Nearly half of health systems are considering dropping Medicare Advantage plans

"Onerous" authorization requirements and high denial rates have health systems considering whether to drop Medicare Advantage plans, according to a report from the Healthcare Financial Management Association and Eliciting Insights. 

"HFMA Health System CFO Pain Points Study 2024" is based on a survey of 135 health system CFOs conducted in January. 

According to the report, 16% of health systems are planning to stop accepting one or more Medicare Advantage plans in the next two years. Another 45% said they are considering the same but have not made a final decision.

Health systems have been increasingly pushing back on Medicare Advantage. Chris Van Gorder, president and CEO of San Diego-based Scripps Health, told Becker's last year that "it's becoming a game of delay, deny and not pay." Scripps terminated Medicare Advantage contracts effective Jan. 1 for its integrated medical groups. The medical groups, Scripps Clinic and Scripps Coastal, employ more than 1,000 physicians, including advanced practitioners. Mr. Van Gorder said the health system was facing an annual loss of $75 million on MA contracts.  

"Providers are going to have to get out of full-risk capitation because it just doesn't work — we're the bottom of the food chain, and the food chain is not being fed," he said.

In March, Bristol (Conn.) Health announced it was eliminating 60 positions, 21 of which are occupied and will result in layoffs. Its CEO, Kurt Barwis, laid blame on Medicare Advantage saying, "All the nice-to-haves are being taken out by the lack of insurance payment and the lack of reimbursement."  

Sachin Jain, MD, CEO of SCAN Group — one of the nation's largest nonprofit Medicare Advantage companies — cautioned health systems that dropping Medicare Advantage plans is a short-term trend that is "going to backfire in a big way for these large health systems."

"You're a nonprofit system saying you're no longer going to accept the insurance that low-income people actually have," he said. "We'll see how that works out for you." 

Dr. Jain said any public policy program is going to create unintended consequences, adding, "What I would say to anybody who's critical about the program is that you're right, but let's fix that."  

Former CMS Administrator Don Berwick, MD, told Becker's in February that the battle between hospitals and Medicare Advantage is a "manifestation of an underlying broken system in which everyone that gives care wants to give more, and everyone that pays for care wants to pay less."

Despite tensions with some health systems, the Medicare Advantage program had a 95% quality satisfaction rating among enrolled members in 2023.

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