CMS Tightens Oversight on ACA Brokers

To address a growing number of complaints regarding broker misconduct, the Centers for Medicare & Medicaid Services (CMS) has proposed new regulations that will impose stricter oversight on insurance brokers and agents operating within the Affordable Care Act (ACA) marketplace. This move follows a significant rise in grievances related to unauthorized changes in beneficiaries’ health plans, false information, and unethical broker practices. If the rule is finalized, brokers who are found to violate marketplace rules could face serious penalties, including suspension from conducting business on the ACA exchange. 

The rule, proposed on October 7, 2024, comes at a time when CMS is ramping up efforts to ensure transparency, consumer protection, and accuracy in the marketplace. Here’s what providers and consumers need to know about this new development. 

The Growing Problem of Broker Misconduct 

Since the open enrollment period for the 2024 ACA plan year began, CMS has seen an alarming uptick in complaints from enrollees. These complaints often involve brokers or agents making unauthorized changes to their health insurance plans, submitting applications without consumer consent, or providing incorrect information—such as inaccurately reporting a consumer’s income. 

Such actions can have serious consequences for enrollees, including limiting their access to healthcare or placing them at financial risk. For example, if a broker misreports an individual’s income, they may mistakenly qualify for a zero-premium plan, only to discover later that they owe payments when tax season arrives. This leaves the consumer with unexpected financial burdens, undermining the very purpose of having health coverage in the first place. 

Brokers and agents are intended to act as facilitators, helping consumers navigate complex insurance choices and selecting the best plan to suit their needs. However, these recent complaints indicate that some brokers are prioritizing their own commissions over consumer well-being by engaging in unethical behaviors like switching plans without consent to earn higher payouts. The CMS’s proposed rule directly targets this growing issue. 

Key Provisions of the Proposed Rule 

• Suspending Brokers for Violations 

A key feature of the proposed rule would grant CMS the authority to suspend brokers from participating in the ACA exchange if they are found to have violated marketplace rules. Specifically, this includes actions that CMS deems an “unacceptable risk” to the integrity of eligibility determinations, marketplace operations, or IT systems. 

For brokers, this means stricter scrutiny over their actions and potentially losing the ability to operate within the marketplace if they engage in fraudulent or deceptive practices. 

• Tighter Controls on Enrollment Consent 

To address unauthorized plan changes, the proposed rule also includes changes to the form that brokers and agents use to obtain consumer consent. The updated form would include a section to document whether an enrollee has reviewed their application before submission. This provides added protection for consumers, ensuring that they are aware of and agree to any changes made to their plan. 

Additionally, the proposal suggests the use of a script for brokers conducting business over the phone. This script would guide brokers through the process of obtaining explicit consent from consumers via an audio recording, creating a verifiable record of the transaction. This provision is designed to curb unauthorized changes and ensure transparency in interactions between brokers and consumers. 

• Protecting Beneficiaries Facing Premium Payment Issues 

Beyond broker oversight, the proposed rule also introduces a measure to protect consumers who may face financial hardship and struggle to make full premium payments. Insurers would be allowed to adopt a fixed-dollar payment threshold of $5 or less (adjusted annually for inflation), meaning that beneficiaries who fall just short of their premium payment would not automatically enter a grace period or face termination of their coverage. 

This change is aimed at keeping more individuals insured, preventing coverage gaps that can occur due to minor shortfalls in premium payments. It reflects CMS’s ongoing commitment to consumer protection and maintaining continuity of care for individuals enrolled in marketplace plans. 

Why Is This Rule Necessary? 

CMS’s decision to propose this rule highlights the agency’s increasing focus on consumer protection and marketplace integrity. The rise in broker misconduct complaints threatens to undermine the ACA marketplace, designed to provide affordable and accessible healthcare coverage to millions of Americans. Fraudulent enrollment practices not only harm consumers but can also distort the insurance market by affecting plan risk pools and driving up costs. 

Unethical broker practices erode trust in the healthcare system, particularly in the ACA marketplace, which serves as a lifeline for many low- and middle-income Americans seeking affordable health coverage. By implementing more stringent oversight and penalties, CMS aims to restore confidence in the marketplace and ensure that brokers are held accountable for their actions. 

What Happens Next? 

CMS is currently accepting public comments on the proposed rule until November 12, 2024. Industry stakeholders, consumer advocates, and brokers themselves are encouraged to provide feedback during this period. After the comment period closes, CMS will review the input and may make modifications before issuing a final rule, expected to go into effect in 2025. 

In the meantime, brokers and agents should ensure their practices comply with all marketplace regulations. They should also prepare for the possibility of increased oversight and the need for clearer documentation when working with clients in the ACA marketplace. 

Takeaway for Providers and Consumers 

As CMS increases its oversight of the ACA marketplace, healthcare providers and consumers alike need to be aware of the new regulations that are being proposed. Brokers will need to adapt to stricter requirements, especially around obtaining consumer consent, while consumers should be vigilant in reviewing their health plan information and making sure they understand any changes made to their policies.