Six dollars and fifty cents. That is, give or take, the largest fine the federal government has ever levied on a Medicare Advantage insurer per patient enrolled. It happened once, in 2019. Most years the figure stays below three dollars. Meanwhile the same insurers receive, on average, somewhere in the neighbourhood of $15,000 per enrollee annually from the federal government. Do the arithmetic and you start to understand why health policy researchers at Brown University got a little alarmed when they finally dug into the numbers.
Medicare Advantage, the privatised alternative to traditional Medicare, now covers more than half of all Medicare beneficiaries in the United States and absorbs over $494 billion in federal payments each year. It is, by almost any measure, one of the largest insurance programmes on earth. And for more than a decade, the question of how rigorously federal regulators have been policing it has gone, for the most part, unanswered.
Audits, Fines, and Very Little Else
The Brown researchers set out to change that. Using data obtained through a Freedom of Information Act request, doctoral student Zihan Chen and his colleagues assembled a dataset covering 1,173 Medicare Advantage contracts and 844 enforcement actions spanning 2010 to 2023. The resulting study, published in JAMA Internal Medicine, is one of the first to examine long-term enforcement trends in the programme. What it found was, perhaps, predictable in hindsight, but striking to see laid out so plainly. “Nobody really knows how this regulatory authority has been imposing its different enforcement tools over the past decade,” Chen said. That opacity, the study suggests, has not served patients well.
The Centers for Medicare and Medicaid Services (CMS), which oversees the programme, has three main enforcement levers it can pull when an insurer misbehaves: financial penalties, suspensions that bar new enrolment, and outright contract termination. In theory, these tools exist on a spectrum of escalating severity. In practice, CMS has been reaching for the lightest one almost every time.
Of the 844 enforcement actions identified over the study period, 87% were monetary penalties. Suspensions accounted for roughly 12%. Contract terminations, which would actually remove a bad actor from the market, made up less than 1% of all actions. Eight terminations in thirteen years, across a programme covering tens of millions of Americans. The enforcement activity was also wildly uneven year to year: in 2012, about one in five contracts received a monetary penalty, while in 2019, fewer than 1% did. Most of that variation tracks CMS audit cycles, meaning violations were far more likely to be identified during scheduled reviews than through any kind of routine monitoring. The system, in other words, catches what it looks for, and it isn’t always looking.
“When fines are levied on plans, it almost means nothing compared to the profits the plans are making,” said David Meyers, an associate professor of health services, policy and practice at Brown and a co-author of the study. “This raises questions about meaningful consequences for violations.”
Who Gets Hurt When Regulators Look Away
The violations in question are not trivial administrative infractions. Medicare Advantage insurers have faced enforcement for inappropriately denying or delaying care that patients are entitled to receive, for aggressive marketing practices and for imposing burdensome prior authorisation requirements that can leave sick people waiting for treatment they should already have. These are, by any reasonable reckoning, harms to real people. But the penalty for those harms has, most years, amounted to less than the cost of a cup of coffee per patient affected.
There is also a distributional wrinkle in who faces the most severe consequences when enforcement does bite harder. Contracts that were terminated during the study period tended to have lower quality ratings and enrolled a substantially smaller share of White beneficiaries (44.7%, compared with 68.7% for contracts that were not terminated). Suspended contracts, meanwhile, served higher proportions of dually eligible beneficiaries, meaning those who qualify for both Medicare and Medicaid and are typically among the most vulnerable and lowest-income patients in the programme. So the disruptions caused by the rare forceful enforcement action fell disproportionately on the people who could least easily absorb them. This is not an argument against enforcement; it is an argument for thinking carefully about how it is designed.
Meyers is measured about why CMS has ended up here. Limited resources, legal exposure and pushback from insurers all likely play a role in shaping how aggressively the agency pursues violations. But he is also clear that those constraints do not fully explain the pattern. “They have the authority to do more, but they’re choosing not to,” he said.
A Programme Too Big to Ignore
What the Brown study cannot tell us, and what researchers acknowledge will need further work, is what the right level of enforcement actually looks like. There is no obvious benchmark. A fine sufficient to deter a small regional plan might barely register to a large national insurer. Contract termination protects the programme’s integrity but can abruptly strand the enrollees of a failing plan with nowhere immediately to go. Designing an enforcement regime that is both proportionate and effective is genuinely hard, probably harder than the current approach suggests anyone in authority has been trying.
“The Medicare Advantage program is so big and so important, but there’s very little enforcement action that seems to be going on to address challenges that have been widely reported,” Meyers said. That tension, between the programme’s scale and its regulatory neglect, is unlikely to resolve quietly. Congressional scrutiny of Medicare Advantage has been building for several years. The Brown data now gives that scrutiny something concrete to grip. Whether CMS will move before it is forced to is, for the moment, anyone’s guess.
Frequently Asked Questions
How much money does the federal government spend on Medicare Advantage each year?
Medicare Advantage plans receive more than $494 billion in annual federal payments, making the programme one of the largest single expenditures in the US federal budget. More than half of all Medicare beneficiaries are now enrolled in these private plans rather than traditional government-run Medicare.
Why are the fines for Medicare Advantage violations so small?
The Brown University study found that CMS financial penalties peaked at just $6.50 per enrollee in 2019, and stayed below $3 in most years. Researchers suggest this reflects both how CMS has designed its enforcement system and broader institutional factors including limited agency resources, legal risks from insurers, and industry resistance. The agency has authority to use stronger tools but has rarely done so.
What kinds of violations do Medicare Advantage insurers actually commit?
Enforcement actions during the study period covered violations including inappropriately denying or delaying covered care, aggressive marketing practices, and imposing excessive prior authorisation requirements. These can directly harm patients by delaying or blocking access to treatments they are entitled to receive under their plan.
Does stricter enforcement always protect the most vulnerable patients?
Not necessarily, and this is one of the more uncomfortable findings in the study. Contracts that were terminated tended to serve higher proportions of low-income and minority beneficiaries, meaning the disruption of losing a plan falls disproportionately on people with the fewest options. This suggests that enforcement design, not just enforcement intensity, matters for patient outcomes.
What would more effective Medicare Advantage oversight look like?
The researchers argue that CMS needs to move beyond its current reliance on small fines and audit-driven enforcement toward more consistent, proactive monitoring and a wider use of its full range of penalties. What the right calibration looks like remains an open question; the study calls for further evaluation to determine what level of enforcement is actually needed to protect patients and ensure plans meet federal standards.
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