Proposed CMS Rule to Medicare Advantage Threatens Industry Competition and Small Businesses

By at 21 March, 2024, 1:16 pm

by Karen Kerrigan –

The Centers for Medicare and Medicaid Services (CMS) is advancing a proposal that would significantly alter the marketing and broker compensation structures of Medicare Advantage (MA) plans. The change threatens the livelihood of small businesses and brokers, and risks stifling competition within the healthcare industry. Moreover, the proposal would drive the United States healthcare system towards a more socialized structure.

Understanding the consequences of the proposed rule on key stakeholders is important for CMS and lawmakers to understand – from the small firms that play a critical role in the healthcare market to the consumers who rely on them for guidance and support.

The proposal aims to target the promotion of objective plan assessments by brokers. But in doing so exposes the system to far-reaching negative consequences that would disrupt the coverage framework that seniors highly enjoy.  So why is CMS doing this, and do they understand the downstream impact on seniors and small businesses?

The Medicare Advantage Success Story

Medicare Advantage is a bipartisan success story. In fact, 95% of seniors identifying as Democrats and 93% as Republicans said they are satisfied with their Medicare Advantage coverage in 2022.

Medicare Advantage plans have consistently offered seniors and other eligible beneficiaries access to quality care, innovative services, and affordable options. This success is supported by a dynamic ecosystem of brokers, small firms, and competition that drives continuous improvement and adaptation in the sector.

A Successful Model is Threatened

The proposed CMS rule threatens to dismantle this successful model. By redefining compensation structures and marketing guidelines, the rule would disproportionately affect small firms and independent brokers – paving the way for large firms to eat up market share.

These smaller entities are an essential part of the Medicare Advantage market, ensuring consumers have access to personalized, knowledgeable advice when navigating the complex landscape of Medicare. Their marginalization would not only reduce the diversity of options available to beneficiaries, but also limit the quality of service and support that has been instrumental in achieving high satisfaction rates among Medicare Advantage plan members.

Moreover, the rule would significantly reduce competition in the healthcare industry. By making it harder for small firms and brokers to operate, the remaining market would likely consolidate around larger entities with the resources to navigate the new regulatory environment. The reduction in competition would lead to higher costs, less innovation, and a decrease in the quality of care available to beneficiaries.

Of equal concern, the proposal pushes the U.S. healthcare system further down a socialized path. By centralizing the functions that were previously distributed among a diverse network of brokers and small businesses, the rule paves the way for a healthcare system that is more controlled by the federal government and less by dynamic and responsive market forces. This shift would have profound implications for the quality, accessibility, and affordability of healthcare in the United States.

A Regulatory Shift That is Not Warranted

The proposed CMS rule represents a worrisome shift for Medicare Advantage and the broader healthcare market. Legislators and policymakers must fully understand the potential negative effects of this rule on small firms, competition, seniors, and the healthcare system as a whole.

If lawmakers want a Medicare Advantage system that works for seniors, they must stand firm and oppose the rule change. CMS must fully analyze the effects of the proposed rule and acknowledge the concerns of small business owners, brokers, and beneficiaries. By listening and collaborating with the stakeholders most affected by this proposed rule change, any alterations to Medicare Advantage would strive to strengthen rather than undermine the program.

America’s healthcare system must values choice, competition, and quality and reject government-directed moves that lead us toward a less effective and more socialized healthcare model.

Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council


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