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Medicare Advantage (MA) has been in a period of transition (see our first article in the series). MA enrollment has grown notably over the last 10 years, reaching 55% of the eligible Medicare population in 2026, expanding to 35.1 million beneficiaries as of February 2026 (KFF). For more than a decade, MA plans built their enrollment growth on a tried-and-true formula: Increase broker commissions, deploy field sales representatives, and scale telesales operations. That worked until the economics stopped adding up. The Medicare coverage decision is complex, and beneficiaries need a guide to close the information gap which the brokers historically filled.
What are the new forces reshaping Medicare distribution?
Today, a new force is reshaping the distribution landscape: the Medicare beneficiary itself. The seniors of 2026 are different from the seniors of 2015—more digitally fluent, more likely to research plans online before ever speaking to a broker, and more willing to self-direct their coverage decisions. As member behavior evolves and CMS increases its scrutiny of traditional sales and marketing practices, MA plans that don’t evolve will carry a cost disadvantage into every enrollment period. The window to adapt is narrowing. Let’s take a look at ways in which CMS-led changes and industry innovation are rewiring how MA plans reach, engage, and retain members—and what it will take to build a distribution model that’s sustainable in the years ahead.
Historically, health plans that secured higher than market average growth and consistently outperformed in terms of enrollment did so through a straightforward mechanism. They offered rich benefits irrespective of affordability, deployed a multichannel sales strategy through offering highest broker commissions and agency overrides, secured a field service representative footprint where necessary, and built a robust telesales strategy. In the peak of enrollment growth, plans were spending 2–3% of premium dollars on member acquisition and retention—more than any other function.
Across the industry, sales and marketing spending varies widely from $30 per member per month (PMPM) for national MA carriers and $17.50 PMPM (according to PwC analysis of NAIC statutory filings) for regional carriers, yet retention lags. As MA economics have shifted with margins tightening and acquisition costs are rising faster than the revenue they support, member retention remains an issue. And with rising regulatory scrutiny over the broker relationship (discussed later in this article), sector leaders are rethinking the sales model. The next chapter of front office evolution will require both reform and innovation.
How seniors shop for Medicare today
The broker channel has played a central role in MA in part because of the complexity of the offerings, the number of plan choices, and the financial importance of the decision. While many seniors seek support when making coverage decisions, channel preference in MA varies meaningfully by beneficiary profile and geography. Beneficiary segmentation can be used to highlight these differences and create a more targeted channel approach.
In rural markets and among dual-eligible or first-time enrollees without a peer network, reliance on in-person and phone-based guidance remains high. In some areas, limited broker infrastructure can constrain access to plan options altogether.
At the same time, wider technology adoption is growing among older adults. During the 2025 annual enrollment period (AEP), a greater share of beneficiaries researched plan options online before speaking with a broker, reflecting a broader shift toward digital-first shopping behavior. Engagement with annual notice of change (ANOC) documents has also increased in recent years, suggesting a more informed and proactive beneficiary base.
These dynamics suggest that a single-channel distribution strategy (whether heavily broker-dependent or aggressively digital) may no longer serve a large share of the beneficiary population. The effective distribution model of the future is segmented by design.
The emerging economic pressure of broker-led distribution
Broker commissions affect Medicare Advantage plan economics. CMS sets maximum national fair market value (FMV) compensation that MA plans may pay independent agents. The FMV for initial MA enrollments has risen for 10 consecutive years, reaching $725 per member per year for 2027. Further, FMV has consistently outpaced MA payment growth because the commission cap is tied to raw fee-for-service (FFS) trend, before CMS applies the impact of risk model revisions and normalization. This has created a squeeze in which member acquisition costs are rising faster than the revenue they are meant to support.
FMV also understates what plans actually spend. Administrative payments—fees paid on top of base commissions for services, like health risk assessment (HRA) completion, PCP assignment, agent recruitment, and operational overhead—function as enrollment bonuses in all but name. Total broker compensation has been reported to reach more than $1,300 per enrollee annually (1), when all such payments are aggregated, more than double CMS-set maximum commission.
Because not all brokers generate equal economics, a segmentation framework can be used to separate high lifetime value relationships from volume-only channels and build compensation structures around them. For example, e-brokers, the digital aggregators that fueled significant enrollment growth at seemingly low acquisition costs, carry the worst retention rates across channels. Average member tenure for e-broker-acquired members has run well under three years. Traditional independent brokers retain members longer, but at higher commission cost.
The downstream implications can be material. High churn undermines risk adjustment continuity, degrades Medicare star ratings performance, and forces plans back to the acquisition treadmill year after year. Much of the industry’s growth has been concentrated in segments of the broker channel characterized by lower retention and lifetime value.
Brokers also wield structural influence beyond the point of sale. Because they’re not required to present all available plans in a market, total compensation effectively buys preferred placement in their pitch. Plans have used this dynamic strategically to migrate existing members between products—decommissioning lower-performing contracts, launching new contracts to reset star ratings, and deploying brokers to move members into the new plan at new-member commission rates.
