG discusses requirements applicable to all communication activities and materials, as well as additional requirements only applicable to marketing activities and materials. All marketing, unless otherwise noted, must adhere to the communication requirements.

20.1 – Factors for Activity and Material Determination

42 CFR §§ 422.2260, 422.2262, 422.2268, 423.2260, 423.2262, 423.2268

As outlined above, communication activities and materials are distinguished from marketing activities and materials based on both intent and content.

Intent – the purpose of marketing activities and materials is to draw a prospective or current enrollee’s attention to a plan or group of plans to influence a beneficiary’s decision when selecting and enrolling in a plan or deciding to stay in a plan (retention-based marketing).

Content – based on the exclusions in the definition of marketing and marketing materials and the type of information that would be intended to draw attention to a plan or influence a beneficiary’s enrollment decision, marketing activities and materials include:

  • Information about benefits or benefits structure;
  • Information about premiums and cost sharing;
  • Comparisons to other Plan(s)/Part D sponsor(s);
  • Rankings or measurements in reference to other Plan(s)/Part D sponsor(s); and/or
  • Information about Star Ratings

To identify marketing activities and materials, CMS will evaluate both the intent and content of the activities and materials to determine if the definition of marketing is met.


  1. A flyer reads “Swell Health is now offering Medicare Advantage coverage in Nowhere County. Call us at 1-800-SWELL-ME for more information.”

Marketing or Communication? Communication. While the intent is to draw a beneficiary’s attention to Swell Health, the information provided does not contain any marketing content.

  1. A billboard reads “Swell Health Offers $0 Premium Plans in Nowhere County”

Marketing or Communication? Marketing. The advertisement includes both the intent to draw the viewer’s attention to the plan and has content that mentions zero-dollar premiums being available.

  1. A letter is sent to enrollees to remind them to get their flu shot. The body of the letter says, “Swell Health enrollees can get their flu shot for $0 copay at a network pharmacy…”

Marketing or Communication? Communication. While the letter mentions cost sharing, the intent is not to steer the reader into making a plan selection or to stay with the Plan, but rather to encourage existing enrollees to get a flu shot. The letter contains factual information about coverage and was provided only to current enrollees.

Marketing During OEP Is Limited.

Section 40.7 clarifies what brokers can and cannot do during the Medicare Open Enrollment Period (January 1 – March 31). In short, brokers cannot knowingly (or intentionally) market to Medicare Advantage or Part D enrollees during OEP. However, brokers can:

  • Fulfill beneficiaries’ requests for:
    • Information on the OEP
    • One-on-one appointments
    • Marketing materials
  • Continue marketing for other enrollment opportunities (such as age-ins and SEPs)

Prohibition of Open Enrollment Period Marketing, Section 40.7, reads:

“40.7 – Prohibition of Open Enrollment Period Marketing42 CFR §§ 422.2268(b)(10), 423.2268(b)(10)

Plans/Part D sponsors are prohibited from knowingly targeting or sending unsolicited marketing materials to any MA enrollee or Part D enrollee during the continuous Open Enrollment Period (OEP) (January 1 to March 31). “Knowingly” takes into account the intended recipient as well as the content of the message.

During the OEP, Plans/Part D sponsors may:

  • Conduct marketing activities that focus on other enrollment opportunities including but not limited to:
    • Marketing to age-ins (who have not yet made an enrollment decision),
    • Marketing by 5-star plans regarding their continuous enrollment SEP, and
    • Marketing to dual-eligible and LIS beneficiaries who, in general may make changes once per calendar quarter during the first nine months of the year.
  • Send marketing materials when a beneficiary makes a proactive request
  • At the beneficiary’s request, have one-on-one meetings with a sales agent
  • At the beneficiary’s request, provide information on the OEP through the call center

Note: The unintentional receipt of other marketing materials by beneficiaries who have already made an enrollment decision is not be considered knowingly targeting. For example, if a Plan sent mailers to a list of age-ins discussing the Initial Coverage Election Period, it is possible that some recipients may have already made an enrollment decision; however, the content of the message to the intended audience of age-ins is not prohibited OEP marketing.

