Federal oversight of Medicare Advantage is entering a more scrutinized era, but new research suggests the enforcement tools used most often may be too small to meaningfully deter repeat offenders.
In a cross-sectional study published in JAMA Internal Medicine, Brown University researchers analyzed Centers for Medicare & Medicaid Services (CMS) enforcement actions from 2010 through 2023 and found that penalties overwhelmingly took the form of relatively modest fines, with far less frequent use of enrollment suspensions or contract terminations.
The investigators examined CMS enforcement actions against 493 unique Medicare Advantage contracts over a 13-year period. They categorized actions into civil money penalties (fines), suspensions of enrollment, and contract terminations, and assessed how often actions occurred, what prompted them (such as program audits), and which contract and beneficiary characteristics were associated with more severe actions.
Among the key findings:
- Enforcement was common, but usually not severe: About 42 percent of 1,173 Medicare Advantage contracts received at least one enforcement action during the study period and about one in five faced multiple actions. The team found 737 of 844 enforcement actions (87 percent) were monetary penalties, compared with 99 suspensions (11.7 percent) and eight terminations (0.9 percents).
- Audits drove most actions: 544 actions (64.5 percent) originated from program audits, suggesting that identification of violations often clustered around formal review cycles.
- Penalty amounts were modest on a per-member basis: Mean penalties peaked at $6.50 per enrollee in 2019 and were under $3 per enrollee in most other years.
- Year-to-year activity varied widely: For example, in 2012, 100 contracts (19.2 percent) received monetary penalties; in 2019, five contracts (0.9 percent) did.
- More severe actions were associated with lower ratings and different beneficiary mix: Terminated contracts had lower mean Star ratings (2.5 vs 3.6) and enrolled a lower share of white beneficiaries (44.7 percent vs 68.7 percent); suspended contracts enrolled more dually eligible beneficiaries (28.9 percent vs 18.8 percent).
Lead study author Zihan Chen, a Brown doctoral student in health services research, told Brown University’s School of Public Health, that the research was meant to gain a better understanding of how CMS has been using its enforcement tools to punish or deter violations.
The team wanted to focus on Medicare Advantage because of the large number of Medicare beneficiaries in the program and recent complaints about aggressive marketing and prior authorizations. Despite the size and importance of the program, it appears CMS has taken little enforcement action to address the challenges, noted David Meyers, Ph.D., an associate professor of health services, policy, and practice at Brown, and a member of the research team.
“When fines are levied on plans, it almost means nothing compared to the profits the plans are making,” Meyers said. “This raises questions about meaningful consequences for violations.”