As described in our July 13, 2009, posting on agent/broker compensation, the Centers for Medicare and Medicaid Services (CMS) last month revisited its guidance regarding payment of initial compensation amounts to independent agents/brokers enrolling Medicare beneficiaries into Medicare Advantage (MA), Cost and Medicare Part D Plans for CY 2009. In memoranda issued via HPMS on July 31, 2009, CMS provides additional information regarding the policy change and implementation, as well as compensation refinements for the remainder of the CY 2009 benefit year.

Qualifying Initial Enrollments in CY 2009

In its memorandum “Revised Guidance on Qualifying Criteria for 2009 Agent/Broker Initial Compensation Amount,” CMS identifies the five circumstances in which CMS will permit independent agents and brokers to receive initial compensation amounts for CY 2009 enrollments. (These compensation amounts do not apply to agents employed by MA Organizations, sponsors of 1876 Cost Plans, and Part D Plan Sponsors (collectively, Plan Sponsors).)

An initial report identifying enrollments effective January 1, 2009, that qualify for this initial compensation amount was released to Plan Sponsors around July 20, 2009. A report covering enrollments with an effective date between February and June was released around July 29, 2009.

Revised CY 2009 Compensation Schedules and Effect on Future Compensation Amounts

A corresponding memorandum, “Revised Guidance on 2009 Medicare Advantage and Prescription Drug Program Agent and Broker Compensation Refinements,” describes Plan Sponsors’ opportunity to adjust their compensation amounts “to any amount that is at or below the fair market value (FMV) cut-off amount” established by CMS in its January 16, 2009, memorandum. As expected, CMS has eliminated the low-end cutoff of the FMV range for compensation amounts.

Plan Sponsors that elect to adjust their compensation amounts have until August 10, 2009, to submit their new compensation schedules to the agency. Such revised payment amounts would become the “new” compensation amounts paid for enrollments effective from September 1, 2009-December 31, 2009, but would not apply retroactively.

Importantly, CMS notes in an accompanying Q&A guidance document that although Plan Sponsors are not required to adjust their 2009 compensation amounts, “it is important for [Plan Sponsors] to understand that, whether they decide to adjust their compensation amount or not, the final 2009 compensation amounts will be used to calculate compensation amounts for 2010 and subsequent years.”