The federal government has imposed sanctions on three Medicare Advantage health plans run by UnitedHealthcare because the Minnetonka-based health insurer spent too small a share of premium revenue on medical benefits for seniors.

As a result, the federal Centers for Medicare and Medicaid Services (CMS) announced earlier this month that the health plans would not be allowed to enroll new subscribers for next year. Medicare Advantage plans are required to spend a minimum of 85% of premium dollars on medical expenses and can be sanctioned if they fail to do so for three consecutive years. The UnitedHealthcare plans in question failed to hit that mark from 2018 through 2020.

In a statement to the Star Tribune, UnitedHealthcare said the business units fell short of requirements because patients used less care than expected during the COVID-19 pandemic last year by avoiding doctor visits.

The three UnitedHealthcare plans penalized by the federal government provide coverage for about 86,000 people, which is just a fraction of the company's total Medicare Advantage enrollment of nearly 7.5 million people.

The plans facing enrollment sanctions primarily operate in Arkansas, New Mexico and four states in the Midwest. None of the plans does a significant amount of business in Minnesota.

UnitedHealthcare said existing members in the three plans will not be affected. Current subscribers will have the option of continuing their UnitedHealthcare coverage, which the company says will feature increased benefits.

"UnitedHealthcare spends at least 85 percent of the premiums we take in on care for the people we serve," the company said in its statement. "In a few, we were not able to do that because so many of our members deferred going to get care due to COVID-19.

"As a result, we can't enroll any new members in a few local plans until 2023 when we expect care patterns to be at more normal levels."

UnitedHealthcare, the nation's largest health insurer, is a division of UnitedHealth Group, Minnesota's largest company by revenue.

A growing share of seniors across the U.S. have been enrolling in Medicare Advantage health plans in recent years. UnitedHealthcare is the largest provider of the plans, where private insurers contract with the federal government to provide publicly funded medical benefits to Americans 65 and older.

CMS says the sanctions will be lifted in the future if UnitedHealthcare's Medicare Advantage plans improve their medical loss ratio (MLR), an industry term that assesses the share of premium revenue that's spent on medical care. If any of the UnitedHealthcare health plans fails to report MLRs of at least 85% for five consecutive years, the government "must terminate the contract," CMS said.

"Medical loss ratios are designed to protect consumers — in this case Medicare beneficiaries — by limiting how much insurers can keep for administrative costs and profit," Tricia Neuman, a senior vice president with the California-based Kaiser Family Foundation, said via e-mail.

"CMS has a responsibility to be sure that insurers meet requirements, and in this case, is imposing penalties for multiple consecutive years of noncompliance," Neuman said. "With nearly half of the population now enrolled in a Medicare Advantage plan, efforts by CMS to assure that federal dollars are being carefully spent and seniors are getting the benefits to which they are entitled take on greater importance."

In 2019, CMS imposed an enrollment sanction on another Medicare Advantage plan from UnitedHealthcare. The federal agency lifted the sanction in September 2020 after the health plan came back into compliance with MLR rules.

A Star Tribune review shows that CMS has suspended enrollment at 11 different Medicare Advantage health plans over the past two years, including the four health plans operated by UnitedHealthcare.