Judge pauses new pay cap policy for Medicare brokers
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A federal judge in Texas blocked a Biden administration policy aimed at preventing Medicare insurers from paying agents and brokers to sign people up for certain plans.
Why it matters: The decision came last week from U.S. District Judge Reed O'Connor, a go-to judge for industry groups looking to target Democrat-backed health policies.
- It's a blow to the Biden administration's efforts to rein in bad actors and improve the accuracy of payments in the Medicare Advantage program.
Catch up quick: About one-third of Medicare beneficiaries use brokers to help them pick coverage options. Insurers pay brokers commissions when they sign someone up for Medicare Advantage, prescription drug or Medigap coverage.
- The Centers for Medicare and Medicaid Services has long capped Medicare broker compensation for each new enrollment.
- But insurers have found loopholes to incentivize brokers to steer people into specific plans. In particular, insurers contract with third-party groups that pay the same brokers extra fees on top of the CMS compensation cap.
In April, CMS changed the definition of compensation to include all administrative fees and commissions paid to agents and brokers signing people up for Medicare Advantage and prescription drug plans.
- CMS also increased the maximum payment for new Medicare Advantage enrollments by $100 for 2025.
- Several companies have sued the Biden administration over the rule, arguing that it could force cutbacks and ultimately put them out of business if it isn't blocked by mid-July.
Where it stands: O'Connor ordered that the new compensation cap policy won't go into effect while he evaluates the lawsuit.
- CMS didn't explain its reasoning for raising the fixed fee insurers can pay brokers and agents by only $100, and didn't sufficiently respond to public comments on the rule, O'Connor wrote.
- CMS told Axios it does not comment on litigation.
