Medicare 101: CMS Marketing & Compensation Changes for 2025

By CalBroker Mag

It may feel like 2024 has only just begun, but it’s already time to prepare for upcoming Medicare changes. In April 2024, the U.S. Centers for Medicare and Medicaid Services (CMS) released the Contract Year 2025 Medicare Advantage and Part D Final Rule. This final rule includes a series of new or revised policies that will go into effect in 2025. The Inflation Reduction Act will also change Medicare programs that year.

These regulations are designed to improve Medicare Advantage (MA) and Part D plans. They include new Medicare enrollment restrictions, data privacy protections, and drug plan changes. Many of these policies will directly affect health insurance professionals and Medicare enrollees. Staying informed about these changes will enable you to give your clients accurate advice and help them choose the most suitable plan.

Medicare Compensation Restrictions for MA and Part D Plans

Health insurance professionals are valuable resources for clients who need help understanding and comparing Medicare coverage options. They also assist clients with the enrollment process.

Many private insurers have historically offered sales incentives for agents and brokers who enroll beneficiaries in their MA or Part D plans. However, this practice has raised concerns that health insurance professionals may prioritize their financial interests over client needs. For example, an agent could encourage clients to enroll in a plan that offers lucrative commissions, even if that plan isn’t the best choice for the beneficiaries.

The final rule will safeguard Medicare enrollees by eliminating anti-competitive and anti-consumer steering incentives. The new policy includes these guardrails:

• Agents and brokers will receive a fixed compensation of $100 for every initial enrollment, regardless of the client’s chosen plan.

• MA/Part D sponsors can’t partner with Third-Party Marketing Organizations (TPMOs) to offer incentives that may prevent agents or brokers from objectively evaluating plans for their clients.

Stronger Data Privacy Protections for Enrollees

The CY 2025 final rule includes new policies to protect Medicare beneficiaries’ personal data.

CMS created these rules in response to complaints about TPMOs selling the personal information of Medicare enrollees. In the final rule fact sheet, the CMS cautions, “Individuals may be unaware that by placing a call or clicking on a generic-looking web link, they are unwittingly agreeing and providing consent for their personal beneficiary data to be collected and sold to other entities for future marketing activities.”

Beneficiaries who unknowingly give their permission report receiving an overwhelming number of unsolicited ads and cold calls from insurance brokers. These aggressive sales pitches can pressure them into choosing an MA or Part D plan that doesn’t cover all their health needs.

The CMS has developed several regulations to address this serious issue. First, TPMOs must ask individuals for express written consent before sharing their data with third parties. This change gives Medicare enrollees more control over their data.

Additionally, organizations must get separate written consent for each TPMO receiving enrollee data. For example, a health insurance broker wanting to share a customer’s data with five TPMOs for marketing purposes would need to get

Medicare policies can be complex and confusing, even for experienced clients.

the beneficiary’s permission five times before each disclosure. This policy increases transparency and helps beneficiaries understand where their data is going.

In a statement, Senate Finance Committee Chair Ron Wyden highlighted the benefits of this policy, explaining, “This announcement is a big win for seniors because it strengthens protections against deceptive and high-pressure marketing practices that have been plaguing seniors.”

Reduced Cap for Out-of-Pocket Prescription Costs

The Biden-Harris Administration has prioritized affordable prescriptions for Medicare patients. They created the Inflation Reduction Act in 2022, but several of its policies didn’t go into effect immediately.

Starting in 2025, this law will cap annual out-of-pocket prescription costs for people with Medicare Part D at $2,000. Once beneficiaries reach this threshold, Medicare will cover the entire cost of their covered medications for the remainder of the year.

This policy aims to make healthcare more accessible and affordable for Medicare beneficiaries. In a press release, CMS Deputy Administrator Meena Seshamani explained that the cap “will provide needed relief for millions of Americans who rely on prescription drugs to stay healthy.”

Increased Flexibility for Drug Plan Changes

The CY 2025 final rule will allow healthcare providers to make midyear substitutions of biosimilar products. Clinicians can update their formularies throughout the year without waiting for prior approval from the CMS.

This new policy increases access to affordable healthcare and enables patients to receive cutting-edge care. Providers will be able to make drug plan changes if new treatment options emerge or a prescription changes costs.

For instance, a clinician could prescribe an expensive, brand-name ACE inhibitor to a Medicare patient. Later that year, a more affordable, biosimilar product is released. The clinician can switch their patient to the cheaper option without prior approval, saving money and time.

New Mid-Year Notification of Available Benefits

Medicare Advantage plans offer an average of 23 supplemental benefits. Some plans make these benefits optional, while others provide them for all beneficiaries. These supplemental benefits may include:

• Dental care

• Gym membership

• Hearing aids

• Home air purifier

• Meal delivery

• Transportation for medical or non-medical needs

• Vision care

These benefits can improve Medicare enrollees’ overall health, but many people don’t take advantage of them. The CY 2025 final rule addresses this lack of usage by requiring Medicare Advantage plans to send beneficiaries a “Mid-Year Enrollee Notification of Unused Supplemental Benefits.” This notice must be issued between June 30 and July 31 each year.

The notification will also include additional resources, such as guidelines about accessing each benefit and a hotline to call for help. This rule will improve clients’ understanding of their MA plans and help them maximize their benefits.

Educate California Clients About the Latest CMS Changes

Medicare policies can be complex and confusing, even for experienced clients. Keeping updated about Medicare changes for 2025 and beyond will allow you to provide your clients with accurate and informed guidance. You can help them pick the right plan, access supplemental benefits, and more.

This knowledge can also help you avoid penalties for non-compliance with compensation caps or misinformation. By staying informed, you can confidently navigate Medicare regulations and advocate for your clients’ best interests.

SOURCES:

CMS.gov: Contract Year 2025 Medicare Advantage and Part D Final Rule (CMS-4205-F), Inflation Reduction Act and Medicare, CMS Releases Proposed Payment Updates for 2025 Medicare Advantage and Part D Programs

WABE.org: "Medicare shoppers often face a barrage of unsolicited calls and aggressive ads."

Senate Committee on Finance: "Wyden Statement on Medicare Advantage and Part D Final Rule."

National Council on Aging: "What Are Medicare Advantage Supplemental Benefits?"