APPLIES TO: Medicare Advantage

I’m Heather Signorelli, a physician who has spent more than a decade on the business side of healthcare. Gavari explains how health coverage really works, so we can fix it.

Sometime in the first week of January, a woman who has seen the same cardiologist for years is going to walk up to the front desk, hand over her new insurance card, and wait while the person behind the counter looks something up and goes quiet. Then she’ll be told she can’t be seen today because there’s no referral on file, and she won’t know what that means, because in all the years she’s been going to that office she has never needed one.

The rule was in her new plan’s booklet, printed next to the specialist copay as “Referral required.” [1] So technically, she was told. But I don’t think being told is the same as understanding, and the research backs that up. In a 2023 survey, only 44% of Medicare Advantage enrollees said they fully understood their plan. [2]

I think a lot of specialists and their patients are going to have a rough January, and most of them won’t see it coming. As you can imagine, very few patients picking a new plan this fall will realize they just signed up for a plan that requires referrals until they find out at a specialist’s front desk. And she won’t be the only one, because this is the direction a big part of Medicare Advantage is moving for 2027.

For 2027, UnitedHealthcare will offer 7,009 Medicare Advantage HMO plans, up from 6,462 this year, while cutting its total number of Medicare Advantage plans from 12,421 to 11,734, according to an analysis by the investment firm Stephens. [3] That’s 547 more HMOs and 687 fewer plans overall. Most of what’s being cut are PPOs, [4] the plans where you can usually see a specialist without asking anyone first. HMOs were already the bigger group: in 2026, more than 6 in 10 Medicare Advantage enrollees with drug coverage were in an HMO. [5]

UnitedHealthcare said 66% of its members will have access to both an HMO and a PPO option in 2027, down from 70% this year. [6] So about a third of its members won’t have both choices where they live. Aetna is moving in the same direction. [7] Between UnitedHealthcare and Humana, nearly 1 million people are expected to be affected by plan cuts for 2027. [8]

People whose UnitedHealthcare plan is being discontinued got a letter in early October. They have until December 31 to pick a new Medicare Advantage plan, and if they don’t, they’ll be moved to Original Medicare on January 1. [9] For a lot of people choosing a new plan, the one that fits their budget will be an HMO. Medicare’s own website answers the question “Do I have to get a referral to see a specialist?” for HMOs with “Yes. In most cases.” [10]

Partly. The Summary of Benefits usually says which services need a referral, and the plan’s full rulebook, called the Evidence of Coverage, has the complete list. [11] UnitedHealthcare even notes that member materials may show referral requirements for more services than its main rule covers. [12]

What you can’t see is what this really means for a patient in real life and in simple terms. How long a referral lasts and how far back it can count are written in the rules the insurer gives practices, not in the plan summary.

So essentially, the rule itself is written down, but almost nothing about how it will affect a patient’s care is, and that’s the part I think we have to fix. Because when you select a plan, you need to understand what you are buying before plans can truly start competing with one another.

HMOs give an insurer more say over where and how members get care. For patients, the trade-off shows up in what they pay. HMO plans tend to have lower premiums than PPO plans, where care can typically be accessed without a referral. [14] They also tend to have lower out-of-pocket limits: in 2026, the average in-network limit was $4,636 in Medicare Advantage HMOs and $6,592 in PPOs. [5] So essentially, patients pay less in exchange for less freedom to decide when and where they see a specialist.

For the insurer, the reason is partly cost and partly care. One news report in 2025 noted that HMO plans give UnitedHealth more control over medical costs. [15] A UnitedHealthcare representative described the same design in terms of care, saying the referral requirement reflects the core design of HMO plans, which emphasize primary care–led coordination. [16]

So how do HMOs keep costs low enough to charge less? It’s not what most people assume, and I want to be fair about it.

For those of you new to this space, there are two main ways an insurer can pay a physician. The most common is fee-for-service: the practice bills for each visit, test, or procedure, and the plan pays for each one. The other is capitation: the plan pays a set amount for each patient every month, no matter how much care that patient uses.

