To examine variation in MA disenrollment by contract, we examined CMS enrollment and disenrollment data for 2014--the most recent year of data available at the time of our analysis--for 252 contracts. We selected these 252 contracts as they had at least 100 disenrollees in poor health and 100 disenrollees in better health as well as had at least 50 percent of the individual measures in the 2016 MA Five-Star Rating System--which largely reflected performance in 2014. These contracts accounted for 80 percent of the 17.5 million beneficiaries enrolled in an MA contract that year. 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. (See appendix I for more details on the selection of the contracts included in our study.) To determine the extent of health-biased disenrollment, if any, among MA contracts, we focused our analysis on the 126 MA contracts with higher disenrollment rates. We used CMS risk score data to identify beneficiaries in poor health and beneficiaries in better health. Specifically, beneficiaries whose projected spending was at least twice as much as that for the average Medicare beneficiary were characterized as being in poor health, while the remaining beneficiaries with projected spending less than that amount were considered to be in better health. Using this information for each of the 126 contracts, we then calculated disenrollment odds ratios to determine the likelihood that beneficiaries in poor health disenrolled from the contract compared to beneficiaries in better health. For example, an odds ratio of 1.50 signifies that those in poor health were 50 percent more likely to disenroll than those in better health. We deemed contracts with an odds ratio over 1.25--where the likelihood that poor health beneficiaries disenrolled was more than 25 percent greater than that of beneficiaries in better health--as having health-biased disenrollment. We deemed those contracts with an odds ratio of 1.25 or less as lacking health-biased disenrollment. To examine the characteristics of contracts with and without health- biased disenrollment, we focused our analysis on the 126 MA contracts with higher disenrollment rates in 2014. We analyzed CMS data for 2014 on a number of contract variables, including enrollment size and the number of years of experience in the MA program. In addition, we compared the quality ratings of contracts in each group based on data from the MA Five-Star Rating System. These data comprise an overall star rating for each MA contract as well as each contract's performance scores on up to 47 individual measures--such as controlling blood pressure--grouped within 9 domains--such as managing chronic conditions. We determined the median score for individual performance measures for all contracts in the rating system. For both the contracts with and without health-biased disenrollment, we then determined the percentage of measures within each domain that had better than median scores; we characterized these contracts as having relatively high quality. To examine the reasons beneficiaries chose to disenroll from contracts with and without health-biased disenrollment, we analyzed CMS's Disenrollment Reasons Survey reports. The reports are compiled for MA contracts based on surveys sent to a representative sample of disenrollees to learn about why they elected to leave their plan. CMS combined survey responses into one of five composite reasons for disenrollment: problems with costs, problems with drug coverage, problems getting information on drugs, problems getting needed care, and preferred providers not in network. For each of the 126 MA contracts with higher disenrollment rates, we compared the average percentage of respondents who identified each composite reason, for contracts with and without health-biased disenrollment. 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. In addition, we compared the set of contracts identified by CMS as having potential problems in 2014 with the contracts we identified as having health-biased disenrollment. We examined CMS's oversight in the context of relevant standards for internal control in the federal government. We assessed the reliability of the data from CMS that we analyzed by reviewing relevant documentation and examining the data for obvious errors. We determined that the data were sufficiently reliable for the purposes of our reporting objectives. We conducted this performance audit from November 2015 to April 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The MA program--also known as Medicare Part C--is the private plan alternative to the traditional Medicare program. Instead of paying providers' claims directly, CMS contracts with MAOs to assume the risk of providing health benefits to beneficiaries in exchange for fixed monthly payments. The payment amounts vary, in part, depending on the relative health status of the MAO's beneficiaries as compared to the health status of an average Medicare beneficiary. CMS paid almost $170 billion to MAOs in 2015. MAOs must provide coverage for all traditional Medicare services and include a yearly limit on out-of-pocket costs. Most plans also include prescription drug coverage offered under Medicare Part D. Plans may offer more generous