Idaho Judge Halts UnitedHealthcare's Medicare Advantage Policies
A federal judge has temporarily barred the state of Idaho from proceeding against UnitedHealthcare concerning its Medicare Advantage (MA) broker compensation policies. This legal action arose after UnitedHealthcare sued Idaho's Insurance Director, Dean Cameron, challenging the state's regulatory compliance requirements over MA marketing and broker commissions, which were justified as consumer protection measures.
In October, Idaho released a bulletin asserting authority over MA plan marketing, leading Director Cameron to issue emergency directives against UnitedHealthcare and PacificSource. These directives claimed that the insurers were limiting access by reducing online applications and cutting broker commissions. UnitedHealthcare argued that Medicare's federal regulations preempt state intervention, maintaining that their compensation adjustments aimed to manage risk and operating costs efficiently in a challenging payer market.
Federal Precedence Over State Regulations
On December 22, U.S. District Judge David Nye supported UnitedHealthcare by ruling that federal regulations take precedence in Medicare-related matters. If federal standards exist in a given area, state regulations are overridden, even if aligning with federal policies. UnitedHealthcare justified that the strategic lowering of broker commissions was pre-approved by the Centers for Medicare & Medicaid Services (CMS) in compliance with permissible underwriting practices.
CMS recently reminded states that federal law governs MA broker compensation and marketing practices, underpinning the industry’s strategic adjustments to mitigate regulatory challenges and rising operational costs. The lawsuit has garnered national attention, with numerous states observing the case's implications, as evidenced by discussions at a National Association of Insurance Commissioners meeting. Strategic decisions in broker commissions and market participation remain crucial as carriers and providers navigate this complex compliance landscape.