Rachel Schmidt
With more than half of Medicare beneficiaries now enrolled in Medicare Advantage (MA), the federal government has a responsibility to make sure beneficiaries have the information they need to make informed choices when looking at their MA plan options. More than ever, federal policy makers also bear responsibility for ensuring that Medicare payments to the private insurers who run MA plans (called Medicare Advantage Organizations—or MAOs) are appropriate. Currently, however, CMS measures quality at the contract level rather than the plan level. Because MAO contracts can include many individual plans, contract-level reporting (which reflects an average across all plans in the contract) can make it harder for beneficiaries to compare how plans might work for them and harder for the Medicare program to reward plans that are truly of higher quality.
Contracts typically include more than one plan
Before allowing an MA plan to begin offering Medicare benefits, CMS must approve a contract with the MAO in which it agrees to provide the same types of benefits as are offered in traditional Medicare and follow applicable laws and regulations. MAOs can have more than one contract with CMS, and each contract typically includes more than one MA plan.
Most MA plans operate at the county level
Nearly all MA enrollees are in what CMS calls local coordinated care plans, in which the MAO selects the counties in which it wants to operate. This is different from regional coordinated care plans in MA and from stand-alone prescription drug plans in Medicare Part D. In those latter types, sponsors must offer their plans across an entire designated region that includes one or more states.
Not all MAOs can enter or exit county markets easily. For example, an MAO that is affiliated with a local or regional integrated health system may only operate MA plans within close proximity to its hospitals, facilities, and providers. In contrast, many of the largest MAOs set up networks of unaffiliated hospitals and physician offices under contract. If a plan in a county is not profitable, these types of MAOs may choose to exit that market and their enrollees must subsequently find a new MA plan or switch to traditional Medicare. Similarly, large MAOs may expand more nimbly than local or regional MAOs into counties that they believe are growing and will be profitable.
There are big differences among MAOs in the structure of their contracts and plans
In July 2025, 163 MAOs had one or more MA plans in the 50 states and the District of Columbia. Of those organizations, 77 (47%) held just one contract with CMS, and those contracts covered 309 plans (6% of all plans), for an average of about 4 plans per contract (see Table 1). Combined, those 77 MAOs had 1.2 million enrollees, or just 3% of total enrollment in MA local coordinated care plans. Competing with those smaller entities are some of the largest MAOs that have dozens of contracts and hundreds of plans. For example, the 3 MAOs with the most contracts with CMS each had 41 contracts or more. Combined, those contracts included 1,564 plans (30% of all plans) and 13.2 million enrollees (38% of total enrollment).
Table 1. Distribution of Medicare Advantage contracts, plans, and enrollment among local coordinated care plans, July 2025
| Number of MA contracts per MAO | Number of MAOs | Share of MAOs | Number of plans | Share of plans | Enrollees(In millions) | Share of enrollment |
| 1 | 77 | 47% | 309 | 6% | 1.2 | 3% |
| 2 to 5 | 65 | 40% | 842 | 16% | 4.4 | 13% |
| 6 to 10 | 12 | 7% | 475 | 9% | 4.6 | 13% |
| 11 to 40 | 6 | 4% | 1,976 | 38% | 11.2 | 32% |
| 41 or more | 3 | 2% | 1,564 | 30% | 13.2 | 38% |
| Total of 651 | 163 | 100% | 5,166 | 100%* | 34.5* | 100%* |
Source: MPI based on CMS July 2025 enrollment data for local coordinated care plans. Includes special needs plans, employer-group plans, and plans open to all beneficiaries. Excludes U.S. territories and plans with fewer than 10 enrollees.
* Sums may not total due to rounding.
For some of the largest MAOs, a single contract can include hundreds of plans, encompassing not only those open to all Medicare beneficiaries, but also others in which enrollment is limited to categories of beneficiaries such as retirees of certain employers and individuals eligible for special needs plans. Plans under the same contract do not necessarily operate in the same geographic region and some even span across all states. As examples, Table 2 shows the six MA contracts that, as of July 2025, had 1 million or more enrollees. (Note that this is just a subset of these MAOs’ contracts, plans, and enrollment.) The largest MA contract, Humana’s H5216, includes 271 plans that operate in 49 states plus the District of Columbia with, collectively, 2.71 million enrollees. Humana, UnitedHealth Group, Kaiser Permanente, and CVS Health each have at least one contract with 1 million or more enrollees.
Table 2. Medicare Advantage contracts with 1 million or more enrollees, July 2025
| Medicare Advantage Organization | Contract number | Number of plans within the contract | Number of states and the District of Columbia covered by the contract | Number of MA enrollees(In millions) |
| Humana | H5216 | 271 | 50 | 2.71 |
| UnitedHealth Group | H2001 | 136 | 51 | 2.57 |
| Kaiser Permanente | H0524 | 37 | 1 | 1.64 |
| CVS Health | H5522 | 20 | 51 | 1.40 |
| UnitedHealth Group | H5253 | 116 | 18 | 1.13 |
| CVS Health | H5521 | 244 | 34 | 1.08 |
Source: MPI based on CMS July 2025 enrollment data for local coordinated care plans. Includes special needs plans, employer-group plans, and plans open to all beneficiaries. Excludes U.S. territories and plans with fewer than 10 enrollees.
CMS evaluates MA quality at the contract level, not the plan level
The MA program evaluates and rewards quality via the star-ratings system which combines a basket of measures that CMS uses to assign ratings of 1 to 5 stars (poor to excellent). Star ratings are intended both to help beneficiaries make informed choices among their plans options and to reward higher quality plans through the MA payment system.
However, CMS evaluates star ratings at the contract level, not the plan level, and each plan that falls under the same contract receives that same star rating. This is one important reason that the Medicare Payment Advisory Commission and other analysts have said that the star-ratings system is not a reliable basis for evaluating quality across MA plans. When beneficiaries look at MA star ratings on Medicare’s Plan Finder tool to help them select among their options, they do not necessarily get an accurate depiction of the quality of some plans in their local area.
Evaluating quality at the contract level may also hinder the ability of MAOs that have relatively few contracts and plans to compete with larger plan sponsors. Under MA’s star-rating system, plans that receive star ratings of 4.0 or higher qualify for quality bonuses that boost their payment benchmarks. Plans with higher star ratings also receive a higher rebate percentage as part of their payment, which they can use to attract enrollees through lower out-of-pocket costs or supplemental benefits. However, observers have suggested that star ratings can be manipulated; large MAOs can group high-performing plans with plans from low-performing areas, with the average quality score obscuring the true performance in low-performing areas. This can lead to higher MA payments that do not fully reflect plan quality in some areas and can potentially mislead enrollees shopping for plans in low-performing areas.
This post outlines problems associated with measuring MA quality at the contract level. In an upcoming blog, we will describe policy options for improving how plans and contracts are used in quality measurement and MA payment.