benefits, such as less cost sharing and additional covered services, such as vision or dental care. To control utilization, plans may impose referral requirements and implement care coordination programs. MA beneficiaries' access to providers is generally limited to a network of physicians, hospitals, and others that contract with their MAO. If a given physician or hospital is not in the MA plan's network, the beneficiary's out-of-pocket cost to use that physician or hospital may be considerably higher than the cost associated with using providers in the plan's network. Beneficiaries may choose from the plans available in their county, which may be provided by multiple contacts. The contracts represent various types of plans, including HMOs, PPOs, and private fee-for-service (PFFS) plans. HMOs, which according to CMS, accounted for nearly three-fourths of MA enrollment in 2016, generally restrict beneficiary access to providers in their network. PPOs, which according to CMS, accounted for nearly one-fourth of 2016 MA enrollment, also have networks, but allow beneficiaries access to non-network providers by paying higher cost sharing amounts. In contrast, PFFS plans, which accounted for 1 percent of MA enrollment in 2016, generally offer a wider choice of providers. A subset of HMOs and PPOs are special needs plans (SNP) which provide care for beneficiaries in one of three classes of special needs. Medicare beneficiaries can enroll in a SNP if they are dually eligible for Medicare and Medicaid, require an institutional level of care, or have a severe or chronic condition. While beneficiaries are generally locked into their MA plan for a year (January through December), they may voluntarily leave their plan at certain times in the year or if they meet certain criteria. During the annual open enrollment period, from October 15 to December 7, MA beneficiaries may change their MA plan selection or join traditional Medicare. This is followed by the MA disenrollment period, from January 1 to February 14, when MA beneficiaries may join traditional Medicare and are allowed to select a drug plan to go with their new coverage. In addition, CMS has special enrollment periods where MA beneficiaries may change their enrollment under certain circumstances. For example, Medicare beneficiaries can switch to a contract with an overall Five-Star rating of 5 from December 8 to the following November 30. In addition, dual-eligible beneficiaries may change their MA enrollment on the first day of any month. In 2014, disenrollment rates varied widely among the 252 contracts in our analysis, ranging from 1 to 39 percent. (See fig. 1.) The 126 contracts with high disenrollment rates--those with rates above the median rate of 10.6 percent--accounted for 38 percent of the MA population in our study. Moreover, these contracts accounted for over two-thirds of total disenrollment in our population. Nineteen percent of this group of contracts--24 contracts--had disenrollment rates of 20 percent or greater. In contrast, contracts with relatively low disenrollment rates accounted for 62 percent of the MA population in our study. Nearly half of these contracts had disenrollment rates at or below 5 percent. 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. These contracts accounted for 15 percent of beneficiaries in higher disenrollment contracts, or approximately 810,000 beneficiaries. For these 35 contracts, on average, beneficiaries in poor health were 47 percent more likely to disenroll relative to beneficiaries in better health. For individual contracts, this percentage ranged from 27 to 126 percent. Among the remaining 91 contracts with higher disenrollment rates, we did not find evidence of health-biased disenrollment--meaning that in these contracts, beneficiaries in poor health had, on average, odds of disenrollment similar to beneficiaries in better health. Specifically, both disenrollees in poor health and disenrollees in better health had a 1 in 5 chance of disenrolling from their contract. In total, the 91 contracts accounted for 4.5 million beneficiaries, or 85 percent of the enrollment in the MA contracts with higher rates of disenrollment in our review. We found several notable differences when comparing the characteristics of the 35 contracts with health-biased disenrollment with the 91 contracts without health-biased disenrollment. Specifically, the 35 health-biased disenrollment contracts were more likely to have the following: Lower enrollment. Sixty-nine percent of health-biased disenrollment contracts had fewer than 15,000 enrollees. This percentage was lower for contracts without health-biased disenrollment--25 percent. In addition, a smaller percentage of health-biased disenrollment contracts--11 percent--had enrollment that exceed 50,000 beneficiaries. In contrast, 29 percent of contracts without health- biased disenrollment had enrollments that large. Higher proportion of HMOs. Ninety-one percent of health-biased disenrollment contracts were HMOs--which feature closed provider networks--while only 9 percent were PPOs. In contrast, for contracts without health-biased disenrollment, 70 percent were HMOs and 25 percent were PPOs. Larger share of SNP enrollees. Contracts with health-biased