Medicare Cost plans, explained
Checked against the current rules on September 24, 2026.
A Medicare Cost plan is a section-1876 HMO or competitive medical plan — an older type of Medicare contract, now concentrated in a small number of states (Minnesota above all), with a few hundred thousand members nationwide.42 CFR 417.600
The single most important thing to know: 42 CFR § 417.600(b) applies the exact same beneficiary appeal rules Medicare Advantage plans follow (Part 422 Subpart M) to Cost plans directly — the same appeal levels, the same Independent Review Entity, the same Administrative Law Judge hearing right. This product's own Medicare Advantage letters and deadlines work for a Cost plan case unchanged.42 CFR 417.600
The one real difference
Unlike a Medicare Advantage member, a Cost plan member can also get services from any provider that accepts Original Medicare, entirely outside the plan. That means a denial notice you're holding could be one of two different things — a decision from the plan itself, or a claim denial from Original Medicare for something obtained outside it — and the two lead to different appeals.
Which appeal applies to you
Denied a service through the plan itself → the same Medicare Advantage-style appeal this product already builds — see the denied page for a plan-covered service.
Billed for care you got outside the plan, using Original Medicare directly → a different, separate appeal (the Original Medicare claims ladder) — see the out-of-plan denied page.
How Cost plans came to exist, and why so few remain
Section 1876 of the Social Security Act created cost-based HMO and competitive-medical-plan contracts well before Medicare Advantage (Part C) existed. Since 2019, the Medicare Access and CHIP Reauthorization Act (MACRA) has required CMS to non-renew a Cost plan's contract in any service area where enough competing Medicare Advantage plans already operate — which is why the population has shrunk steadily and is now concentrated in a small number of states.42 CFR 417.600
Where a Cost plan still operates, it remains a completely real, currently-valid form of Medicare coverage — not a legacy product being wound down mid-year on its members. The appeal rights described here apply for as long as the plan's own contract with CMS is in effect.
What this page does not cover
This page is about a member's own appeal right, not a dispute between CMS and the plan organization itself over its own contract (a separate process under 42 CFR § 417.640, Subpart R) — that's not something a member ever needs to navigate directly.
Questions people ask
- Is a Medicare Cost plan going away?
- CMS has non-renewed cost plans in areas with enough competing Medicare Advantage plans since 2019, so the population has been shrinking for years — but real cost plans still operate today, concentrated in a handful of states.
- Do I have Medicare Advantage or a Cost plan?
- Check your plan card or your Annual Notice of Change — a Cost plan will identify itself by name. If you're not sure, 1-800-MEDICARE or your SHIP counselor can confirm it directly.
- Does CaseWhy Appeals have separate letters or forms for a Cost plan?
- No — because the same Part 422 Subpart M rule governs both, the exact same Medicare Advantage letter drafting and deadline calculation already built into this product apply to a Cost plan case unchanged.
- Where can I get help beyond this product?
- Your State Health Insurance Assistance Program (SHIP) counselor and 1-800-MEDICARE both handle Cost plan questions directly — the same free resources available for any Medicare coverage question.
Sources — last checked September 24, 2026
- 42 CFR 417.600as of September 24, 2026
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By CaseWhy Appeals editorial. See how this content is produced. Not legal advice. Not affiliated with or endorsed by Medicare, CMS, or any health plan. A product of CaseWhy LLC.
