We calculated the disenrollment rate for each of these contracts  and designated the 126 contracts above the median rate of 10.6 percent  as having relatively high disenrollment rates and the 126 contracts below  the median rate as having relatively low disenrollment rates. To examine how, if at all, CMS identifies contracts with health-biased  disenrollment as part of its routine oversight of MA contracts, we reviewed  the agency guidance and data provided to its regional offices and  interviewed CMS officials. We examined CMS’s  oversight in the context of relevant standards for internal control in the  federal government. 1.) Health-biased Disenrollment Found in One-Quarter of MA Contracts with Higher Disenrollment Rates

Among the 126 contracts with higher disenrollment rates, we found that  35 contracts had health-biased disenrollment—meaning that beneficiaries  in poor health were substantially more likely to leave their contracts than  those in better health. For these 35 contracts, on average, beneficiaries in poor  health were 47 percent more likely to disenroll relative to beneficiaries in  better health. 2.) Beneficiaries Reported Different Reasons for Disenrolling from Contracts with and without Health-Biased Disenrollment

Our review of CMS’s Disenrollment Reasons Survey reports showed that  beneficiaries who disenrolled from the 35 contracts with health-biased  disenrollment tended to report that they did so for reasons related to  provider coverage. In contrast, beneficiaries who disenrolled from the 91  contracts without health-biased disenrollment tended to report that they  left their contracts for reasons related to the cost of care. 3.) By not analyzing disenrollment rates for signs of potential health-biased  disenrollment, CMS account managers may fail to identify problems in  MA contract performance. This poses a risk to beneficiaries, given that  MA contracts are prohibited from limiting or conditioning their coverage or  provision of benefits based on health status and must ensure adequate  access to covered services for all beneficiaries. CMS’s oversight is also  inconsistent with federal internal control standards, which call for  agencies to identify, analyze, and respond to risks. This type of information on disenrollment and  beneficiary health status is available to CMS; however, by not leveraging  it as part of its routine oversight of MA contracts, CMS is missing an  opportunity to better target its oversight activities toward MA contracts  that may not be adequately meeting the health care needs of all  beneficiaries, particularly those in poor health. Recommendation

To strengthen CMS’s oversight of MA contracts, the Administrator of CMS  should review data on disenrollment by health status and the reasons  beneficiaries disenroll as part of the agency’s routine monitoring efforts.
Why GAO Did This Study

In 2016, over 30 percent of Medicare beneficiaries were enrolled in the MA program. Each year beneficiaries have an opportunity to join or leave their MA plan.
GAO was asked to review MA disenrollment by health status and CMS oversight. This report examines, among other issues, (1) the extent of any health-biased disenrollment, (2) beneficiaries' reasons for leaving contracts with and without health biased disenrollment, and (3) how, if at all, CMS identifies contracts with health-biased disenrollment, for routine oversight purposes.
GAO analyzed 2014 disenrollment rates for the 252 MA contracts that had a sufficient number of disenrollees and met other criteria. For the 126 contracts with disenrollment rates above the median rate, GAO used beneficiaries' projected health care costs to identify those in poor health and better health. GAO examined data from CMS's Disenrollment Reasons Survey to learn why beneficiaries reported leaving the 126 contracts with relatively high disenrollment rates. GAO also interviewed CMS officials and compared their oversight to federal standards for internal control.

What GAO Found

Under the Medicare Advantage (MA) program, the Centers for Medicare & Medicaid Services (CMS) contracts with private entities to offer coverage for Medicare beneficiaries. GAO examined 126 contracts with higher disenrollment rates—above the median rate of 10.6 percent in 2014—and found 35 contracts with health-biased disenrollment. In these contracts, beneficiaries in poor health were substantially more likely (on average, 47 percent more likely) to disenroll relative to beneficiaries in better health. Such disparities in contract disenrollment by health status may indicate that the needs of beneficiaries, particularly those in poor health, may not be adequately met.
GAO found that beneficiaries who left the 35 contracts with health-biased disenrollment tended to report leaving for reasons related to preferred providers and access to care. In contrast, beneficiaries who left the 91 contracts without health-biased disenrollment tended to report that they left their contracts for reasons related to the cost of care.
CMS does not use available data to examine data on disenrollment by health status as part of its ongoing oversight; thus, CMS may fail to identify problems in MA contract performance, which poses a risk as contracts are prohibited from limiting coverage based on health status. CMS's oversight is inconsistent with internal control standards.

What GAO Recommends

To strengthen its oversight of MA contracts, CMS should examine data on disenrollment by health status and the reasons beneficiaries disenroll. HHS concurred with GAO's recommendation.