The path forward: Enhanced multichannel distribution
The broker channel is not going away. For first-time Medicare enrollees, dual-eligible populations, rural beneficiaries, and seniors with limited digital comfort, brokers serve a function that no app or website currently replicates. Washington State Insurance Commissioner Patricia Kuderer made this point in late 2025, writing to carriers that eliminating commissions risks stripping seniors of producers who spend hours searching provider directories and drug formularies on their behalf. The answer is not broker elimination but rather broker optimization through a multichannel approach.
Plans that thrive in the next phase of MA can do four things differently to enable more personalized, multichannel interactions with members
1. Segment distribution strategies by beneficiary profile to drive better retention
Start by segmenting the market beyond traditional demographics, factoring in digital fluency, life stage, and local distribution density. Plans need a clear picture of where broker networks are concentrated and where coverage gaps leave beneficiaries underserved. Channel strategy should align to each segment with guided support where it is needed most. Distribution strategies built around this level of precision can result in the acquisition of better-fit members and retain them for longer periods of time.
2. Invest in AI-assisted plan matching and lead qualification
Digital sales agents can replace Tier 1 telesales agents in the future. Health plans rely on telesales at varying degrees, bringing 5–40% of their enrollment (according to the 2024 CMS Final Rule and PwC analysis) through telesales. This channel has proven to be the most cost-effective enrollment channel where plans stand up captive channels that do everything from inbound inquiry handling, lead qualification and eligibility verification, and warm transfers to licensed Tier 2 representatives. MA plans are asking, “How can AI help optimize plan matching and retention?” Omnichannel AI-agents can support all legacy Tier 1 agents and reduce the information asymmetry such as plan comparison, plan selection, and matching. By capturing medication lists, provider preferences, prior utilization, and social determinants of health, these AI tools can surface the right plan for the right member, reducing plan selection misalignment, improving satisfaction, and building retention. CMS's February 2024 FAQ clarifying that MA organizations may use AI in coverage determinations suggests directional comfort with AI deployment in MA operations. The investment case is now a retention case.
3. Build year-round member relationships to grow trust and engagement
The broker channel’s renewal leverage derives in part from the absence of a meaningful direct relationship between plan and member between annual enrollment periods (AEP). The surge in plan annual notice of change (ANOC) readership during AEP 2025 points to a beneficiary population ready to engage. But it needs meaningful content with which to engage.
So, what should health plans do to improve MA member retention? Plans that deliver year-round value through digital channels, preventive care reminders, benefit utilization nudges, and primary care physician support can reduce their dependence on brokers to retain membership at renewal.
4. CMS has a role to play in reshaping Medicare Advantage distribution
Commission caps have been unsuccessful. The alternative is smarter compensation design.
CMS has been trying to close the gap between stated FMV limits and actual broker spend for years. The 2025 CMS Final Rule sought to bring all broker compensation, including administrative fees, under a single cap and prohibit bonuses tied to enrollment volume targets. A federal court invalidated the compensation price caps in August 2025, finding CMS lacked ratemaking authority, and the rule was paused before ever taking effect. (2) The current administration has proposed further rollbacks, including the removal of time and manner restrictions on broker marketing activities (CMS-4212-P, proposed November 2025). Though the court closed the door on rate-setting, plans and policymakers can still redesign compensation incentives around outcomes rather than volume.
Rebalancing compensation toward retention could reshape behavior. Retained members tend to carry higher lifetime value than new sales, yet broker compensation structures don’t fully reflect that. Initial enrollment commissions only apply to new-to-Medicare beneficiaries, and plan-to-plan switches already pay at the renewal rate, but the overall model still emphasizes acquisition over retention. A compensation model that more deliberately rewards retention and satisfaction outcomes would better align broker incentives with plan economics. The 2027 CMS Final Rule largely sidesteps broker compensation but includes a formal Request for Information on “modernizing marketing oversight and agent/broker regulations.” The question is not closed, only deferred. Plans that voluntarily shift compensation emphasis toward renewal and retention can reduce churn and get ahead of regulatory action that is building.
Medicare Plan Finder is behind its ACA equivalent, and AI could help to close the gap. HealthCare.gov supports integrated subsidy calculations and mature third-party enrollment pathways. Medicare Plan Finder has narrowed the gap, adding in-network provider directory listings in October 2025, supporting direct enrollment, and mirroring user experience with similar UX, but it still lacks comparable decision-support tools for comparing out-of-pocket costs across plans to make decision-making easier for consumers. With AI-assisted recommendations, a modernized Plan Finder could make independent plan comparison easier for digitally fluent beneficiaries, complementing the broker support many rely on today.
In the end, payers can focus on retaining members within their ecosystem. The focus in MA distribution is shifting from scaling enrollment to sustaining long-term value. Success in the next phase of MA will depend less on how aggressively plans deploy commissions and more on how effectively they align members to the right products and sustain engagement over time. Plans that build direct, durable relationships, beginning at enrollment and reinforced throughout the year, can be better positioned to retain members without relying heavily on intermediary-driven renewal.
1) Rebecca Pifer Parduhn, “CMS caps broker payments in Medicare Advantage”, April 8, 2024, Healthcaredive.com
2) Rebecca Pifer Parduhn, “Judge overturns rule limiting broker payments in Medicare Advantage”, Aug. 20, 2025, Healthcaredive.com
Raffy Salcedo and Joie Li contributed to this article.
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