CMS orders end to 'referral fees' to sales agents for Medicare Advantage plans

CMS has ordered private insurers to payment of "'referral fees' to sales agents who steer a beneficiary to a company for enrollment," Florida Health News reports.

These pay-for-referral fees "came in response" to caps set by CMS on commissions to sales agents for enrolling patients in Medicare prescription drug plans and Medicare Advantage plans, according to Florida Health News.

Insurers have offered as much as $500 to sales agents who suggested that beneficiaries enroll in certain MA or prescription drug benefit plans. A memo from CMS dated Feb. 24 stated that the referral fees seemed to be an attempt to get around the commission caps. According to Florida Health News, the referral fees resulted in the ability of sales agents to sometimes receive more money for referring a patient to an insurer for enrollment than for completing the customers' paperwork themselves. The memo ordered all Medicare health and drug plans to "cease [paying referral fees] immediately."

According to Florida Health News, not all companies complied immediately. Humana halted the payments on March 21, according to an e-mail sent to the sales community. The e-mail said Humana was taking the action "pending further clarification from" CMS and that it still hoped to offer a referral fee program at some point in the future (Gentry, Florida Health News, 3/24).