More than 64,000 seniors enrolled in Medicare Advantage plans through Providence Health Plan could soon be forced to find new coverage after a deal to keep the plans operating collapsed. Providence Health Plan announced earlier this year that it would wind down much of its insurance business, but had been negotiating with an undisclosed national insurer to preserve its Medicare Advantage coverage for 2027. However, those discussions have now ended without an agreement, putting the future coverage of tens of thousands of Medicare beneficiaries in doubt.
Medicare Advantage plans are private alternatives to traditional Medicare and cover millions of seniors nationwide. Providence's failed negotiations affect more than 64,000 Medicare Advantage members, meaning many beneficiaries could be forced to evaluate new coverage options ahead of the 2027 plan year. Nationally, insurers and health systems have increasingly faced rising medical expenses while reimbursement rates have struggled to keep pace, putting pressure on plan profitability.
Providence Health Plan, the insurance arm of Renton, Washington-based nonprofit hospital system Providence, announced in May that it would wind down its commercial and Medicaid insurance operations beginning in 2027. At that time, company officials said they were working with a national insurer to allow Medicare Advantage members to continue coverage through a separate arrangement. However, Providence said negotiations ultimately failed.
"Despite significant effort on all sides, we were unable to reach an agreement on a sale," Providence said in a statement to Newsweek. "We are in discussion with regulators about this development and the broader wind-down of Providence’s health plan operations. We will share more details with our members and the public as we are able under applicable regulations." A spokesperson told Healthcare Dive that Providence and the prospective partner were unable to reach an agreement "despite significant effort on all sides." Providence said it is now working with regulators regarding the future of its health plans and intends to provide additional information when available.
Providence Health Plan covers roughly 440,000 members across several Western states and has operated for more than four decades. However, several factors came together behind the decision to close the plan, including rising medical costs, increased regulatory requirements as well as competition from larger national insurers. Several other insurers and health systems have recently scaled back participation in government-sponsored coverage programs.
This includes Aetna's exit from Affordable Care Act markets as well as Cigna's departure from both ACA and Medicare Advantage markets, and a number of Medicaid and ACA market exits by other insurers. Providence is dealing with the same financial pressures other insurers in the space have, as rising costs have made these plans unsustainable in remaining profitable for the long term,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. For the more than 64,000 Medicare Advantage members affected, the next steps remain uncertain.
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