Tessa Quinn
Medicare Advantage plans are popular with lawmakers and Americans, enrolling about 31 million people. However, hospitals are increasingly dropping these plans due to issues with prior authorizations, excessive denial rates, and slow payments from insurers. This has led to negative patient experiences, delays in post-acute placement, and financial burdens on hospitals. As a result, patients with Medicare Advantage plans may encounter challenges in accessing healthcare services and face unexpected costs.
| Characteristics | Values |
|---|---|
| Reason for dropping Medicare Advantage plans | Excessive prior authorization denial rates, slow payments from insurers, negative patient experiences, post-acute placement delays, administrative and financial burdens, and delayed reimbursements |
| Hospitals dropping Medicare Advantage plans | WellSpan Health, ECU Health, WakeMed, Genesis Healthcare System, Cape Fear Valley Health, Samaritan Health Services, Cameron Regional Medical Center, Mayo Clinic, and hospitals in Louisville |
| Impact on patients | Loss of coverage, unexpected costs, difficulty accessing care, and dissatisfaction with quality of care |
| Alternatives to Medicare Advantage plans | Original Medicare, Medicare Part C plan, or a plan with a different insurer |
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What You'll Learn
- Hospitals dropping Medicare Advantage plans due to administrative delays and denial rates
- Patient experiences, including access issues and care quality, leading to switches to traditional Medicare
- Delayed reimbursements and slow payments from insurers
- Hospitals no longer in-network with Medicare Advantage plans
- Issues with prior authorizations and excessive denial rates
Hospitals dropping Medicare Advantage plans due to administrative delays and denial rates
Medicare Advantage (MA) provides health coverage to more than half of the nation's older adults. However, a growing number of hospitals are dropping MA plans due to administrative delays and denial rates.
In 2023, Becker's Hospital Review began reporting on hospitals and health systems nationwide that dropped some or all of their MA contracts. As of January 1, 2023, Humana and BCBS of Oklahoma's MA members could no longer receive in-network coverage at Stillwater (Okla.) Medical Center. The hospital made this decision after experiencing rising operating costs and a 22% prior authorization denial rate for MA plans, compared to a 1% denial rate for traditional Medicare. Similarly, Cameron (Mo.) Regional Medical Center stopped accepting Cigna's MA plans in 2023 due to delayed reimbursements and plans to drop Aetna and Humana in 2024.
In October 2023, the Nebraska Hospital Association issued a report detailing how MA is "failing patients and jeopardizing Nebraska hospitals," with 33% of hospitals in the state not accepting MA patients. The report cited negative patient experiences, post-acute placement delays, and administrative and financial burdens on hospitals that accept MA patients. As a result, several hospitals in Nebraska, such as York-based WellSpan Health and Raleigh-based WakeMed, have decided to no longer accept certain MA plans starting in 2024.
Other hospitals across the country have also dropped MA plans due to similar issues. For example, Samaritan Health Services in Corvallis, Oregon, ended its MA contracts with UnitedHealthcare, citing slow "processing of requests and claims" that made it difficult to provide appropriate care to members. Additionally, St. Charles Health System in Bend, Oregon, considered dropping all MA plans and encouraged its older patients not to enroll in private plans during the upcoming enrollment period. They cited high denial rates, longer hospital stays, and the overall administrative burden on clinicians as reasons for their decision.
While MA plans provide valuable coverage for many older adults, the recent trend of hospitals dropping these plans due to administrative delays and denial rates highlights the challenges and impacts of the MA system on hospitals and patients.
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Patient experiences, including access issues and care quality, leading to switches to traditional Medicare
A growing number of hospitals and health systems across the nation are dropping some or all contracts with Medicare Advantage plans. The reasons for this include excessive prior authorization denial rates, negative patient experiences, post-acute placement delays, and slow payments from insurers.
A study found that people who switch to traditional Medicare are those with high healthcare needs, driven by dissatisfaction with access and quality of care issues in Medicare Advantage. These patients reported having trouble getting the care they needed and were dissatisfied with the quality of care they received. They were also dissatisfied with the cost of their care and specialty care.
Another study found that Medicare Advantage enrollees were more likely to report having a usual source of care, receiving information during care transitions, and having better experiences getting needed prescription drugs. However, they also found lower rates of skilled nursing facility use, inpatient rehabilitation facility use, and home health use among Medicare Advantage enrollees. They also had shorter lengths of stay in skilled nursing facilities and inpatient rehabilitation facilities.
Traditional Medicare beneficiaries were found to have better access to the highest-rated hospitals for cancer care and the highest-quality skilled nursing facilities and home health agencies. They also experienced fewer cost-related problems, mainly due to lower rates among those with supplemental coverage.
Overall, there are low rates of switching between Medicare Advantage and traditional Medicare. However, a slightly larger share of Medicare Advantage enrollees opts to switch to traditional Medicare. These rates of switching may be a proxy for dissatisfaction with current coverage arrangements.
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Delayed reimbursements and slow payments from insurers
A growing number of hospitals and health systems across the United States are dropping Medicare Advantage plans. One of the most commonly cited reasons for this is delayed reimbursements and slow payments from insurers.
