AmeriLife Holdings, LLC, Network Insurance Senior Health Division ALG, LLC, and AmeriLife Marketing Group, LLC (“AmeriLife”) recently sued the United States Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) over the final rule that caps payments from Medicare Advantage health insurers to agents and brokers.
AmeriLife notes that the central feature of the Rule is a cap on payments to agents and brokers that includes not only “compensation” – as CMS as construed the term for 16 years – but also “administrative payments” made directly to the agents. AmeriLife argues that the redefinition of a settled statutory term exceeds the agency’s authority.
In the lawsuit, AmeriLife argues that the federal government does not have the authority to cut payments to field marketing organizations. Field marketing organizations do not enroll beneficiaries in plans themselves but use payments from carriers to oversee independent brokers that do.
The lawsuit states that the “unprecedented move with respect to carrier-to-FMO payments defies law and logic many times over” and “arbitrarily and capriciously thwarts FMOs’ ability to provide agent and broker oversight and support services that are essential to fulfilling the Medicare Act’s purposes.” AmeriLife states in the complaint that it provides “critical services” that “ensure that agents and brokers are appropriately licensed, trained, and informed, and have the best tools to assist MA beneficiaries nationwide in selecting the MA plan that is in their best interest for their health care needs, and thereby help carriers discharge their oversight duties.”
While the intent behind the rule may be to stop certain predatory marketing tactics and improper back-door payments, it will also prevent insurers from paying brokers additional fees. This may prevent field marketing organizations from entering into contracts with carriers for the 2025 plan year, which may have an impact on beneficiary enrollment assistance.
By filing the lawsuit, AmeriLife is asking for a declaration that the rule does not apply to payments paid from MA plans to field marketing organizations that are not passed along to agents and brokers, or for an order preventing the rule from applying to those payments. Of note, AmeriLife is not trying to stop CMS from capping the total payments from carriers to agents and brokers, but is only seeking to carve out carrier payments unrelated to compensation incentives.