During the OEP, Plans/Part D Sponsors may not:

  • Send unsolicited materials advertising the ability/opportunity to make an additional enrollment change or referencing the OEP
  • Specifically target beneficiaries who are in the OEP because they made a choice during Annual Enrollment Period (AEP) by purchase of mailing lists or other means of identification
  • Engage in or promote agent/broker activities that intend to target the OEP as an opportunity to make further sales
  • Call or otherwise contact former enrollees who have selected a new plan during the AEP

For more information on the OEP, please reference to Chapter 2 – Medicare Advantage Enrollment and Disenrollment of the Medicare Managed Care Manual or Appendix 4 to access the CMS Eligibility and Enrollment Guidance link.”

You Can Find Broker-Specific and Compensation Rules in One New Location.

This new section combines much of the broker-related information that was previously scattered throughout the previous MMGs. Some wording has slightly changed, like the use of “may” rather than “must” for initial and renewal compensation. However, much of the content (and implications for brokers) remains the same. Here’s a list of the topics within this section:

  • Agent Requirements (Section 110)
  • Permitted Agent Activities (Section 110.2)
  • Plan/Part D Sponsor Oversight (Section 110.3)
  • Compensation Applicability and Definitions (Section 110.4)
  • Plan/Part D Sponsor Compensation Reporting Requirements (Section 110.5)
  • Compensation (Section 110.6)
  • Initial Compensation (Section 110.6.1)
  • Renewal Compensation (Section 110.6.2)
  • Referral/Finder’s Fees (Section 110.6.3)
  • Paying Compensation (Section 110.6.4)
  • Paying Initial Compensation (Section 110.6.5)
  • Paying Renewal Compensation (Section 110.6.6)
  • Other Compensation Scenarios (Section 110.6.7)
  • Compensation Recovery Requirements (Charge-backs) (Section 110.7)
  • Rapid Disenrollment (Section 110.7.1)
  • Other Compensation Recovery (Section 110.7.2)
  • Payments Other Than Compensation (Section 110.8)

What Medicare Marketing Rules Are No Longer Present?

There are a few sections that our team noticed are no longer in the Medicare Communications and Marketing Guidelines.

  • Enrollee Referral Programs
  • Font Size Rule
There Are No Guidelines on Enrollee Referral Programs.

There is no longer a section detailing what you can and cannot do when asking for referrals. Because CMS has not dictated strict standards, you have more flexibility when obtaining referrals. However, creating value by advising is the best way to gain a referral. If you decide to offer gifts to gain referrals, it must still be under $15 and should be valuable to a senior.

For example, imagine you have just finished a one-on-one appointment with a new client. They expressed how helpful you were in finding the right coverage for that individual. Because you have provided them with valuable advice, now would be the right time to ask if any of their friends or family members also need assistance with their coverage. You could say: “Do you know if anyone else needs help choosing their Medicare coverage? I would gladly send them a letter, so they know that I am available.”

Enrollee Referral Programs, previously MMG, Section 30.9, used to read:

“The following general guidelines apply to referral programs under which a Plan/Part D Sponsor solicits leads from enrollees for new enrollees. These include gifts that would be used to thank enrollees for devoting time to encourage enrollment.

  • A Plan/Part D Sponsor can ask for referrals from enrollees, including names and mailing addresses, but cannot request phone numbers or email addresses
  • Plans/Part D Sponsors may use enrollee provided referral names and mailing addresses to solicit potential new enrollees by conventional mail only
  • Any solicitation for leads, including letters sent from Plans/Part D Sponsors to enrollees, cannot announce that a gift will be offered for a referral
  • Gifts must be of nominal value (refer to sections 110.1.1, 110.2, and 110.3 for additional guidance on limits for gifts provided to enrollees or prospective enrollees)”
Only ‘Required Materials’ Have to Follow the Font Rules.

This may be a small change, but it can have an enormous effect on the marketing materials brokers create for their own businesses. Only “Required Materials,” such as ANOC and Summary of Benefits documents, are required to meet the Times New Roman, 12-point font rules (noted in the Medicare Communications and Marketing Guidelines, Section 100).

What does this mean for brokers? Marketing materials are not required to follow font or type size rules. For instance, you don’t have to ensure that the text on marketing materials is in at least 12-point Times New Roman font.

