The Centers for Medicare & Medicaid Services (CMS) has clarified that the use of consultants in the sale of Medicare Advantage plans is primarily governed by state law, a move that has prompted Nebraska regulators to allow the practice under certain conditions.
The Nebraska Department of Insurance sought guidance from CMS after concerns emerged that some Medicare Advantage carriers were reducing or eliminating commissions paid to agents for these products. Regulators in multiple states had raised similar concerns, suggesting that changes to compensation structures could affect enrollment patterns in Medicare Advantage and supplemental plans.
Under traditional arrangements, licensed agents and brokers receive commissions from insurers for selling policies. In contrast, insurance consultants typically charge fees directly to clients for advisory and placement services, rather than being compensated by carriers. Previously, CMS rules were interpreted as limiting or prohibiting the use of consultants in Medicare Advantage sales, on the grounds that such arrangements could conflict with federal compensation regulations.
However, in its response to Nebraska’s inquiry, CMS indicated that federal compensation rules apply specifically to agents and brokers who are appointed by Medicare Advantage plan sponsors. As a result, consultants operating under a state-issued insurance consultant license - and charging reasonable fees for their services - may not fall under the same federal restrictions.
Following the clarification, Nebraska regulators said they would permit consultants to participate in Medicare Advantage sales, provided that state laws are followed, existing sales and marketing regulations are met, and any fees charged are deemed reasonable.
State officials said the decision is intended to expand consumer choice by allowing additional avenues for individuals to receive advice when selecting Medicare coverage.
The development comes amid broader scrutiny of compensation practices in the Medicare Advantage market, particularly as regulators assess how changes to commission structures may influence distribution and consumer access to coverage.
CMS’s position leaves implementation largely in the hands of individual states, potentially resulting in varied approaches across jurisdictions as regulators determine how consultants can operate within their respective frameworks.