disenrollment tended to have a higher proportion of beneficiaries in SNPs--which provide targeted care for special needs individuals, such as those with chronic conditions. On average, 37 percent of these contracts had a majority of their beneficiaries in SNPs compared with 21 percent, on average, for the contracts without health-biased disenrollment. Less time in MA program. The contracts with health-biased disenrollment had, on average, fewer years in the MA program compared to the contracts without health-biased disenrollment--an average of 8 years compared to 12 years, respectively. (See table 1 for a comparison of the characteristics of contracts with and without health-biased disenrollment.) Our analysis of data from CMS's MA Five-Star Rating System showed that the contracts with health-biased disenrollment generally had lower overall quality ratings than contracts without health-biased disenrollment. (See fig. 2.) Among the 126 contracts with higher disenrollment rates, nearly two-thirds of the health-biased contracts had three or fewer stars compared to about one-fourth of the contracts without health-biased disenrollment. Furthermore, only 11 percent of contracts with health-biased disenrollment had four or more stars compared to 32 percent of the contracts without health-biased disenrollment. In addition, the contracts with health-biased disenrollment scored lower than the contracts without health-biased disenrollment across each of the nine performance domains in the MA Five-Star Rating System. We found a smaller share of the 35 contracts with health-biased disenrollment had better than median quality scores when compared to the 91 contracts without health-biased disenrollment. For example, only 36 percent of the contracts with health-biased disenrollment had better than median scores on managing chronic (long-term) conditions, which include measures on blood pressure and diabetes care. In contrast, 52 percent of the contracts without health-biased disenrollment performed above the median on this performance domain. (See table 2.) 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. (See fig. 3.) Specifically, we found the following: Beneficiaries who left the 35 contracts with health-biased disenrollment commonly reported disenrolling because their preferred doctor or hospital was not covered by their MA contract. This reason was cited by 41 percent of surveyed disenrollees, on average, across the contracts with health-biased disenrollment. In contrast, the same reason was cited by 25 percent of surveyed disenrollees, on average, across the contracts without health-biased disenrollment. Beneficiaries in contracts with health-biased disenrollment were more likely to report problems obtaining needed care, obtaining information on drugs, and with drug coverage. For example, on average, 27 percent of surveyed disenrollees from contracts with health-biased disenrollment reported difficulty getting needed care. In contrast, 16 percent of surveyed disenrollees from contracts without health-biased disenrollment cited these reasons. Beneficiaries who left the 91 contracts without health-biased disenrollment were more likely to report financial reasons for disenrolling. On average, 28 percent of disenrollees from these contracts identified problems with costs, compared with 18 percent of disenrollees from contracts with health-biased disenrollment. For example, when asked whether the presence of another plan that costs less was a reason for disenrolling, 45 percent of disenrollees from the contracts without health-biased disenrollment cited this reason, compared with 27 percent of beneficiaries who left contracts with health-biased disenrollment. CMS does not identify patterns of disenrollment by beneficiary health status in its routine oversight of MA contracts. Account managers in the 10 regional offices are the CMS officials responsible for overseeing these contracts. To do so, CMS officials told us they follow a standard performance monitoring protocol designed to determine whether the contracts adhere to all program requirements and need additional scrutiny. As part of their review, the account managers examine a variety of contract performance data, including MA Five-Star ratings, beneficiary complaint rates, and data on significant changes in drug coverage. Overall contract disenrollment rates are included in the MA Five-Star Rating System provided to account managers to identify contracts that may need closer scrutiny. However, CMS officials told us these rates do not include information on beneficiary health status. In addition, CMS's account managers do not use the information CMS collects in the Disenrollment Reasons Survey in their oversight of MA contracts. The survey asks beneficiaries about the reasons they have disenrolled from their MA plan, and CMS officials told us that that CMS develops the survey reports and distributes them to MAOs annually to help them facilitate quality improvement efforts. The survey results are also made available to the public on CMS's Medicare Plan Finder website so that beneficiaries considering enrollment in an MA plan can learn why beneficiaries have chosen to leave a particular plan. Given the data account managers