Keep in mind: Your clients may need larger fonts in order to read documents easily, but you now have the freedom to customize your documents.

Previous MMG, Section 40.2, the font size rule, dictated that:

“…all text included on marketing materials, including footnotes, must be printed with a font size equivalent to or larger than Times New Roman twelve (12)-point. The equivalency standard applies to both the height and width of the font.”

Excelsior Is Here For Brokers

To find more broker-focused resources like this explainer of the Medicare Communications and Marketing Guidelines, visit our Senior Market Resource Center. There, you can find Medicare Do’s and Don’ts, year-round sales tips, and advice from Excelsior’s Regional Sales Directors. To find out more about Excelsior’s broker opportunities, contract with us.



Last Year’s 2018 Medicare Marketing Guidelines

Editor’s Note: Below are guidelines that applied to the 2018 Medicare Marketing Guidelines.

The Centers for Medicare and Medicaid Services (CMS) recently updated the 2018 Medicare Marketing Guidelines. But before you click through the lengthy PDF, let Excelsior give you a breakdown of the main changes that apply to you as a broker or agent. We’ll run through the guide—marking the updates in red—so that you know which changes you should implement now. Here are the highlights for brokers and agents:

What Should I Do if an Informational Call Turns Into a Sales Call?

80.2: Informational Scripts. This addition to the MMG requires telephonic enrollment to meet additional requirements. The additional language reads:

Any change in the nature of a call from informational to sales/telephonic enrollment must clearly inform the beneficiary regarding the change. This must be done with the full and active concurrence of the beneficiary, ideally with a yes/no question. Telephonic enrollment must also meet the requirements in CMS Eligibility and Enrollment Guidance (Chapter 2 of the Medicare Managed Care Manual and Chapter 3 of the Medicare Prescription Drug Benefit Manual).

What Do I Have to Do With Telephone Sales Scripts?

80.4: Telephone Sales Scripts (Inbound or Outbound). These additions to the MMG clarify that it is the responsibility of: 1) the Plan/Part D Sponsor to submit scripts and 2) sales departments and agents to inform beneficiaries when a call shifts from presentation to enrollment. The additional language reads:

Plans/Part D Sponsors must submit any telephone sales scripts to [Health Plan Management System] (HPMS) verbatim (bullets or talking points are not acceptable). Plans/Part D Sponsors must follow all guidance in sections 70.1 and 70.2. This guidance also extends to telephone sales services provided on behalf of the Plan/Part D Sponsor by all downstream contractors.

In addition, when a beneficiary makes an inbound call directly to a sales department or agent, the sales department or agent must clearly inform the beneficiary if/when the nature of the call moves from a sales presentation to telephonic enrollment. Plans/Part D Sponsors must ensure that the sales department or agent do this only with the full and active concurrence of the beneficiary, ideally by having the beneficiary answer a yes/no question.

Can I Contact A Person Who Has Reached Out to Me?

80.4.1: Telephonic Contact. These additions to the MMG give further examples of situations when you can call an individual who has reached out for contact. The additional language reads:

  • Call individuals who have expressly given permission for a plan or sales agent to contact them, for example, by filling out a business reply card (BRC), sending an email to the Plan/Part D Sponsor requesting a return call, or asking a customer service representative (CSR) to have an agent contact them. This permission applies only to the entity from which the individual requested contact, for the duration of that transaction, for the scope of product, (e.g., MA-PD plan or PDP), previously discussed or indicated in the reply card.

How Much Can I Spend Per Person on Promotional Activities?

110.1: Promotional Activities. The section has now moved from 70.1 to 110.1. The maximum aggregate per person, per year, for promotional activities or items has been increased to $75 from $50. The language now reads:

Generally, promotional activities are designed to attract the attention of prospective enrollees and/or encourage retention of current enrollees. In addition to the guidance on nominal gifts, any promotional activities or items offered by Plans/Part D Sponsors must:

  • Have only nominal value (be worth no more than $15) based on the fair market value of the item or less with a maximum aggregate of $75 per person, per year;
  • Be offered to all potential enrollees regardless of whether they enroll, and without discrimination;
  • Not be items that are considered a drug/health benefit, including optional mandatory supplemental benefits (e.g., a free checkup); and
  • Not be tied directly or indirectly to the provision of any other covered item or service.Note: Plans/Part D Sponsors should track and document items given to current enrollees. Plans/Part D Sponsors are not required to track pre-enrollment promotional items on a per person basis; however, they may not willfully structure pre-enrollment activities with the intent to give people more than $75 per year.

