By Sundar Pichai 
A federal judge in Texas delivered a significant blow to Medicare beneficiary protections on August 18, 2025, vacating key provisions of a rule designed to curb aggressive Medicare Advantage marketing practices. Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled that the Centers for Medicare and Medicaid Services overstepped its authority in attempting to limit payments to insurance agents and brokers.
The decision represents a major victory for the Medicare marketing industry and a substantial setback for efforts to protect seniors from potentially misleading sales tactics. With Medicare’s Annual Election Period underway and millions of beneficiaries making coverage decisions, the ruling’s implications extend far beyond courtroom walls.
What the Judge Decided
Judge O’Connor vacated two central provisions of the April 2024 CMS Final Rule while upholding a third protection for Medicare beneficiaries.
Provisions Struck Down
The court eliminated the $100 cap on administrative payments that CMS attempted to classify as agent compensation. The agency had documented cases where agents received golf parties, trips, and extra cash framed as administrative add-ons in exchange for enrolling seniors in specific plans.
The ruling also removed contract-term restrictions that prohibited insurance companies from offering volume-based bonuses and other incentives to steer beneficiaries toward particular plans, regardless of their healthcare needs.
Protection Upheld
The judge maintained a requirement that third-party marketing organizations obtain beneficiary consent before sharing personal information like names and phone numbers with lead generators and other advertising companies. This provision remains in effect and continues to protect the data privacy of Medicare enrollees.
Background: Why CMS Created the Rule
The regulation emerged in response to mounting beneficiary complaints and widespread marketing misconduct documented by the Senate Finance Committee. Committee investigations revealed a complex network of marketing middlemen operating in the Medicare Advantage space, often with minimal oversight.
Senator Ron Wyden’s March 2025 report detailed how payments for marketing and administrative services to increase enrollment had outpaced actual Medicare Advantage enrollment growth. The investigation found that payments for enrolling individuals in dual-eligible special needs plans could be five to ten times greater than general enrollments.
Beneficiaries reported being encouraged or pressured to join Medicare Advantage plans that didn’t match what had been explained to them. Many discovered after enrollment that their doctors weren’t in network or that promised benefits didn’t materialize as described.
CMS aimed to align agent and broker compensation with the beneficiary’s health needs, rather than with the agent’s financial gain. The agency argued that when administrative payments varied significantly by plan, this created exactly the incentive structure Congress intended to prevent.
Judge O’Connor’s Legal Reasoning
The court’s decision rested on two primary findings about CMS authority.
No Rate-Setting Power
Judge O’Connor determined that while Congress authorized CMS to ensure that compensation creates incentives for appropriate plan recommendations, the statute didn’t delegate rate-setting authority. The judge distinguished this language from other provisions where Congress explicitly granted agencies power to establish payment rates.
The court interpreted regulating the “use of compensation” as governing how agents and brokers deploy compensation, not setting specific compensation amounts.
Administrative Payments Aren’t Compensation
The ruling rejected CMS’s attempt to classify administrative payments as compensation subject to regulatory limits. Judge O’Connor found that the plain meaning of “compensation” is payment for services rendered, while administrative payments reimburse overhead and hard costs.
The court noted that CMS’s own previous regulations stated administrative payments were not considered compensation, undermining the agency’s current position.
Impact on Medicare Beneficiaries
The decision creates immediate practical consequences for the 33 million Americans enrolled in Medicare Advantage plans.
Third-party marketing organizations can now resume operating under the previous regulatory framework. This means agents and brokers may again receive higher “administrative” payments and volume-based incentives that advocacy groups argue compromise objectivity.
Roughly one-third of Medicare Advantage beneficiaries use brokers to help select coverage, according to the Commonwealth Fund. These intermediaries now face fewer restrictions on the financial incentives that might influence their recommendations.
The Center for Medicare Advocacy expressed disappointment with the ruling, stating it leaves Medicare beneficiaries more vulnerable to inappropriate marketing tactics during the critical Annual Election Period running from October 15 through December 7.
Industry Response
Medicare marketing industry groups celebrated the decision. Americans for Beneficiary Choice and the National Association of Benefits and Insurance Professionals issued statements praising Judge O’Connor’s order.
Health Agents for America President Ronnell Nolan characterized the ruling as recognition that CMS had overreached federal authority. The organization argued that the original rule would have unnecessarily constrained legitimate marketing activities.
