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.