New and Old Marketing Materials Can Be Reviewed at Any Time

90.9: Review of Materials in the Marketplace. The updated MMG has revised this subsection’s language to: 1) describe the review process as including prospective and retrospective marketing materials, 2) increase the listed review materials, and 3) detail the potential action needed from Plan/Part D Sponsors if errors are found. The new language reads:

CMS conducts prospective and retrospective reviews of marketing materials. These include, but are not limited to, accepted (File &Use) materials, approved materials, documents in the marketplace, as well as materials associated with marketing activities. If CMS or the Plan/Part D Sponsor discovers any errors, the Plan/Part D Sponsor may be required to provide enrollees with accurate, updated information.

Note: Plans/Part D Sponsors must report self-identified errors in all marketing materials. When errors that mention benefits and cost sharing are discovered by Plans/Part D Sponsors, they must report the errors to their Account Manager.

When Does My Third-Party Website Need to Be Reviewed?

100.7: Third-Party Websites. The updated MMG document now includes a section that details new rules surrounding third-party websites. The new language reads:

A third-party website is defined as a site that is not owned by a Plan/Part D Sponsor, but a by company with whom the Plan/Part D Sponsor has a contract for the purpose of selling or promoting its products.

Website owners should contact the Plan/Part D Sponsors with which they contract to discuss the website submission process. When a website owner is contracted with multiple Plans/Part D Sponsors, we suggest they coordinate the Multi-plan submission process for the website. See section 90.2.3. Plans/Part D Sponsors are not required to submit third-party marketing websites to HPMS that do not include any plan-specific information.

Plans/Part D Sponsors must ensure that third-party websites with which the Plan/Part D Sponsor contracts does not:

  • Provide misleading information, such as identifying a Medicare Supplement plan as a Medicare Advantage plan; or
  • Use prohibited terminology, including unsubstantiated absolute superlatives

Third-party websites may request, but not require, health status information.

Compensation Definitions

120.4: Compensation Applicability and Definitions. This section has been edited to clarify Plan/Part D Sponsors’ responsibilities for compensation, as well as sales and marketing requirements. The new language reads:

All compensation requirements contained in this section apply to independent agents/brokers. Agents/brokers employed by a Plan/Part D Sponsor are exempt from compensation requirements, except where noted (e.g., referral/finder fees). However, all other marketing and sales requirements must be met by Plan/Part D Sponsor and downstream entities.

Initial Compensation:

Plans/Part D Sponsors may pay initial compensation at or below the fair market value (FMV) cut-off amounts that CMS publishes annually.

Renewal Compensation:

Plans/Part D Sponsors may pay renewal compensation for each enrollment in Year 2 and beyond. Plans/Part D Sponsors may pay renewal compensation up to fifty (50) percent of the current FMV that CMS publishes annually.

Referral/Finder’s Fees:

Referral/Finder’s fees paid to agents and brokers, including independent, employed, and captive agents and brokers, may not exceed $100 ($25 for PDPs). CMS expects that this amount will not provide enough financial incentive for an agent or broker to recommend or enroll a beneficiary into a plan that is not the most appropriate for the beneficiary’s needs.

Additionally, referral/finder’s fees that the Plan/Part D Sponsor pays to all agents and brokers must be part of total compensation and must not exceed FMV for that contract year.

Compensation Rules

120.4.1: General Rules Regarding Compensation. The updated MMG has simplified language about compensation. In short, untrained agents and brokers cannot be compensated. The new language reads:

Plans/Part D Sponsors may not pay agents/brokers who have not been trained and tested.

