Judge Halts CMS Limit on Medicare Advantage Pay

July 3, 2024

The actual decision can be downloaded here.

The summary of the action is as follows:

In plain English, the court decision can be summarized as follows:

Medicare is a federal health insurance program for the elderly and disabled. There are different parts, including Medicare Advantage (MA) and Part D, provided by private insurers under government contracts. The Centers for Medicare and Medicaid Services (CMS) set rules to regulate how insurers compensate agents and brokers who help enroll beneficiaries in these plans.

Key Issue:
CMS recently introduced a new rule (the “Final Rule”) that set fixed rates for administrative payments to agents and brokers, which were previously uncapped. This rule also introduced restrictions on contract terms and prohibited sharing personal beneficiary data without consent.

The plaintiffs, including Americans for Beneficiary Choice (ABC) and the Council for Medicare Choice (CMC), argued that the new rule would harm their business operations and filed for a stay (a temporary halt) of the rule's effective date.

Court's Decision:
The court granted a stay for parts of the new rule but denied others. Specifically:

1. Stay Granted:
– The Fixed Fee and Contract-Terms Restrictions are temporarily halted. The court found these parts of the rule to be likely arbitrary and capricious because CMS did not adequately substantiate its decisions or address reliance interests and public comments.

2. Stay Denied:
– The Consent Requirement (related to sharing personal beneficiary data) remains in effect because ABC did not show a substantial likelihood of success in challenging this part.

The court decided to temporarily halt parts of the rule while litigation continues, as the plaintiffs showed they could suffer irreparable harm. The parties must now submit a joint schedule for summary judgment briefing by July 17, 2024.

The court's decision means that certain agent and broker compensation restrictions will not take effect immediately, giving the plaintiffs temporary relief while the case proceeds.


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