MA Third Party Marketing Organization Rule Stayed by Federal Court

Last week, a federal court in Texas issued a stay on a Centers for Medicare and Medicaid Services (CMS) final rule that would have increased oversight of agents and brokers contracting by Medicare Advantage plans. The stay will remain in effect for the duration of the lawsuit unless lifted by an appellate court.

The stay follows the filing of two lawsuits that challenge the 2025 Final Rule, arguing that the rulemaking exceeds CMS’s statutory authority and is “arbitrary and capricious.” Sheppard Mullin Health Law explains that the rules challenged involve restrictions on contract terms, in which MA plans must ensure that no agreement with agents, brokers or third party marketing organizations (TPMOs) include provisions that create extraneous incentives for sales beyond the interest of the beneficiary. They also challenge reimbursement rules that restrict how much agents, brokers and TPMOs may be paid.

In the ruling, Judge Reed O’Connor, U.S. District Judge for the Northern District of Texas determined that the plaintiffs would suffer harm namely by having their business model changed and being forced to spend less on marketing and brokerage than they normally would. The plaintiffs, who include the MA plan representatives Americans for Beneficiary Choice and the Council for Medicare Choice, also contend that they could lose up to a third of their expected business if the rule is not enjoined this summer.

The full rule under challenge may be reviewed at the Centers for Medicare and Medicaid Services.