Compensation Payment Requirements

120.4.2: Compensation Payment Requirements. The MMG now has a deadline for when Plan/Part D Sponsors may submit their decisions to use employed, captive, and/or independent agents, as well as how much they will compensate these agents/brokers. The addition to the language now reads:

Each year, Plans/Part D Sponsors may decide whether they are using employed, captive, and/or independent agents, as well as the amount within CMS’ FMV limits they will compensate independent agents/brokers. Each year, CMS issues an HPMS memo that notifies Plans/Part D Sponsors of the FMV, and requires them to inform CMS yearly by the end of July whether they will use agents/brokers, including the types of agents/brokers, as well as the compensation payment rates or ranges. Once the July deadline has passed, Plans/Part D Sponsors may not change what they submitted and attested to.

Other compensation guidelines and timelines have also been clarified. The language now reads:

In addition, Plans/Part D Sponsors must have in place their full agent/broker compensation structure for initial and renewal enrollments by October 1 each year. This structure supports the compensation payment rates or ranges submitted earlier in the year (see previous paragraph) and must be made available to CMS upon request. The compensation structure must include details of how the Plan/Part D Sponsor plans to disseminate compensation, including specifying payment amounts for initial and renewal compensation. The compensation structure must stay the same for the compensation year as it was put in place by October 1 of the previous year. This does not preclude Plans/Part D Sponsors from entering into/re-negotiating, or modifying agent/broker contracts or payment policies provided the payment rates fall within the specified submitted ranges.

The agent/broker compensation year is January 1 to December 31. Compensation payments must be calculated on a January to December enrollment year. They may not be made on a rolling basis or on an enrollment year based on the initial enrollment month. For example, if a beneficiary’s enrollment is effective September 1, then the initial enrollment year for that beneficiary ends on December 31 and the beneficiary’s “renewal” year would begin in January of the following year rather than on September of the following year. Plans/Part D Sponsors should consult the MARx agent/broker compensation report to determine whether an initial or renewal payment is appropriate. This report is automatically released and disseminated monthly by the MARx system.

Plans/Part D Sponsors have the flexibility to make compensation payments annually, quarterly, monthly, or by a different schedule. However, Plans/Part D Sponsors must pay compensation payments during the year of enrollment. In other words, Plans/Part D Sponsors must not pay compensation for enrollments based on enrollment requests made during the preceding year for effective dates January 1 (or later) of the following year until January 1 or after. Plans/Part D Sponsors must make payments in full for enrollments effective at any point during a calendar year by December 31 of the calendar year of enrollment. In addition, Plans/Part D Sponsors must base compensation payments on the number of months a beneficiary is enrolled during a calendar year.

Plans/Part D Sponsors that contract with third-parties to sell MA/Part D products must ensure that compensation payments (and any enrollment-based payments) to these third-parties are no greater than the Plans’/Part D Sponsors’ initial and renewal compensation amounts. Additionally, third parties must comply with agent broker compensation guidelines.

Plans/Part D Sponsors pay Initial Compensation:

  • The beneficiary’s first year of enrollment in any plan (MA, PDP, MA-PD, Cost) where the MARx report has a prior plan type of None;
  • A beneficiary moves from an employer group plan to a non-employer group plan (either within the same Parent Organization or between Parent Organizations);
  • A beneficiary changes plans during their initial enrollment year; or
  • A beneficiary makes an “unlike plan change.”

Plans/Part D Sponsors may pay Initial Compensation in full or pro-rated for:

  • The beneficiary’s first year of enrollment in any plan (MA, PDP, MA-PD, Cost) where the MARx report has a prior plan type of None; or
  • An enrollment situation where a beneficiary moves from an employer group plan to a non-employer group plan (either within the same Parent Organization or between Parent Organizations).

Plans/Part D Sponsors must pro-rate Initial Compensation when:

  • A beneficiary enrolls in an “unlike plan type,” during their renewal year; or
  • A beneficiary changes plans during their initial enrollment year.

Plans/Part D Sponsors must pay Renewal Compensation to agents/brokers under the following three scenarios:

  • In any year following the initial year compensation;
  • When a beneficiary enrolls in a new “like plan” within the same Parent Organization or between two different Parent Organizations; or
  • When a beneficiary who is a member of an MMP switches to an MA plan or an MA-PD plan (and vice versa), if applicable per state MMP policy.

Plans/Part D Sponsors must always pro-rate Renewal Compensation. Other compensation scenarios are highlighted below:

Plans/Part D Sponsors must pay only the MA compensation amount when a beneficiary enrolls in an MA-PD plan, not the MA compensation amount and the PDP compensation amount.