use in their oversight of MA contracts, CMS is unlikely to consistently identify contracts with health-biased disenrollment as needing extra scrutiny. As part of its ongoing analysis of contract performance data, CMS identified 63 contracts as potentially requiring additional scrutiny in 2014. However, this list included only 9 of the 35 contracts we identified as having health-biased disenrollment. CMS classified 2 of the 9 contracts as potentially requiring what the agency describes as "intensive monitoring," which may include dedicated monthly meetings between the account managers and MAO representatives to discuss problem areas. CMS identified the other 7 contracts as requiring some additional monitoring, which may include at least one meeting between the account manager and MAO representatives. CMS has available data that its account managers could use to monitor contract disenrollment rates by beneficiary health status. Disenrollment rates are one of the measures used in the MA Five-Star Rating System; we used CMS's beneficiary risk scores, which are based on demographic and diagnosis information, to identify beneficiaries in poor and better health; and the Disenrollment Reasons Survey provides information on why beneficiaries disenroll from their plans. As we have shown, contracts with health-biased disenrollment had lower quality scores, and beneficiaries who disenrolled from these contracts more commonly cited problems with coverage of preferred doctors and hospitals as well as problems getting access to care as leading reasons for disenrolling. As a result, the survey data could be used in conjunction with the other available data to reveal unique information about contract performance that other data do not show. 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. CMS is responsible for ensuring that all MA contracts offer care that meets applicable standards, regardless of beneficiary health status. However, as part of its routine oversight, CMS does not examine disenrollment rates by health status. Our analysis identified 35 contracts in 2014 where MA beneficiaries in poor health were more likely to disenroll than those in better health. These contracts with health-biased disenrollment had quality scores that were consistently and substantially below the scores of contracts without health-biased disenrollment. In addition, survey data indicate that beneficiaries who left these contracts reported problems with coverage of preferred doctors and hospitals as well as problems getting access to care as leading reasons they chose to leave their contracts. 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. 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. We provided a draft of this report to HHS for comment. In its written comments, which are reprinted in appendix II, HHS concurred with our recommendation. HHS noted that it currently uses disenrollment data in its review of MA plan quality and performance and will continue to consider ways of incorporating disenrollment data in its oversight. HHS also provided technical comments, which we incorporated as appropriate. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees and the Secretary of Health and Human Services. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staffs have any questions about this report, please contact me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Using data from the Centers for Medicare & Medicaid Services (CMS), we examined enrollment and disenrollment in 2014--the most recent year of data available at the time of our analysis. Of the 732 Medicare Advantage (MA) contracts in 2014, we excluded 480 contracts, with 3.6 million beneficiaries, from our analysis. These were contracts with fewer than 100 beneficiaries in poor health who disenrolled from the contract in 2014, fewer than 100 beneficiaries in better health who disenrolled from the contract in 2014, and contracts for which CMS reported fewer than 50 percent of the individual measures in the 2016 MA Five-Star Rating System--which largely reflected performance in 2014. These contracts were excluded because they did not have a sufficient number of Five-Star ratings, or had low contract enrollment. The remaining 252 contracts accounted for 79.7 percent of the 17.5 million beneficiaries enrolled in an MA contract in 2014. We then ranked the 252 contracts in terms of their total disenrollment rate, identifying the 126 contracts with disenrollment rates higher than the median of 10.6 percent as having relatively high disenrollment. In our analysis we focused on these 126 contracts because they had relatively high disenrollment as contracts with below median disenrollment may not warrant the same level of oversight scrutiny as those with higher rates. (See fig. 4.) In addition to the contact named above, GAO staff who made key contributions to this report include Rosamond Katz (Assistant Director), Richard Lipinski (Assistant Director), Will Crafton (Analyst-in-Charge), and Betsy Conklin. Also contributing were Krister Friday and George Bogart.

Summary:
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. 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. 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.