Medicare Advantage insurers gained flexibility to restore previous compensation structures, though some expressed concern about potential regulatory uncertainty if the government appeals. Insurers had already begun adjusting 2025 marketing strategies based on the rule before the court intervened.
What Happens Next
The government has until October 17, 2025, to appeal Judge O’Connor’s decision to the Fifth Circuit Court of Appeals. However, the Trump Administration’s position on defending the Biden-era rule remains unclear.
CMS has already issued revised 2025 fair market value compensation amounts reflecting the court’s stay and final decision. Insurance companies and marketing organizations are operating under the pre-rule regulatory framework for the current enrollment season.
Potential Reform Paths
Without regulatory authority to address marketing compensation, several alternatives exist for addressing Medicare marketing concerns.
Congressional legislation could explicitly grant CMS broader authority over compensation and marketing practices. Enhanced state oversight through federal legislation might restore state authority over Medicare Advantage plan marketing. CMS could explore alternative regulatory approaches within its existing authority.
Increased funding for unbiased counseling resources like State Health Insurance Assistance Programs could help beneficiaries navigate plan choices without relying on potentially conflicted agents.
Broader Regulatory Context
The decision arrives during a period of significant Medicare Advantage scrutiny. The program has grown to cover more than half of all Medicare beneficiaries, with enrollment and spending continuing to expand rapidly.
Recent financial reports from major Medicare Advantage insurers, including Humana, CVS Health’s Aetna, and UnitedHealth Group’s UnitedHealthcare, revealed rising medical expenses and unfavorable regulatory changes affecting profitability. Some insurers have announced benefit reductions and footprint contractions in response.
Bipartisan Senate legislation introduced in July 2025—the Independent BROKERS TIME Act—seeks to clarify distinctions between independent agents and large marketing entities like offshore call centers and private equity-financed lead generators. The bill would direct HHS to establish clearer definitions separating these categories.
What Medicare Beneficiaries Should Know
During the 2025-2026 Annual Election Period, beneficiaries should approach Medicare Advantage marketing with increased awareness.
Ask agents directly about compensation structures and whether they receive higher payments for enrolling you in specific plans. Request information about all available plans in your area, not just those the agent recommends.
Verify that recommended plans include your current doctors and prescription drugs in their networks. Review plan materials independently rather than relying solely on agent explanations.
Consider using State Health Insurance Assistance Programs, which provide free, unbiased counseling. These programs don’t receive commissions from insurance companies and can offer objective guidance.
Document all interactions with agents, including promises made about coverage and benefits. If you experience misleading marketing, report it to CMS through 1-800-MEDICARE.
Expert Perspectives
The Alliance of Community Health Plans, representing nonprofit health plans, expressed disappointment with the decision. The organization stated that Medicare Advantage wasteful spending grows alongside program expansion and that addressing anticompetitive practices remains critical.
Healthcare policy attorney Helaine Fingold of Epstein Becker & Green noted the ruling was “really top of mind” for plans and the agents and brokers selling their products. She observed that the court “took a pretty broad brush” in suggesting CMS lacks authority to set compensation at all.
The Center for Medicare Advocacy’s analysis emphasized that the court’s formalistic distinction between “compensation” and “administrative payments” ignores economic reality. When field marketing organizations structure payments so agents receive substantially more for enrolling beneficiaries in certain plans, the practical effect on agent behavior remains identical regardless of payment labels.
Looking Ahead
The August 2025 decision fundamentally reshapes Medicare Advantage marketing regulation. By constraining CMS’s authority and vacating compensation reforms, the ruling may hamper efforts to address the marketing misconduct that prompted the 2024 Final Rule.
The regulatory gaps that allowed marketing problems to flourish may persist without Congressional action or alternative CMS approaches. Medicare beneficiaries face continued vulnerability to being steered toward coverage options that prioritize agent commissions over their healthcare needs.
As Medicare Advantage continues growing as the dominant coverage option for seniors, the tension between marketing industry interests and beneficiary protections will likely intensify. How policymakers respond to Judge O’Connor’s decision will determine whether meaningful reforms can advance through legislation, modified regulations, or enhanced state oversight.
For now, the Medicare marketing landscape returns to its pre-2024 state, with fewer guardrails protecting vulnerable seniors from potentially conflicted advice during one of their most important healthcare decisions.