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Medicare Proposal Updates Could Affect Medicare Advantage/PDP Sales Process

The Centers for Medicare and Medicaid Services published proposed changes to the Medicare marketing rules on January 12, 2022. Their action was due to beneficiary complaints related to marketing roughly doubled from 2020 to 2021. CMS believes many complaints are related to third-party marketing organizations (TPMOs).

These proposed changes are intended to address the complaints and concerns with TPMOs. The Medicare marketing proposed rule broadly defines “third-party marketing organization” and requires a disclaimer on TPMO marketing material. It also proposes requirements applicable to entities contracting with TPMOs.

CMS’s Proposed Definition of TPMOs

  • Organizations who are compensated to perform lead generation, marketing, sales, and enrollment-related functions as part of the chain of enrollment (the steps taken by a beneficiary from becoming aware of an MA plan or plans to making an enrollment decision).
  • TPMOs may be first tier, downstream, or related entities, but may also be entities that are not FDRs but provide services to customers, including an MA plan or an MA plan’s First Tier, Downstream, and Related Benefits (FDR).
  • TPMOs include but are not limited to: FMOs; Agencies/Brokerages; Agents/Brokers; other organizations who are compensated to perform lead generation, marketing, sales and enrollment, and vendors that provide these services.

Proposed TPMO Disclaimer

CMS is concerned beneficiaries are misled into thinking agents/brokers offer all available plans in the beneficiaries’ area. With that concern in mind, CMS is proposing the following disclaimer be stated before communicating with a consumer about Medicare options.

“We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.”

If the proposed change is made, this statement must be used by any TPMO that sells plans on behalf of more than one Medicare Advantage (MA)/Prescription Drug Plan (PDP) organization UNLESS the TPMO actually sells all commercially available MA/PDP plans in a given service area.

It also must be verbally stated within the first minute of the sales call and must be electronically conveyed when communicating with the beneficiary via email, online chat, or other electronic communication. The above disclaimer also must be prominently displayed on TPMO websites and stated in any marketing materials developed, used, or distributed by the TPMO.

Proposed TMO Oversight

Contracts with TPMOs must require the TPMO:

  • To disclose subcontracted relationships used for marketing, lead generation, and enrollment to the MA plan/PDP sponsor
  • To record all calls with beneficiaries in their entirety, including the enrollment process
  • To report to plans monthly any staff disciplinary actions associated with beneficiary interaction to the plan
  • To use the TPMO disclaimer

When conducting lead-generating activities, TPMOs must disclose to the beneficiary that he/she is being transferred to a licensed agent who can enroll him or her into a new plan. TPMOs also must disclose to the beneficiary that his/her information will be provided to a licensed agent for future contact:

  • Verbally when communicating via phone
  • In writing when communicating through mail or other paper
  • Electronically when communicating through email, online chat, or other electronic messaging platform

How You Should Plan for the Proposed Rules

  • Plan as if the proposed rules will be finalized.
  • Recognize that there may be modifications.
  • Add the TPMO Disclaimer now where required.
  • Prepare to disclose that information will be provided to a licensed agent for future contact verbally, in writing, and electronically.
  • Prepare to disclose when being transferred to a licensed agent who can enroll the beneficiary.
  • Review contracts with uplines for new contractual obligations.
  • Determine what vendors may be TPMOs.
  • Prepare to revise your contracts with downlines and TPMOs.

For more information, you can read this article on the CMS website on 2023 Medicare Advantage and Part D Rule. If you have additional questions, please contact AIPMA at marketing@aipma.com.

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