Hospitals take aim at Medicare Advantage

Medicare Advantage may now provide health coverage to more than half of the nation's seniors, but that is not stopping health systems from pushing back against the growing and controversial program.

Hospitals have been dropping Medicare Advantage plans over high claim or prior authorization denial rates since at least 2018, but it was an uncommon move until recently. Some systems have noted that most MA carriers have faced allegations of billing fraud from the federal government and are being probed by lawmakers over high denial rates.

Rochester, Minn.-based Mayo Clinic warned Medicare-eligible patients in Florida and Arizona in October that it does not accept most Medicare Advantage plans, and Vanderbilt University Medical Center in Nashville, Tenn., was preparing to drop Humana and Centene MA plans before reaching contract agreements in March.

Cameron (Mo.) Regional Medical Center stopped accepting Cigna's MA plans in 2023 and plans to drop Aetna and Humana in 2024. It plans to continue Medicare Advantage contracts with UnitedHealthcare and BCBS, the St. Joseph News-Press reported in May. Cameron Regional CEO Joe Abrutz previously told the newspaper the decision stemmed from delayed reimbursements.

Stillwater (Okla.) Medical Center ended all in-network contracts with Medicare Advantage plans amid financial challenges at the 117-bed hospital. Humana and BCBS of Oklahoma were notified that their MA members would no longer receive in-network coverage after Jan. 1, 2023. The hospital said it made the decision after facing rising operating costs and a 22 percent prior authorization denial rate for Medicare Advantage plans, compared to a 1 percent denial rate for traditional Medicare.

Brookings (S.D.) Health System will no longer be in network with any Medicare Advantage plans in 2024, the Brookings Register reported. The 49-bed, municipally owned hospital said the decision was made to protect the financial sustainability of the organization. 

Bend, Ore.-based St. Charles Health System has taken it a step further and is not only considering dropping all Medicare Advantage plans, but is also encouraging its senior patients not to enroll in the private Medicare plans during the next open enrollment period. 

The health system's president and CEO, CFO, and chief clinical officer cited higher rates of denials, longer hospital stays and overall administrative burden for clinicians. 

"We recognize changing insurance options may create a temporary burden for Central Oregonians who are currently on a Medicare Advantage plan, but we ultimately believe it is the right move for patients and for our health system to be sustainable into the future to encourage patients to move away from Medicare Advantage plans as they currently exist," St. Charles Health CFO Matt Swafford said.

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