2018 CMS Marketing Guidelines

[yogooglethis]

Question Has anyone paid a referal fee to a non liscensed person for a MAPD PLan? Section 120.4 does not explicitly say you can or can not.It does say you can pay an agent 100 dollars

120.4 - Compensation Applicability and Definitions
42 CFR 422.2274, 423.2274

Referral/Finder’s Fees: Referral/Finder’s fees paid to agents and brokers, including independent, employed, and captive agents and brokers, may not exceed $100 ($25 for PDPs). CMS expects that this amount will not provide enough financial incentive for an agent or broker to recommend or enroll a beneficiary into a plan that is not the most appropriate for the beneficiary’s needs.

Paying a non licensed person a referral fee is not compliant.

 

[J.R.]

Yes, you don't need to get an SOA 48 hours in advance. The 2018 MMG says you need to get it in advance of making a presentation, which we interpret as being immediately before the presentation, IE, same day SOA.

It's a bit clearer what I mean if you look at the 2017 and 2018 MMG side by side (section 70.4.3).

We're talking to a lot of the carriers about it and, eventually, they will clarify, but from the way this reads, if you have permission to contact (like a client), you can call them, schedule an appointment for 8am the next morning, show up at their house, have them sign an SOA right then, present a new plan and enroll them.

For Medicareful, you can call a client, have them do an SOA electronically, present the plan over the phone and have them enroll electronically ALL IN ONE PHONE CALL.

I think this is pretty big news. Maybe it's just not out there yet?!?

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It's probably not in the AHIP training because the 2018 MMG came out on July 20th which is after the AHIP training was developed. Typically, the MMG comes out around the first week in June, it was about a month and a half late this year.

I am going to blog on all the agent relevant changes later today. I think there are about 15-20 things agents need to know. Also, as the carriers digest the MMG, a consensus will develop around what everything means. We might interpret things one way and a carrier sees it differently, but generally, it crystallizes into a pretty uniform standard.

For example, I'm also trying to get clarification on some requirements around CMS approval of BRC's. The wording seems a bit contradictory. We may be able to use generic BRC's again for permission to contact and with the same day SOA, that might make direct mail cost effective again. Not 100% sure on that.

Let's hope that you're right Craig. That would/will be YUGE news indeed. Looking forward to reading your next blog entry.

 

[sshafran]

Earlier in the thread, the topic of the $100 referral/finder fee came up.

After reading everything in the marketing guidelines, here is how I understand it. If anyone has further thoughts on it - I'd appreciate it, but this is how I understand it. Am I wrong?

Referrals from clients and/or people on Medicare
From section 30.9

We can solicit referrals as we always have done. We can't mention any gifts if writing a letter - but we can give a gift as a thank you for a referral just like we've always done - it must be of nominal value, not based on a sale, etc.

Nothing has changed. The main thing to note is that we can't pay a mapd client $100 for a referral...


Referrals from agents / finders fees

This fee can be contingent upon a sale. It's included in the list of "remuneration of any kind relating to the sale." (commissions, bonuses, gifts, prizes, awards, and referral/finder’s fees).

The limit is $25 for PDP or $100 for MAPD.

The referral source receiving the $100 does not need to be certified, so it seems.

So, if John - a local p/c agent that I know - refers someone to me and I sign that person up for a PDP, then I can pay John $25 if I want to. If he refers someone to me and I sign that person up for a MAPD, then I can pay John $100 if I want to.

If he refers someone to me and they sign up for nothing, then I don't need to pay John as my agreement with John is that the finder fee is based on the sale.


Is that correct? Or does the other agent need to have a health license? It doesn't say - it just says agent/broker.

The main thing here is that it seems like the guidelines treat referrals from "customers/prospects on Medicare" differently than referrals from those whom we've networked with professionally - like another agent.

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Link to the guidelines in case anyone is interested.

 

[mdlovell]

I don't have this in writing anywhere to support my statement. That being said...

From my experience, the referral partner needs to have a health license in order to get the $100 referral fee contingent upon sale. Otherwise they would be limited to the other referral structure.

So that p&c agent example would only work if the agent also had a health license.

This comes from my experience of my former position. Part of that role was contracting agents to be eligible for a carrier's referral program that followed these rules. No health license meant not eligible to participate.

 

[somarco]

I believe the license is only required if the referral fee is contingent on or tied to a sale. It is permissible to pay referral fees for "traditional" products (life, health, p&c) but MA plans may be different. CMS has some really stupid rules.

 

[sshafran]

Ok - so this may be closer to accurate.

• Client refers friend - you can send a nominal gift as a thank you, not contingent up sale.
  
• Health Licensed Agent John refers MAPD business to you - you can send up to $100 - contingent upon sale.
  
• P&C Agent refers MAPD business to me - I can pay $_, as long as it's not contingent upon a sale (i.e. $20 per lead). I don't know of anything in the Medicare Marketing Guidelines preventing this.

Obviously, the best thing is to just get referrals and not pay out - but it's good to know what our options are.

 

[somarco]

I believe the IRS frowns on "gifts" xs of $25.