The combination of CMS rule changes, financial pressures and the distraction of the hotly contested presidential election were already creating anxiety for payers as they prepare for the 2025 Annual Enrollment Period (AEP). Now, you can add to the mix the uncertainty stemming from a series of lawsuits against the Centers for Medicare and Medicaid Services (CMS). Medicare Advantage (MA) plans have successfully sued CMS over the changes to star rating calculations, and brokers are suing over changes to their compensation. These lawsuits continue a trend of disruption facing the healthcare industry in 2024.
CMS Star Rating Recalculations
Elevance Health and SCAN Health Plan recently prevailed in lawsuits against CMS regarding changes to the star rating scoring – changes that may have contributed to the plans’ lower ratings and decreased quality bonus payments.
In light of these decisions, CMS announced on June 13 that they will recalculate and update the star ratings and related bonus payments, which – according to Modern Healthcare – could impact 40 insurers and 1.9 million enrollees and will cost CMS $1.3 billion in additional bonus payments owed to the plans. (Note: CMS has still not decided on whether to appeal the Elevance Health and SCAN Health Plan judgments.)
The bonus payments are crucial to plans because they impact product design and member benefits, including highly popular benefits like dental, hearing and flex cards. Due to the improper calculation, impacted insurers can resubmit their 2025 bids by June 28.
Discord Over Broker Compensation
And if that’s not enough, AmeriLife, a major field marketing organization, recently filed a lawsuit against CMS objecting to a new rule capping payments to brokers and agents. This came on the heels of two similar suits.
The new compensation structure fixes agent and broker compensation regardless of the plan the beneficiary enrolls in and prohibits payers and field marketing organizations from offering additional incentives to brokers. The change is intended to limit “predatory” marketing and compensation practices, said CMS. However, the complainants say that CMS overstepped its regulatory authority and have asked for a court order suspending the rule changes by July, to allow brokers, payers, and marketing organizations time to prepare for the October start of open enrollment.
Based on what we’ve heard from our clients and other nonprofit health insurance companies, they approve of the compensation limits because they level the playing field between regional and national payers.
Takeaways for Health Plans
So, what actions can be taken in light of these looming issues? Here are some quick takeaways:
- This would be a good time to focus on member retention and the intangibles like customer experience. It’s never too late to “surprise and delight” your existing members before they have to decide whether to stay with your plan or go elsewhere.
- As for the broker issue, nonprofits should be advocating to keep the rule in place. And if that doesn’t happen, they should consider banding together to get messaging out to consumers about how the proposed cap is intended to protect them. This might be an uphill battle, but transparency around broker compensation might resonate.
- In general, be prepared and ready to make course corrections. Have contingency plans, including CMS-approved creative, ready to go if needed.
- All of this uncertainty and disruption could drive more shopping and switching during AEP, which has the potential to lead to a more active Open Enrollment Period (OEP). OEP will inherently be less noisy and crowded than AEP, so it may be worthwhile to start planning early and set aside sufficient funding for a robust strategy. Long story short, don’t wait until January to start planning for OEP – build it into your plans from the start.
We will continue to monitor this ever-evolving landscape, so keep an eye on our blog for updates and insights. Any questions? Reach out to Media Logic today.
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