When a beneficiary enrolls in both a Section 1876 cost plan and a stand-alone PDP, the cost plan must pay compensation for the cost plan enrollment and the Part D Sponsor should pay compensation for the Part D enrollment.

Charge-Back Requirements

120.4.3: Compensation Recovery Requirements (Charge-backs). The MMG has clarified some requirements and time-period language in regard to charge-backs. The language now reads:

Plans/Part D Sponsors must recover compensation payments from agents/brokers under two circumstances: 1) a beneficiary disenrolls from a plan within the first three months of enrollment (rapid disenrollment), and 2) any other time a beneficiary is not enrolled in a plan but the Plan/Part D Sponsor had paid compensation for that time period.

CMS expects Plans/Part D Sponsors to retroactively pay or recoup funds based on retroactive beneficiary changes (retroactive enrollment/disenrollment) for the current calendar year and the previous calendar year. CMS does not require Plans/Part D Sponsors to recoup or pay compensation for years prior to the previous calendar year. However, if a Plan/Part D Sponsor chooses to recoup payments from a prior calendar year, it must also pay funds retroactively that would have been due during that same year.

Rapid Disenrollment

  • Rapid disenrollment applies when an enrollee moves from one Parent Organization to another Parent Organization, or when an enrollee moves from one plan to another plan within the same Parent Organization, within the first three months of enrollment.
  • Rapid disenrollment compensation recovery does not apply when a beneficiary enrolls in a Plan/Part D Sponsor effective October 1, November 1, or December 1, and subsequently uses the Annual Election Period to make changes to their current plan for an effective date of January 1 of the following year. If, however, a beneficiary enrolls for October 1, November 1, or December 1 and disenrolls from the plan during that same enrollment year (unrelated to the AEP), the Plan/Part D Sponsor should recover compensation based on the rapid disenrollment.
  • Rapid disenrollment compensation recovery does not apply when CMS determines that recoupment is not in the best interests of the Medicare program. Such situations include when a beneficiary disenrolls within the first three months for any of the following reasons:
  • Other creditable coverage;
  • Moving into or out of an institution;
  • Gains/drops employer/union sponsored coverage;
  • CMS sanction against the plan/contract violation;
  • Plan terminations and non-renewals;
  • In order to coordinate with Part D enrollment periods;
  • In order to coordinate with a State Pharmaceutical Assistance Program;
  • Becoming dually eligible for both Medicare and Medicaid;
  • Dual eligibles moving from an MA to MMP;
  • Qualifying for another plan based on special needs;
  • Becoming LIS eligible;
  • Qualifying for another plan based on a chronic condition;
  • Due to an auto, facilitated, or passive enrollment;
  • Death;
  • Moves out of the service area;
  • Non-payment of premium;
  • Loss of entitlement;
  • Retroactive notice of Medicare entitlement; or
  • When moving to a plan with a 5-star rating or from an LPI plan into a plan with three or more stars.

Payments That Aren’t Compensation

120.4.4: Payments Other Than Compensation. The language update in this subsection is only reflected in the notes. The clarification references how items paid for outside of compensation must be paid at fair market value and outside of enrollment numbers. The subsection and new note language read:

Payments made to third parties for services other than enrollment of beneficiaries (e.g., training, customer service, or agent recruitment) must not exceed FMV and must not exceed an amount that is commensurate with the amounts paid by the Plan/Part D Sponsor to a third party for similar services during each of the previous two (2) years.

Note: Plans/Part D Sponsors can tie the third-party (e.g., FMOs) administrative fees per enrollment as a way to attribute the FMV costs of services to a particular Plan/Part D Sponsor.

That’s All, Folks

That concludes our breakdown of the new regulations that apply to brokers and agents in the 2018 Medicare Marketing Guidelines. To read more about the other sections that have been updated, refer to the 2018 MMG.

Keeping you up to date with CMS isn’t all Excelsior can do. At Excelsior, we can also help you reach your personal goals for the year and, potentially, double or triple your income with compliant cross-selling. To learn more about the Excelsior team and how we can help you, contact us.


Note: For the most current information, see the CMS Medicare Marketing Guidelines.

2018: EXCL000029



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