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In the Medicare Advantage program (MA), the Centers for Medicare & Medicaid Services (CMS) pays private insurers capitated payments to cover enrollees’ health care. In 2022, MA accounted for 44% of all Medicare beneficiaries,¹ and recent growth in MA enrollment has been greater among Black, Hispanic, and low-income beneficiaries.²

On an annual basis, CMS contracts with private insurers to provide Medicare services. These insurers may elect to terminate their MA contracts each year, or CMS can choose to terminate an insurer’s contract if it has consistently low performance. Terminations may be of notable concern to beneficiaries as they may disrupt their access to care and require a switch to a different MA plan or Traditional Medicare (TM) that may have vastly different benefits, out-of-pocket costs, physician networks, and medication formularies.^3,4

Our objective was to characterize contract terminations and to identify the characteristics of enrollees who may have been disproportionately affected by these events.

In this cross-sectional study, we used publicly available CMS plan crosswalk data to identify all MA contract terminations between 2011 and 2020. We only included contracts that ceased to exist in the following year necessitating an enrollee to change their enrollment and did not include consolidations in which 2 contracts merged and enrollees were assigned to the remaining contract.⁵ We linked these data to other publicly reported star ratings (an overall measure CMS uses for plan quality, ranging from 2 to 5 in 0.5 increments) and plan benefit data to compare plan characteristics. Using the 100% Medicare Master Beneficiary Summary file, we also calculated contract-level measures of enrollee characteristics, including the percentage of contract enrollees by race and ethnicity (defined based on administrative records and augmented with the Research Triangle Institute [RTI] race code) and the percentage of each contract’s enrollees that were dually enrolled in Medicaid. We compared characteristics using χ², ANOVA, and t tests. A significance threshold of P < .05 with 2-tailed tests was used. Analyses were performed in Stata, version 17 (StataCorp LLC). This study met the reporting guideline and was determined to be exempt by the Brown University Institutional Review Board. Informed consent was waived because the data were deidentified.

This study included 935 unique MA contracts that were offered for at least 1 year between 2011 and 2020. Of these contracts, 170 (18.2%) were terminated, affecting 2.4% of MA beneficiaries (Table). Terminated contracts tended to have lower quality (mean star rating 3.1 vs 3.6, P < .001), tended to have $0 premiums (20.0% vs 13.2%, P = .001), and enrolled a greater proportion of Black (21.9% vs 14.3%, P < .001) beneficiaries. In all years but 2020, terminated contracts disproportionately enrolled Black beneficiaries compared with nonterminated contracts (Figure).

In this cross-sectional study from 2011 to 2020, almost 1 in 5 MA contracts were terminated, affecting more than 750 000 beneficiaries. These terminations may have had a disparate effect on Black beneficiaries who enrolled in terminated contracts at higher rates.

Although prior research has found that the termination of lower-quality contracts may be beneficial for some enrollees,⁶ terminations may still be disruptive for beneficiaries if they are associated with access to care or out-of-pocket spending. Although beneficiaries who do not select a new MA plan default into TM, they may be subject to substantial out-of-pocket spending if they lack supplemental coverage. Because MA contracts can selectively contract with a limited set of practitioners, an enrollee who needs to select a new contract may also experience disruptions in access to care. Given the potential disproportionate effect of terminations on Black beneficiaries, contract terminations may exacerbate disparities in access and continuity of care.

This study is limited in that we cannot distinguish contracts that were terminated by an insurer’s own decision from those that were terminated by CMS due to poor performance. However, both scenarios result in a potential disruption in an enrollee’s continuity of coverage.

As MA contracts become dominant payers in the Medicare program, it will be essential to understand how terminations affect the care and outcomes of enrollees. These findings demonstrate a substantial number of terminations from 2011 through 2020, and these terminations may have had a disproportionate effect on Black beneficiaries.

Accepted for Publication: August 29, 2022.

Published: October 21, 2022. doi:10.1001/jamahealthforum.2022.3704

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2022 Meyers DJ et al. JAMA Health Forum.

Corresponding Author: David J. Meyers, PhD, MPH, Department of Health Services, Policy, and Practice, Brown University School of Public Health, 121 S Main St, Floor 6, Providence, RI, 02912 (David_Meyers@brown.edu).

Author Contributions: Dr Meyers had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: Meyers, Trivedi.

Acquisition, analysis, or interpretation of data: All authors.

Drafting of the manuscript: Meyers.

Critical revision of the manuscript for important intellectual content: All authors.

Statistical analysis: Meyers, Dixit.

Obtained funding: Trivedi.

Supervision: Meyers, Trivedi.

Conflict of Interest Disclosures: Dr Meyers reported grants from the National Institute on Minority Health and Health Disparities and Arnold Ventures outside the submitted work. Dr Trivedi reported grants from the National Institute of Diabetes and Digestive and Kidney Diseases, Agency for Healthcare Research and Quality, Department of Defense, and Department of Veterans Affairs outside the submitted work. No other disclosures were reported.

Funding/Support: This study was supported by the National Institute on Aging award P01AG027296.

Role of the Funder/Sponsor: The funder had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.