Claire Dawson
Hospitals across the United States are dropping Medicare Advantage plans, causing over a million patients to lose coverage. Medicare Advantage is a version of Medicare offered by private insurance companies, which typically provides extra benefits such as dental, vision, and prescription drug coverage. Hospitals are dropping these plans due to administrative challenges, including excessive prior authorization requirements, slow payments from insurers, and high rates of patient claim denials. These issues have led to concerns about the financial impact of Medicare Advantage, with hospitals terminating contracts over payment rates and delays. The situation has alarmed state insurance regulators, who are fielding inquiries from older adults worried about their hospitals and doctors withdrawing from Medicare Advantage plans.
| Characteristics | Values |
|---|---|
| Excessive prior authorization denial rates | Requiring prior authorization for hospital stays and other high-cost services |
| Slow payments from insurers | Delayed reimbursements |
| High rates of patient claim denials | Excessive denial rates |
| Rising costs and changes within the industry | Inflation Reduction Act |
| Reimbursement rates | Lower reimbursement rates compared to private insurance |
| Coverage restrictions | Restrictive provider networks |
| Administrative delays | Administrative challenges |
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What You'll Learn
Administrative challenges and delays
Hospitals are dropping Medicare Advantage plans due to several administrative challenges and delays. Firstly, there are issues with prior authorization requirements, which can impede patients' needs and cause delays in care. Hospitals have reported that the approval process for services covered by Medicare Advantage plans has become increasingly onerous and time-consuming. This includes pre-authorization and referral requirements that may not align with the timely needs of patients.
Secondly, hospitals have cited slow payments and delayed reimbursements from insurers as a reason for discontinuing Medicare Advantage plans. Financial pressures, including rising costs and changes within the industry, have made prompt reimbursement crucial for hospitals. Medicare Advantage plans have been associated with concerns about payment rates and delays, impacting the financial viability of hospitals.
Additionally, high rates of patient claim denials have been a significant concern for hospitals. Medicare Advantage plans have been known for their excessive denial rates, which can lead to increased administrative burdens and affect patient care. Hospitals have reported challenges in dealing with claim denials and the need to spend time and resources fighting over medical decisions and approvals.
The combination of these administrative challenges and delays has led to growing frustration among hospitals, resulting in their decision to drop Medicare Advantage plans. These issues not only affect the financial stability of hospitals but also impact patient care and access to timely treatment.
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High rates of claim denials
Hospitals are dropping Medicare Advantage plans due to several reasons, one of which is the high rates of claim denials. Medicare Advantage plans often require prior authorization for hospital stays and other high-cost services, which can be time-consuming and cumbersome for patients and providers. A congressional investigation found that the nation's largest Medicare Advantage insurers denied a quarter of all prior authorization requests for post-acute care in nursing homes. Hospitals and doctors are becoming increasingly vocal about their frustrations with insurers' cost-control efforts, including routine denials or delays in approving or paying for medical care.
In addition to high denial rates, Medicare Advantage plans often have limited networks of providers, which can restrict patients' choices of physicians and hospitals. These networks are also subject to change, further complicating patients' access to care.
The issue of claim denials has led to a growing trend of hospitals dropping Medicare Advantage plans. In 2023, hospitals and health systems in at least 11 states announced they would be out of network for some or all Medicare Advantage plans in 2024. This has caused concern among older adults who rely on Medicare Advantage for health coverage, as they may face increased out-of-pocket costs or delays in accessing necessary medical services.
Some specific examples of hospitals dropping Medicare Advantage plans due to issues with claim denials include:
- WVU Medicine's Uniontown Hospital and its affiliated provider groups ended their participation with Highmark PA and Highmark Wholecare Medicare Advantage as of January 1, 2025.
- North Memorial Health in Robbinsdale, Minnesota, terminated its contract with Humana Medicare Advantage.
- Essentia Health in Duluth, Minnesota, went out of network with Humana Medicare Advantage plans in 2025.
- Prairie Lakes Healthcare System in Watertown, South Dakota, dropped Humana Medicare Advantage.
- Vanderbilt Health in Nashville is no longer in network with BCBS Tennessee Medicare Advantage.
- Avera Health in Sioux Falls, South Dakota, ended its participation as an in-network provider with Humana Medicare Advantage effective January 1, 2025.
- Lawton, Oklahoma-based Comanche County Memorial Hospital stopped accepting UnitedHealthcare Medicare Advantage plans on May 1, 2024.
- Houston-based Memorial Hermann Health System ended its contract with Humana Medicare Advantage on January 1, 2024.
These are just a few examples of the many hospitals and health systems that have cited high rates of claim denials as a reason for dropping Medicare Advantage plans. The issue of claim denials has contributed to the growing trend of hospitals opting out of these plans, which has significant implications for patients' access to care and out-of-pocket costs.
