Dropped by Your Healthcare system? The Truth About Medicare Advantage Plans
Recently, several people have reached out to me in a panic after learning their preferred healthcare system—and its hospitals and doctors—will no longer accept their Medicare Advantage plans starting in 2025.
How Big is the Problem?
More than half of Medicare-eligible individuals are enrolled in Medicare Advantage plans, but these plans are increasingly being dropped by hospitals nationwide. In 2023, hospitals in at least 11 states announced they would no longer accept some or all Medicare Advantage plans for 2024. By 2024, an additional 32 health systems joined the trend, according to Becker’s Hospital Review.
Why is This Happening?
Hospitals and Healthcare systems cite three major issues with Medicare Advantage plans:
Delayed or low Reimbursements: Payments are often low or slow to arrive. Medicare Advantage plans reimburse hospitals and doctors less than Original Medicare.
Cumbersome Processes: Prior authorization requirements are time-consuming and costly for Healthcare providers.
High Denial Rates: Many patient prior authorizations for care are denied, creating poor outcomes for patients.
In fact, nearly 1 in 5 health systems stopped accepting one or more Medicare Advantage plans last year, according to the Healthcare Financial Management Association.
“It’s a huge money-loser for medical practices,” says Melinda Caughill, CEO of 65 Incorporated, which provides Medicare guidance. She explains that doctors don’t receive extra compensation for navigating the administrative hurdles of Medicare Advantage.
Nilsa Cruz, a patient advocate at a rheumatology practice in Milwaukee, shared her experience of spending two hours trying to resolve an issue with an insurance representative. “These plans often outsource critical administrative and clinical functions, making it harder to provide care,” she says. UnitedHealthcare uses AI to deny care to Medicare Advantage patients.
“This problem has always existed but is now worsening,” says Katy Votava, a health economist and founder of Goodcare, a consulting firm focused on healthcare costs. “The approvals have become so onerous that providers are finding it unsustainable.”
What Can You Do if your Healthcare system drops your Medicare Advantage?
If your healthcare system stops accepting your Medicare Advantage plan, you may face two difficult choices:
Switch your insurance.
Switch your healthcare providers.
For example, tens of thousands of Medicare Advantage enrollees in California had to make this decision when Scripps Health announced it would no longer accept certain Medicare Advantage plans in 2024.
How Can You Avoid This Medicare disaster?
No hospital system ever drops Original Medicare. If you have Original Medicare and a Medicare Supplement plan:
You will never be dropped by any hospital system.
Your Medicare Supplement plan cannot drop you as long as you pay your premiums.
All hospitals accept Original Medicare, so you’ll always have access to care.
Can You Switch from Medicare Advantage to Original Medicare with a Supplement?
It depends. After age 65, Medicare Supplement plans can deny coverage for pre-existing conditions. To learn more, read my article about the questions insurers may ask regarding pre-existing conditions.
NOT FINANCIAL ADVICE
The information contained in this article is for informational purposes only and shall not be understood or construed as financial advice. I am not an attorney, accountant, or financial advisor, nor am I holding myself out to be. I do not accept any fees or commissions from anyone or any financial institution.
