Analysis: CY 2025 Revisions to Medicare Advantage and Part D Rules Governing Agent, Broker and Third Party Compensation

On April 4, the Centers for Medicare & Medicaid Services (CMS) released the Contract Year (CY) 2025 Medicare Advantage (MA) and Medicare Part D Policy and Technical Changes final rule (“Final Rule”), which included revisions to the regulations governing how MA organizations and Part D plan sponsors (referred to collectively throughout as “issuers”) compensate agents, brokers and third parties. In this rulemaking, CMS raised a number of concerns about third party marketing organizations (TPMOs) and, specifically, field marketing organizations (FMOs) having undue influence over beneficiary plan selection and competition among issuers. Despite some speculation that CMS would force an overhaul of issuers’ contractual relationships with TPMOs, the Final Rule should only affect contract provisions that could interfere with agent and broker objectivity. This conclusion is supported by the final regulatory text, the underlying statutory authority, regulatory history, and sub-regulatory guidance, as well as CMS’s own assertion that it “does not believe [the Final Rule] will have an adverse effect, either on TPMOs, FMOs or independent brokers.”¹

Overview of Changes

CMS made three primary changes to regulations governing relationships between issuers and independent agents, brokers and other third parties:

1. Prohibiting contract terms between issuers and agents, brokers or TPMOs that may interfere with the agent’s or broker’s ability to objectively assess and recommend the plan which best fits a beneficiary’s health care needs. 42 C.F.R. 422.2274(c)(13) and § 423.2274(c)(13) (“subparagraph (c)(13)”).
2. Amending the definition of compensation to include “administrative payments” and setting a single compensation rate for agents and brokers that reflects the inclusion of such administrative payments. 42 C.F.R. 422.2274(a) and § 423.2274(a).
3. Eliminating the separate treatment of “administrative payments” at 42 C.F.R. 422.2274(e) and § 423.2274(e) (“subparagraph (e)”).

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^{1 Medicare Program; Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Program for Contract Year 2024-Remaining Provisions and Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (PACE), 89 Fed. Reg. 30,448, 30,802 (April 23, 2024) (hereinafter referred to as “Final Rule”).}