Medicare Advantage Plans Face Growing Resistance from Hospitals and Doctors

"Medicare Advantage is the future of Medicare." This is how Seema Verma, the former administrator of the Centers for Medicare & Medicaid Services (CMS), described the private health plans that offer an alternative to the traditional fee-for-service Medicare program. However, not everyone shares this optimistic view, especially some hospitals and doctors who are increasingly terminating their contracts with Medicare Advantage plans over payment disputes.

Understanding Medicare Advantage Plans

Medicare Advantage plans, also known as Part C, are offered by private insurance companies that contract with CMS to provide Medicare benefits to enrollees. These plans often include extra benefits, such as vision, dental, and prescription drug coverage, and may have lower premiums and out-of-pocket costs than Original Medicare. However, they also have more restrictions on which providers and facilities enrollees can use, and may require prior authorization or referrals for certain services.

Rising Popularity of Medicare Advantage

According to CMS data, about 28.6 million people, or 42% of all Medicare beneficiaries, were enrolled in Medicare Advantage plans as of September 2023. This number is expected to grow to 30.4 million, or 44%, by 2024. The popularity of these plans among consumers has been driven by factors such as increased marketing, expanded benefits, and lower costs.

Provider Concerns and Contract Terminations

However, some hospitals and doctors are not happy with the way Medicare Advantage plans reimburse them for their services. They claim that these plans pay less than Original Medicare, delay or deny payments through prior authorization or other administrative hurdles, and impose unfair contract terms that limit their ability to negotiate or appeal. As a result, some providers have decided to drop out of Medicare Advantage networks or refuse to accept new patients with these plans.

• Scripps Health: Scripps Health, a nonprofit health system in San Diego, California, announced in October 2023 that it would terminate its contracts with six Medicare Advantage plans at the end of the year, affecting about 28,000 enrollees.
• Steward Health Care System: Steward Health Care System, a for-profit hospital chain based in Dallas, Texas, that operates in nine states, announced in September 2023 that it would end its contracts with four Medicare Advantage plans in Massachusetts, affecting about 100,000 enrollees.

Impact on Consumers and CMS Response

These contract terminations have raised concerns among consumers, advocates, and regulators about the potential impact on access to care and quality of care for Medicare Advantage enrollees. CMS has been monitoring the situation and has issued guidance to both providers and enrollees on how to handle contract terminations. CMS has also encouraged providers and plans to resolve their disputes through negotiation or arbitration, rather than cutting ties abruptly. CMS has said that it will take enforcement action against any provider or plan that violates its contractual obligations or federal regulations.

Balancing Cost, Quality, and Access

The conflict between providers and plans over Medicare Advantage payments reflects the broader challenges of balancing cost, quality, and access in the U.S. health care system. As more consumers choose Medicare Advantage plans for their perceived value and convenience, providers may face more pressure to accept lower payments or more restrictions from these plans. On the other hand, as providers demand higher payments or more flexibility from these plans, consumers may face more uncertainty or difficulty in accessing the care they need.

The Future of Medicare Advantage

The future of Medicare Advantage may depend on finding a middle ground between these competing interests, where providers are paid fairly and promptly for their services, plans are able to offer affordable and comprehensive benefits to their enrollees, and consumers are able to choose the best option for their health care needs.

Citations 

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