The Centers for Medicare and Medicaid Services is making it easier for Medicare Advantage insurers to swoop in and rescue struggling rivals.
The agency last week notified insurance companies that it may allow them to expand where they sell policies midyear if they acquire competitors. Previously, CMS only considered expansion requests during the annual bid cycle in June.
The new guidance opens the door to faster and easier dealmaking, said John Selby, an independent health insurance consultant. It is yet another indication federal authorities are trying to stabilize the volatile Medicare Advantage market in 2027 and beyond, he said. Annual enrollment runs from Oct. 15-Dec. 7.
“If the expectation is that they’re going to see more acquisitions and consolidation over the next few years, this is likely a preemptive move to make that process easier,” Selby said.
CMS did not comment on why it was introducing this flexibility now. The agency has not approved any off-cycle service area expansions yet, a spokesperson said.
Recently, several struggling Medicare Advantage insurers have placed themselves on the auction block but failed to find a buyer.
Approximately 25% of financially vulnerable health plans announced deals or market exits in 2024 and 2025, according to an August report by HealthScape Advisors, a Chartis company.
Providence Health Plan last month announced it would shutter after its Medicare Advantage deal fell through. Molina Healthcare said in July it would quit individual Medicare Advantage after an unsuccessful sale of the business. Georgia regulators shut down Sonder Health Plan in August 2025 after the Medicare Advantage startup failed to make a deal.
Other insurers that are withdrawing from Medicare Advantage likely also tried and failed to sell their businesses, said Ari Gottlieb, an independent health insurance consultant.
“Any carrier looking to fully exit a line of business would obviously look to monetize that asset if they could,” he said.
Previously, CMS frowned upon companies taking over a Medicare Advantage insurer outside the annual bid cycle if they did not already sell policies in the competitor’s market.
If a Medicare Advantage insurer bought a competitor midyear, CMS would often force the buyer to shut down any plans it purchased that were outside of where it currently marketed policies, said Michael Bagel, vice president of public policy at the Alliance of Community Health Plans, which represents provider-affiliated insurers such as Mass General Brigham Health Plan. The new owner would have to wait for the next bid cycle to ask CMS if it could expand where the company sold policies, he said.
The requirement limited the potential pool of buyers for distressed companies, he said.
Adding flexibility to when companies can take on another’s operations could help promote continuity of care for members enrolled in Medicare Advantage insurers encountering business challenges, said Helaine Fingold, an attorney who focuses on managed care at the law firm Epstein Becker & Green.
“If a plan that’s currently out there is having issues or struggling, it’s better to have another entity come in and pick that up to maintain coverage, rather than for the entity to go out of business,” Fingold said.
The new guidance increases the amount of due diligence that buyers must do before finalizing a deal, said Rose Mollitor, managing director of managed care strategy and program design at ATI Advisory, a consulting firm. Buyers will need to verify that the insurer they are acquiring complies with network adequacy and other requirements, she said. Previously, companies could ensure those standards internally during the annual bid cycle.
Insurers welcome the new guidance, Bagel said.
Mass General Brigham in January announced it planned to acquire rival Fallon Health.
“What this shows you is concern, on CMS’ part, of there being too long of a lag, or a break, in coverage in some areas,” Bagel said. “They’re willing to speed acquisitions up.”