Study Finds Weak Penalties for Medicare Advantage Rule Violations

Why It Matters

Weak enforcement undermines CMS’s ability to protect beneficiaries and control costs, especially as Medicare Advantage serves over half of Medicare enrollees. Persistent low‑level penalties risk allowing systemic abuses to persist, eroding trust in the program.

Key Takeaways

• 87% of CMS actions were monetary fines, only 12% suspensions
• Fines averaged under $3 per enrollee, peaking at $6.50 in 2019
• Less than 1% of actions involved contract terminations
• 42% of MA contracts faced at least one enforcement action
• Enforcement spikes align with audit cycles, hitting low‑income beneficiaries

Pulse Analysis

Medicare Advantage has become the dominant vehicle for delivering Medicare benefits, covering more than 50% of beneficiaries and accounting for a sizable share of federal health spending. As the program expands, the Centers for Medicare & Medicaid Services (CMS) wields a toolbox that includes contract terminations, enrollment suspensions, and financial penalties. Yet the regulatory landscape has long been opaque, leaving stakeholders uncertain about how aggressively the agency polices plan conduct.

The Brown University analysis reveals a stark reliance on modest fines: 87% of enforcement actions were monetary penalties, typically under $3 per enrollee and never exceeding $6.50 per person. By contrast, the most severe levers—suspensions and terminations—were used in only about 12% and less than 1% of cases, respectively. Given that Medicare Advantage plans earn thousands of dollars per beneficiary annually, such penalties are unlikely to alter behavior, raising concerns that the current enforcement model lacks sufficient deterrence.

Policymakers now face a choice: strengthen the punitive capacity of CMS or risk perpetuating systemic issues such as aggressive marketing, burdensome prior authorizations, and disparate impacts on low‑income and minority enrollees. Enhancing penalty severity, increasing random audits, or tying enforcement to quality ratings could improve compliance and protect vulnerable populations. As the program continues to grow, robust oversight will be essential to sustain beneficiary trust and contain federal health expenditures.