In 2023, at least 15 hospitals and health systems ended their contracts with various insurers' Medicare Advantage plans, with more than 60% considering dropping coverage. This trend has continued into 2024, with at least 28 health systems in 21 states stopping acceptance of some Medicare Advantage plans. The slow payment times from insurers are causing significant challenges for hospitals, with payment delays extending for months in some cases.
The issue of delayed reimbursements and slow payments has been particularly notable with certain insurers. For example, Samaritan Health Services in Oregon ended its Medicare Advantage contracts with UnitedHealthcare, citing slow "processing of requests and claims" that made it difficult to provide appropriate care to their members. Similarly, Cameron Regional Medical Center in Missouri stopped accepting Cigna's MA plans in 2023 due to delayed reimbursements and plans to drop Aetna and Humana in 2024.
The impact of these delays and slow payments goes beyond the financial strain on hospitals. It also affects patients, who may experience longer wait times for appointments and delays in receiving necessary medical care. In some cases, patients may be forced to choose between travelling long distances to reach an in-network hospital or incurring high out-of-pocket costs for out-of-network services.
The situation has become so concerning that state insurance regulators have been fielding questions and seeking guidance from federal authorities. With the growing number of hospitals and health systems dropping Medicare Advantage plans due to these issues, it is essential for patients to stay informed about their insurance coverage and any changes to their plans.
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Hospitals no longer in-network with Medicare Advantage plans
A growing number of hospitals and health systems across the US are ending their contracts with Medicare Advantage plans. While Medicare Advantage provides health coverage to more than half of America's seniors, hospitals are pushing back due to various administrative and financial challenges.
Some hospitals have cited negative patient experiences, post-acute placement delays, and excessive prior authorization denial rates as reasons for dropping Medicare Advantage plans. For example, WakeMed in Raleigh, North Carolina, cited a claims denial rate that was "3 to 4 times higher" with Humana compared to its other contracted Medicare Advantage plans. Similarly, Stillwater Medical Center in Oklahoma ended all in-network contracts with Medicare Advantage plans due to rising operating costs and a 22% prior authorization denial rate.
Slow payments from insurers and billing fraud allegations are also contributing factors. Hospitals have reported difficulties in providing appropriate patient care due to slow processing of requests and claims by insurers. Furthermore, most Medicare Advantage carriers have faced allegations of billing fraud, leading to increased scrutiny from lawmakers.
The impact of these decisions is significant, with thousands of seniors losing coverage at local hospitals. For example, Aultman Health System's termination of its contract with Humana affected approximately 7,000 patients. As a result, patients may need to seek alternative coverage or find different healthcare providers to continue receiving care.
It's important to note that hospitals are not required to accept all Medicare Advantage plans, and individuals with these plans may face higher out-of-pocket expenses or limited coverage when seeking care from out-of-network providers. However, in the case of a medical emergency, Medicare Advantage plans will cover emergency services even at out-of-network hospitals, although copays and coinsurance may still apply.
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Issues with prior authorizations and excessive denial rates
Prior authorization is a requirement that healthcare providers obtain pre-approval from insurers to provide a given service. Medicare Advantage insurers use prior authorization to manage utilization and lower costs. While it is intended to ensure that healthcare services are medically necessary, it has also been criticised for creating barriers to receiving necessary care.
In 2023, Medicare Advantage insurers made nearly 50 million prior authorization determinations, with the volume of determinations varying across insurers. The share of requests that were denied, appealed, and overturned upon appeal also varied. The denial rate ranged from 3.5% for Humana plans to 13.6% for Centene plans.
The American Medical Association (AMA) has highlighted the negative impact of prior authorization, with 24% of physicians reporting that it has led to serious adverse events for patients in their care. These include hospitalizations, life-threatening events, and permanent disability or damage. The AMA also notes that prior authorization adds significant costs to the healthcare system and results in worse patient care.
In response to these concerns, the Improving Seniors' Timely Access to Care Act of 2024 aims to reform prior authorization procedures in Medicare Advantage. The bill has earned bipartisan support and would require Medicare Advantage plans to streamline and standardize prior authorization processes and improve transparency. The AMA is also challenging insurance companies to eliminate care delays, patient harms, and practice hassles associated with prior authorization.
While most appeals of prior authorization denials are partially or fully overturned, the additional step of appealing the initial decision may delay necessary medical care. This can have negative effects on a person's health. It is important for patients considering Medicare Advantage plans to be aware of prior authorization denial rates to make informed choices.
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Frequently asked questions
Hospitals are dropping Medicare Advantage plans due to issues with prior authorizations and excessive denial rates. Hospitals have also complained about slow payments from insurers and administrative delays.
Patients with Medicare Advantage plans may need to switch to a different hospital or healthcare provider within their plan's network. In the case of a medical emergency, individuals with a Medicare Advantage plan can seek care at any ER or hospital in the country, and their plan will cover the emergency services as if they were in-network.
An alternative to Medicare Advantage plans is Original Medicare, which does not impose the same limits on which doctors or care providers patients can visit. Patients can also consider other types of Medicare Advantage plans, such as PPO plans, which offer more flexibility and allow individuals to receive healthcare services from providers outside their network.
