A district court in Texas has ruled against the Department of Health and Human Services, deciding to vacate several provisions imposed last year impacting how Medicare Advantage (MA) plans market products.
The Centers for Medicare & Medicaid Services (CMS) finalized a rule in April 2024 that fixed broker and agent compensation and raised the pay cap for new enrollments. It also eliminated certain contracts between MA plans and third-party marketing organizations as well as volume-based bonuses.
A judge paused enforcement of the provisions last summer. Yesterday (PDF), the court said the rule exceeded statutory authority and violated the Administrative Procedures Act, siding with Americans for Beneficiary Choice and broker groups to vacate the provisions.
However, the court did uphold a provision requiring banning third-party marketing firms from distributing personal beneficiary data—such as names, addresses and phone numbers—to other marketing organizations without consent.
This provision was supported by Sen. Ron Wyden, citing investigations by the Senate Finance Committee.
The CMS regulates compensation MA plans can pay agents, brokers and third-party marketing firms. Under the Biden administration, the agency tried capping payments to third-party firms. Industry stakeholders later told the feds its changes could cause agents and brokers to leave their field.
In the decision, the judge cited the overturning of the Chevron deference doctrine, a consequential Supreme Court decision last summer that limits the power of federal agencies to interpret and enforce regulations. In this situation, the CMS can only regulate how compensation is used, not “engage in ratemaking,” the judge determined.
“The decision gives some level of certainty to the broker community as to how it can structure operations and upstream and downstream arrangements moving forward,” said Helaine Fingold, a regulatory attorney at Epstein Becker Green, in a statement to Fierce Healthcare. “CMS will be issuing its 2027 MA-PD proposed rule in the next several months and may again propose changes to how they regulate administrative payments.”
The final rule also had implications for health equity, quality bonus payments, supplemental benefits and biosimilars.