Federal Judge Overturns Key Medicare Advantage Marketing Rules, Citing Limits on Chevron Deference

In a legal rebuke that should make federal agencies everywhere sit up straighter, a U.S. District Court in Texas has just sent the Centers for Medicare & Medicaid Services (CMS) back to class: Administrative Law 101.

The court vacated the bulk of a sweeping 2024 CMS rule targeting broker compensation and marketing practices in Medicare Advantage (MA), holding that the agency had strayed far outside the lines of its statutory authority.

It’s the first major decision to land after Loper Bright v. Raimondo, I believe, and thanks to Dr. Hirsch for bringing it my attention earlier this week; there was no time wasted wielding the U.S. Supreme Court’s sledgehammer to the now-demolished doctrine of Chevron deference.

For healthcare providers and insurers long wary of Washington’s rule-by-fiat style of regulation, this ruling is a long-overdue course correction.

CMS Tries to Regulate Too Much

The now-vacated rule was part of the CMS latest crusade to “protect” seniors by tightening controls on MA marketing, a move with which I actually agree. This places me on a teeter-totter: I agree with holding up Loper Bright, but I also believe that capping broker compensation, eliminating enrollment-based bonuses, and seeking to sever longstanding ties between performance and reward is logical and necessary.

CMS also came after third-party marketing organizations (TPMOs), limiting how they could share beneficiary information – even when such sharing is crucial for delivering efficient, competitive plan offerings.

Industry stakeholders didn’t buy the agency’s pretense of authority. Brokers, agents, and advocacy groups like Americans for Beneficiary Choice challenged the rule, arguing correctly that CMS had no congressional mandate to cap private compensation. Nor did it have license to outlaw incentives under the vague banner of “beneficiary protection.”

Private compensation? I am 100 percent sure that the Medicare Advantage companies receive tax dollars. Is that private compensation?

Chevron Is Gone. Long Live Judicial Review.

Before Loper Bright, CMS might’ve waltzed into court with a shrug and a statute, expecting deference for its “reasonable” interpretation. But those days are over. The Loper Bright ruling, issued in June 2024, marked the formal end of Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984), the case that gave unelected entities a blank check to “interpret” laws however they pleased – as long as Congress hadn’t been crystal clear.

Now, with Chevron off the books, courts don’t have to defer to agencies. They interpret the law themselves. And in this case, the Texas court was unimpressed with CMS’s grasp of the Medicare statute.

“CMS may not rely on ambiguity in the Medicare statute to justify broad new restrictions on private broker compensation,” the judge wrote, calling the rule what it was: unauthorized ratemaking. Under Loper Bright, that’s not regulatory creativity; it’s statutory trespass.

The Lone Survivor: Data Privacy

The court did let one provision stand: a restriction preventing TPMOs from sharing beneficiary information without consent. No one’s arguing against privacy. Even brokers agree: seniors deserve clarity about who’s calling and why.

But that narrow win for CMS doesn’t vindicate the agency; it merely confirms what everyone already knew, that CMS can regulate marketing only to a point. What it can’t do, at least not anymore, is sneak major policy changes in through the regulatory back door.

A Message to Washington: Stick to the Script

For years, CMS has acted like a legislative body unto itself, drafting rules that go far beyond what Congress authorized. This case puts the agency on notice: if it wants to make policy, it needs to do what everyone else does: go to Congress.

Providers and brokers have long operated in good faith within a shifting regulatory environment. But enough is enough. The market deserves stable, lawful guardrails – not surprise rulemaking based on agency whim and creative statutory “interpretation.”

A New Era Begins

This Texas ruling is a precedent-setting moment, for it affirms that in the post-Chevron world, agencies don’t get the last word on the law. Courts do. And courts are no longer inclined to rubber-stamp overreaching rules just because an agency says, “trust us.” I agree with the court’s decision, but agree with CMS attempting to regulate capping broker compensation and eliminating enrollment-based bonuses.

This is a case aligning positively with Loper Bright, but preventing something that may have been good. Maybe Congress should step up.