Tens of thousands of retirees could learn that their current health care plan will no longer be available in Maryland this fall, as major insurance providers consider ending their Medicare Advantage plans for next year.

About 25% of Maryland Medicare recipients use a supplemental Medicare care program that helps low-income retirees use a private insurer for health coverage that often provides additional services such as vision, dental and transportation assistance.

State officials and people in the health care industry say the Medicare Advantage market in Maryland has long been more expensive than in most other states because of a unique hospital payment system in the state. But the state has offered insurers a grant in recent years to help cover some of their costs and encourage them to keep offering the coverage in the state.

That grant is going away, however, and some companies are considering terminating their Medicare Advantage plans in the state as a result.

“Over the last five years, Medicare Advantage has seen its challenges in Maryland, and those challenges resulted in health plan exits and disruptions for beneficiaries who rely on Medicare Advantage for their supplemental benefits,” says Mark Puente, CEO of Alterwood Health, an insurance carrier focused on Medicare Advantage plans.

At issue is a disconnect between Maryland’s hospital rate-setting system and federal calculations to reimburse health care provided under the Medicare Advantage plans.

“Given the uniqueness of the Maryland system, there is pressure on Medicare advantage,” said Gene Ransom, CEO for MedChi, the Maryland State Medical Society.

Part of the issue comes from Maryland’s unique Total Cost of Care hospital payment model, in which a state board called the Health Services Cost Review Commission (HSCRC) sets hospital rates. Under the current system, insurance carriers pay higher hospital rates than in other states and get reimbursed by the federal government for Medicare Advantage services at lower rates than elsewhere. Meanwhile, insurance carriers are unable to negotiate hospital rates under their plans.

As a result, it’s more expensive to use Medicare Advantage in Maryland than in other states, and Maryland seniors aren’t getting the same quality of benefits, a spokesperson for CareFirst said in a written statement.

“We remain concerned that Maryland seniors don’t have access to the same affordable, high-quality Medicare Advantage plans available to seniors all across the country, making it difficult for them to afford healthcare at a time when they need it the most,” the statement said. “Maryland seniors deserve access to the same robust, low-cost benefits available to their neighbors in other states.”

There are 1.1 million Medicare recipients in Maryland, with about 295,000 participating in a Medicare Advantage plan, a participation rate of under under 27%. That was one of lowest rates in the nation, ahead of only North Dakota (25%), South Dakota (20%), Wyoming (19%) and Alaska (2%). Most states have at least 50% of their Medicare recipients taking part in Medicare Advantage.

“The losses that the Medicare Advantage plans have incurred over the last couple of years have continued to grow,” Puente said.

In previous years, the HSCRC has offered grants to help encourage insurance companies to continue providing Medicare Advantage in the state. Former HSCRC Commissioner Adam Kane, who chaired the commission at the time it operated the grant program, said the grants were supposed to be a temporary fix to a longstanding problem.

“At the time, we created the grant program in an effort to stabilize the Medicare Advantage market in hopes that there would be a federal solution permanently” Kane said. “At this point, we still don’t not have a permanent resolution with the federal government on how to harmonize the Maryland hospital model with Medicare Advantage reimbursement.”

As a result, analysts say companies are looking to get out.

“We’re hearing that a couple of the large, publicly traded Medicare Advantage plans are going to exit the Maryland marketplace, creating further disruption for the beneficiaries who are either going to have to select another Medicare Advantage plan … or relinquish those supplemental benefits,” Puente said. “Those supplemental benefits include dental, vision, transportation, hearing aids that traditional Medicare fee-for-service doesn’t cover.”

Some of the large, publicly traded plans in Maryland are Aetna, Humana, Cigna and United Healthcare, though it’s not yet clear what plans those companies will offer for the upcoming enrollment period.

“We’ll be happy to share more when 2026 MA benefits and markets become public in early-October,” a spokesperson for United Healthcare said in a statement.

“We can’t comment on our 2026 MA offerings until the launch of the Medicare Annual Enrollment Period in October,” Mark Taylor, communication director for Humana, said in a statement.

It would not be the first time carriers trimmed their Medicare Advantage plan coverage in the state. In 2021, Johns Hopkins Medicine terminated plans for Baltimore City residents, kicking 5,000 seniors off their plans and sending them searching for new coverage, according to reports at the time.

Andrew Rosenberg is president of Health Resource Advisors, an insurance broker company that helps seniors weigh their health care options. He’s said that losing health care coverage can be very disruptive for seniors, who often rely on regular and consistent health care services for significant health needs.

“Any type of change is not good for seniors, even a change in pharmacy. They may need to change doctors,” Rosenberg said. “When you bounce around plans … It’s changing a lot in their continuity of care.”

Meanwhile, the Maryland model is undergoing a major transition in the coming weeks, as state health officials and federal officials finalize new terms of the States Advancing All-Payer Health Equity Approaches and Development, or AHEAD, model.

Current negotiations appear to prompt the state to offer solutions to the stabilize Medicare Advantage. There may also be significant changes to the state’s Medicare rate-setting authority.

“I am hopeful that the state and federal government are diligent in coming up with a solution that protects the Maryland Medicare beneficiaries,” Puente said.

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