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Rising costs and industry changes
Hospitals across the United States are dropping Medicare Advantage plans, impacting over a million patients. Medicare Advantage is a version of Medicare offered by private insurance companies that contract with the government. These plans typically offer extra benefits, such as dental, vision, and prescription drug coverage, that are not included in traditional Medicare. However, they often have a limited network of providers, which can restrict patients' choices.
There are several reasons for hospitals to drop Medicare Advantage plans, and rising costs are a significant factor. Hospitals have cited delayed reimbursements and slow payments from insurers as reasons for terminating their contracts with Medicare Advantage plans. They also face higher costs due to the excessive prior authorization denial rates associated with these plans. Prior authorization requirements make it harder for seniors to access care and increase administrative burdens on hospitals. A congressional investigation found that the nation's largest Medicare Advantage insurers denied a quarter of all prior authorization requests for post-acute care in nursing homes.
In addition to rising costs, industry changes have also played a role in hospitals dropping Medicare Advantage plans. The plans' prior authorization requirements have come under increased scrutiny, and hospitals have found them cumbersome and time-consuming. There are concerns that the limited networks of providers in Medicare Advantage plans may compromise patients' access to care and expose them to higher out-of-pocket costs. As a result, some patients may have to pay increased out-of-network costs or reschedule their medical services with other providers.
The combination of rising costs and industry changes has led to a growing trend of hospitals ending their contracts with Medicare Advantage plans. This has alarmed state insurance regulators and prompted discussions among lawmakers and ordinary Americans. Hospitals are becoming more vocal about their frustrations with insurers' cost-control efforts and the impact of Medicare Advantage plans on their finances. As a result, patients may need to switch to traditional Medicare or find alternative Medicare Advantage plans that work for them.
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Payment delays
Hospitals are dropping Medicare Advantage plans due to payment delays, among other reasons. Medicare Advantage plans are run by private insurance companies that contract with the government. These plans offer extra benefits such as dental, vision, and prescription drug coverage, which are not included in traditional Medicare. However, they often have a limited network of hospitals and physicians, which can restrict patients' choices.
Medicare Advantage plans have been facing financial pressures, with rising medical costs and increasing enrolments, resulting in higher costs for providers. As a result, some insurers are pulling their Medicare Advantage plans from unprofitable counties and states. Hospitals, on the other hand, are facing challenges with payment delays and slow reimbursement rates from insurers. This has led to concerns about the impact on their finances, with some hospitals terminating their contracts.
In 2023, Becker's Hospital Review reported that hospitals and health systems in at least 11 states announced they would be out of network for some or all Medicare Advantage plans in 2024. This trend has continued into 2025, with health systems in various states, including Pennsylvania, Minnesota, South Dakota, and Tennessee, ending their participation with specific Medicare Advantage plans.
The issue of payment delays has been a significant concern for hospitals. A survey of 135 health system CFOs found that 16% planned to stop accepting one or more Medicare Advantage plans in the next two years, with 45% considering the same. The same survey revealed that 62% of CFOs found collecting payments from Medicare Advantage plans "significantly more difficult" than in previous years. This indicates a growing trend of hospitals dropping Medicare Advantage plans due to payment delays and financial challenges.
The impact of these changes is felt by patients, who may face increased out-of-network costs or have to reschedule medical services with different providers. Medicare Advantage enrollees, in particular, account for a significant proportion of inpatient hospital days, and the loss of coverage can be a significant concern. As a result, patients may have to switch to traditional Medicare or explore alternative Medicare Advantage plans to ensure continued access to healthcare services.
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Coverage restrictions
Medicare Advantage plans often have a limited network of hospitals and physicians. This restricted networking means that enrollees could end up paying more in the long run in copays and deductibles if they develop a serious illness. This is because they may have to pay increased out-of-network costs or reschedule their necessary medical services with another provider who may not have prompt availability.
Medicare Advantage plans also require patients to get prior authorization for more services than Original Medicare, which can cause frustration and delay care. This is a significant issue for hospitals, which have to spend time and resources dealing with the approvals process.
Some hospitals have also terminated contracts over payment rates, with insurers facing increasing medical expenses as members require more care. This can make it financially challenging for some providers, especially in areas with high overhead costs.
The combination of these factors has led to a growing trend of hospitals dropping Medicare Advantage plans.
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Frequently asked questions
Hospitals are dropping Medicare Advantage plans due to administrative challenges, including excessive prior authorization denial rates and slow payments from insurers.
When hospitals drop Medicare Advantage plans, patients may face increased out-of-network costs or have to reschedule their medical services with another provider, potentially compromising their access to care.
Patients can switch to traditional, government-run Medicare programs, which have more limited prior authorization and claim denial rates. However, traditional Medicare may not offer the same extra benefits as Medicare Advantage, such as dental, vision, and prescription drug coverage.
