CMS Terminates Medicare Advantage Contract with American Health Plan of Texas

The Centers for Medicare & Medicaid Services (CMS) recently made a significant decision to terminate the Medicare Advantage contract with American Health Plan of Texas. This insurer failed to meet essential quality thresholds over the last three years, affecting an institutional special needs plan for approximately 495 Medicare enrollees in Texas. Managed by the Mitchell Family Office in Michigan, this contract termination highlights the critical importance of maintaining compliance with rigorous regulatory standards.

Impact of Non-Compliance on Medicare Advantage Providers

On December 17, CMS released a termination notice stating that the contract would end on December 31, 2026. A major factor leading to this decision was the insurer's consistent inability to achieve at least a 3-star Part D rating, having only received 2.5 stars from 2024 to 2026. This demonstrates the high stakes of compliance in the insurance industry, where maintaining minimum quality ratings is crucial to contract sustainability.

Sanctions and Future Compliance Requirements

CMS had previously issued corrective action notices throughout 2023 and early 2025 to address the insurer's low performance. The decision to terminate the contract is paired with intermediate sanctions beginning January 2, 2026. These measures include the suspension of new enrollments and the cessation of all marketing activities, illustrating the significant influence of regulatory compliance requirements on operational strategies for healthcare providers.