Diving briefs:
- A federal judge has overturned rules from the Biden administration aimed at limiting payments to agents and brokers involved with the Medicare Advantage Plan.
- On Monday, Judge Reed O’Connor of the Northern District of Texas ruled that the CMS had overstepped its authority by attempting to restrict contracts that would reduce payments to MA sales organizations and incentivize brokers to direct seniors to specific plans.
- According to O’Connor, “CMS may only regulate how compensation is used.” He pointed out that the changes would primarily benefit larger, wealthier insurers and undermine efforts to combat aggressive marketing practices in privatized Medicare programs.
Dive Insights:
The Medicare Advantage plan is designed to reimburse independent agents and brokers to assist seniors in enrolling. While regulators have set limits on compensation, payments to third-party entities, like field marketing organizations that assist these agents, had their caps removed only last April, following a CMS rule that aimed to halt non-eligible extra payments.
This rule also disallows brokers from engaging in agreements that offer incentives such as bonuses based on registration volume.
The Biden administration stated that the objective of these regulations was to ensure that seniors choose plans that actually fit their needs best, rather than just those that offered the highest compensation for sign-ups.
Brokers and marketing firms quickly filed lawsuits to challenge the rules, claiming they jeopardized their business models and exceeded the authority of CMS.
After joining the lawsuit in July, O’Connor upheld the rules, but he has since annulled them, reflecting a consistent pattern of rejecting health policy measures from the liberal administration.
In his ruling, O’Connor stressed that the CMS lacks the legal power to regulate contracts between health plans and their marketing allies beyond direct compensation. Therefore, they cannot cap payments for administrative services or dictate broader contract terms.
While O’Connor did acknowledge that the rules barred marketing firms from sharing beneficiary information without consent, this ruling is part of a larger effort to impose more restrictions on MA marketing.
Many Medicare enrollees depend on brokers to select their coverage. In fact, about a third of MA beneficiaries utilize intermediaries to help them navigate plans, according to the Federal Fund.
Medicare provides a fixed amount for broker compensation, but additional payments from health plan services are expected to grow rapidly, according to the Community Health Plan Alliance, which advocates for broker oversight.
This financial incentive, coupled with the fact that brokers are not obligated to inform consumers of all available plans in their vicinity, raises concerns that beneficiaries might be directed toward plans that don’t necessarily suit their needs.
Reports of misleading MA marketing have more than doubled between 2020 and 2021, as highlighted by a Senate Finance Committee investigation. The findings suggested that beneficiaries could be enrolled in plans without their consent or switched to coverage that doesn’t include certain doctors.
When CMS initially proposed the rules in November, analysts indicated that smaller health plans could benefit members by competing more effectively against larger plans with extensive marketing resources.
