Maryland's Medicare Advantage Market Faces Crisis as Insurance Providers Consider Exiting

The potential exit of major insurance providers from Maryland's Medicare Advantage market threatens to disrupt healthcare coverage for tens of thousands of retirees who depend on these plans for supplemental benefits. Approximately 25% of Maryland Medicare recipients utilize Medicare Advantage programs, which provide additional services such as vision, dental, and transportation assistance beyond traditional Medicare coverage. The market instability stems from Maryland's unique hospital payment system that creates financial disincentives for insurance carriers operating in the state.

Maryland operates under a Total Cost of Care hospital payment model where the Health Services Cost Review Commission (HSCRC) sets hospital rates, preventing insurance carriers from negotiating rates under their plans. This system creates a fundamental mismatch: insurance companies pay higher hospital rates than in other states while receiving lower reimbursement rates from the federal government for Medicare Advantage services. The financial pressure has been mounting for years, with Medicare Advantage plans experiencing growing losses according to industry experts.

Mark Puente, CEO of Alterwood Health, stated that challenges over the last five years have already resulted in health plan exits and disruptions for beneficiaries. The situation worsened when temporary grants from the HSCRC, designed to stabilize the market while seeking a permanent federal solution, were discontinued. Former HSCRC Commissioner Adam Kane explained that the grant program was intended as a temporary measure while awaiting a federal resolution to harmonize Maryland's hospital model with Medicare Advantage reimbursement structures.

The potential market exits could significantly impact Maryland's 295,000 Medicare Advantage participants, who represent one of the lowest participation rates in the nation at under 27%. This compares to most states where at least 50% of Medicare recipients participate in Medicare Advantage plans. CareFirst expressed concern that Maryland seniors lack access to the same affordable, high-quality Medicare Advantage plans available in other states, making healthcare less accessible when they need it most.

Industry analysts indicate that several large, publicly traded Medicare Advantage plans are considering exiting the Maryland marketplace, which would force beneficiaries to either select alternative Medicare Advantage plans or relinquish valuable supplemental benefits. These benefits include dental, vision, transportation, and hearing aids that traditional Medicare fee-for-service doesn't cover. Major carriers in Maryland include Aetna, Humana, Cigna, and United Healthcare, though companies remain non-committal about their 2026 offerings until the Medicare Annual Enrollment Period begins in October.

The disruption would not be unprecedented in Maryland. In 2021, Johns Hopkins Medicine terminated plans for Baltimore City residents, displacing 5,000 seniors from their coverage. Andrew Rosenberg, president of Health Resource Advisors, emphasized that coverage changes can be particularly disruptive for seniors who rely on consistent healthcare services for significant health needs, potentially forcing changes in pharmacies and doctors that affect continuity of care.

Hope for resolution may come from ongoing negotiations between state and federal officials regarding the States Advancing All-Payer Health Equity Approaches and Development (AHEAD) model. These negotiations could lead to solutions that stabilize Medicare Advantage in Maryland and potentially bring significant changes to the state's Medicare rate-setting authority. Industry stakeholders remain hopeful that state and federal governments will develop a solution that protects Maryland Medicare beneficiaries from further market disruptions.