A lot of people assume HMOs save money mainly through capitation, by paying doctors a flat fee that gives them a reason to do less. That’s not how most care is paid today. In the most recent breakdown I could find, from a 2022 report, about a quarter of Medicare Advantage payments went through capitation or similar per-patient arrangements, according to a national payment survey run by a group that works with the insurance industry’s trade association. [17] That means most Medicare Advantage care is still paid one service at a time (fee-for-service).

So where do the savings come from? A 2000 study of Massachusetts state employees found that about half of the HMOs’ savings came from enrolling healthier members, who needed less care. Most of the rest came from the HMOs negotiating lower rates with doctors and hospitals, so they paid less for the same treatments, not from giving patients fewer treatments. [18] What this tells me is that the referral is one of the main ways an HMO keeps patients inside its network, where those lower rates apply. I’ll go much deeper on how physicians and hospitals actually get paid in a future issue.

A referral is the primary care doctor telling the plan that a patient needs to see a specific specialist. In an HMO, the plan won’t pay for the specialist visit without it.

Under UnitedHealthcare’s Medicare Advantage HMO rules for 2026, the primary care office had to submit the referral before the specialist visit. It could only count for visits up to five days before it was sent, so a referral sent well after a visit usually wouldn’t cover it. It lasted for the number of visits entered, up to 99, or six months, whichever came first. [19] And for the 2026 plan year, no referral could be submitted before January 1. [20] Every referral for every January visit had to be sent in January, by primary care offices that were also seeing their own patients with new cards. I couldn’t find whether UnitedHealthcare will use the same start rule for 2027, so primary care offices should plan as if it will.

A referral also isn’t approval for everything. Even with a referral on file, a claim can still be denied if a required prior auth wasn’t obtained. [12] An HMO patient can need both for the same care.

In 2026, UnitedHealthcare didn’t deny claims for missing referrals through April 30. Starting May 1, specialist claims without a referral were denied. [12] Those denials are the provider’s financial responsibility, and patients can’t be billed for them. [20]

That means the patient won’t get a bill for it, which matters, but it doesn’t get her in front of her cardiologist. At least one specialty hospital tells patients their appointments will need to be rescheduled until a referral is active. [21] So in January, a practice is left choosing between sending the patient home without being seen, or seeing her anyway and hoping the claim doesn’t come back denied.

Insurers say HMO plans give members coordinated care, lower out-of-pocket costs, and supplemental benefits. [22] Coordinated care means one primary care doctor keeps track of a patient’s specialists, tests, and medications, so care isn’t scattered across offices that don’t talk to each other. For many patients, that’s good medicine. I don’t think the HMO model is the problem here.

What worries me are a few things. First, how many people are being moved into it this year without anyone making sure they understand what changes. Second, if care is delayed waiting for a referral a patient or office didn’t understand, when can we start blaming the payer for this?

This tells me that a plan design change, like adding a referral rule, can reach millions of patients in one year with almost no warning at the point of care. If we want to fix this, a rule that decides whether a patient can see her specialist should be as clear as the premium, to the patient and to the practice, before January 1.

Specialty practices: before January, pull every Medicare Advantage patient booked for January and February, check their 2027 plan type in the payer portal, and get referrals in before the visit for anyone in an HMO.

Primary care practices: expect a wave of referral requests in the first week of January, and plan staffing for it.

All practices: tell your Medicare Advantage patients to check their 2027 plan type before open enrollment ends on December 7. [23] Patients whose UnitedHealthcare plan is being discontinued have until December 31. [9] If they find a problem in January, they can switch plans or go back to Original Medicare once between January 1 and March 31. [24]

“Is this patient’s 2027 plan an HMO, and is a referral on file before the visit?”

A referral tells you which doctor a patient can see. It doesn’t tell you whether the plan will pay for what that doctor orders. Next, I’m going deeper on prior authorization: who is actually responsible for getting it, how a practice is supposed to know it’s needed, and what happens when nobody knew until the denial came back.

If you work at a specialty practice, forward this to your scheduler before January.

Help more people see how this works. If this issue helped you, forward it to one colleague, practice leader, or employer who should read it. If someone forwarded it to you, you can subscribe free at gavari.co.

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This is general education about how health coverage works. It is not insurance, legal, or medical advice. I do not sell insurance or recommend plans.

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