Hospital and Payer Groups Support CMS’ MA Prior Authorization and Broker Compensation Rules

The CMS issued a proposed rule that would make several changes to the Medicare Advantage (MA) program for contract year 2025. The proposed rule, which was open for public comment until January 17, 2024, aims to improve the quality, affordability, and accessibility of MA plans, which are private health plans that offer Medicare benefits to eligible beneficiaries.

The proposed rule includes several provisions that would affect the prior authorization and broker compensation processes for MA plans. Prior authorization is a process that requires the MA plan to approve certain services or items before they are provided to the beneficiary. Broker compensation is the payment that MA plans make to brokers or agents who enroll beneficiaries into their plans.

The proposed rule would require MA plans to:

• Adopt electronic prior authorization standards and processes consistent with the CMS Interoperability and Prior Authorization final rule, issued in December 2023 and applies to Medicaid, CHIP, and QHPs on the FFEs, and MA plans. The electronic prior authorization standards and processes would enable providers to submit and receive prior authorization requests and responses electronically, and access information about the MA plan’s prior authorization requirements, criteria, and decisions.
• Report data on their prior authorization programs to the CMS, such as the number and type of prior authorization requests, the approval and denial rates, the average processing time, and the appeals and grievances outcomes. The CMS would use this data to monitor and evaluate the MA plan’s prior authorization practices, and to inform beneficiaries and providers about the MA plan’s prior authorization performance.
• Limit the broker compensation for new enrollees to the first six years of enrollment, instead of indefinitely. The CMS would also establish a minimum compensation amount for brokers who enroll beneficiaries into zero-premium MA plans, which are plans that do not charge any monthly premium to the beneficiary. The CMS would also prohibit MA plans from paying brokers for switching beneficiaries from one MA plan to another within the same parent organization, unless the switch results in a material benefit to the beneficiary.

The proposed rule also includes other provisions that would affect the MA program, such as:

• Expanding the use of telehealth and other technologies to provide care and services to MA beneficiaries, especially those who live in rural areas or have limited access to transportation.
• Enhancing the Star Ratings system which measures and rewards the quality and performance of MA plans by adding new measures, adjusting the methodology, and incorporating health equity considerations.
• Increasing the transparency and accuracy of the MA plan finder tool, which helps beneficiaries compare and choose MA plans, by requiring MA plans to provide more information about their benefits, costs, and network providers, and by updating the tool more frequently.
• Implementing the No Surprises Act, which was enacted in December 2023 and protects beneficiaries from surprise medical bills, by requiring MA plans to comply with the provisions of the law, such as limiting the cost-sharing for out-of-network emergency and air ambulance services, and establishing a dispute resolution process for out-of-network claims.

The proposed rule was met with support and appreciation from several hospital and payer groups, who submitted their comments to the CMS before the deadline. The groups praised the CMS for addressing some of the issues and challenges that affect the MA program, and for promoting the goals of value-based care, patient-centered care, and health equity.

The American Hospital Association (AHA), which represents nearly 5,000 hospitals and health systems, expressed its support for the proposed rule, especially the provisions that would improve the prior authorization and broker compensation processes for MA plans. The AHA stated that the proposed rule would “reduce administrative burden, enhance transparency, and ensure appropriate oversight of MA plans’ prior authorization and broker compensation practices.”

The AHA also applauded the CMS for aligning the electronic prior authorization standards and processes for MA plans with those for Medicaid, CHIP, and QHPs on the FFEs, and for requiring MA plans to report data on their prior authorization programs. The AHA said that these provisions would “facilitate data exchange and interoperability among payers and providers, and enable the CMS and other stakeholders to monitor and evaluate the impact of prior authorization on access, quality, and outcomes.”

The AHA also welcomed the CMS’ proposal to limit the broker compensation for new enrollees to the first six years of enrollment, and to prohibit MA plans from paying brokers for switching beneficiaries within the same parent organization. The AHA said that these provisions would “prevent inappropriate and excessive payments to brokers, and discourage unnecessary and potentially harmful plan switching.”

The America’s Health Insurance Plans (AHIP), which represents over 1,000 health insurance companies, also expressed its support for the proposed rule, especially the provisions that would expand the use of telehealth and other technologies, enhance the Star Ratings system, and implement the No Surprises Act for MA plans. AHIP stated that the proposed rule would “improve access, quality, and affordability of care for MA beneficiaries, and reward MA plans for delivering high-value care and services.”

CMS’ proposal to adopt electronic prior authorization standards and processes for MA plans, and to require MA plans to report data on their prior authorization programs was appreciated by AHIP. The payer group said that these provisions would “improve the efficiency and transparency of the prior authorization process, and provide valuable information to the CMS and other stakeholders on the MA plan’s prior authorization performance.”

AHIP also agreed with the CMS’ proposal to limit the broker compensation for new enrollees to the first six years of enrollment, and to establish a minimum compensation amount for brokers who enroll beneficiaries into zero-premium MA plans. AHIP said that these provisions would “ensure fair and reasonable compensation for brokers, and encourage enrollment into MA plans that offer low or no premiums to beneficiaries.”

The groups requested the CMS to make some modifications and clarifications to the proposed rule, and to address some of the issues and concerns that were not covered by the proposed rule. The groups also urged the CMS to “continue advancing broader policy efforts to advance health equity goals,” and to delay the date by which plans must publish their utilization reviews.

Additional Changes Suggested by Industry Bodies:

• Clarify the criteria and process for determining the material benefit for beneficiaries who switch MA plans within the same parent organization, and to allow for exceptions for certain circumstances, such as changes in health status, network availability, or plan benefits.
• Provide more guidance and flexibility for MA plans and providers to comply with the No Surprises Act, especially regarding the dispute resolution process, the qualifying payment amount, and the notice and consent requirements.
• Delay the implementation of the provision that would require MA plans to publish their utilization reviews, which MA plans conduct to determine the medical necessity and appropriateness of care and services, by at least one year, from January 1, 2025 to January 1, 2026.
• Reconsider the provision that would prohibit MA plans from paying brokers for switching beneficiaries within the same parent organization, and to allow for exceptions for certain situations, such as changes in plan offerings, service areas, or quality ratings.

The CMS is expected to issue the final rule on the MA program for contract year 2025 by April 2024, after reviewing and considering the public comments. The final rule will determine the final policies and regulations that will apply to the MA program for contract year 2025, which will begin on January 1, 2025.