With Medicare Advantage enrollment approaching 55% of eligible beneficiaries, health systems across the country are grappling with a question that’s gone largely unaddressed in policy circles: What happens if the healthcare providers best equipped to care for seniors can no longer afford to participate?
Over the past couple of years, persistent operational and financial hurdles have driven a growing number of hospitals and health systems to end some or all of their commercial MA contracts. These range from rising denial rates and prior authorizations to delayed or insufficient reimbursements. And while payers and providers navigate these clashes behind the scenes, patients are left in limbo.
“Over the past 15 to 20 years, we’ve seen a dramatic shift with the rise of Medicare Advantage. It’s changed the dynamic,” Chip Kahn, president and CEO of the Federation of American Hospitals, told Becker’s. “In certain markets — take Southern Florida, for example — hospitals can have Medicare Advantage penetration rates as high as 70% to 80%, not just the national average of 54%. In those areas, it has essentially become the dominant way Medicare beneficiaries receive coverage.”
While MA plans are attractive to many enrollees for their simplicity and potential cost savings, the back-end friction they can generate has providers doubting whether the program is sustainable in its current form.
“The assumption seems to be that the more friction you introduce — whether through prior authorizations, delays or denials — the less care will ultimately be delivered, because patients, clinicians and hospitals will get worn down,” Mr. Kahn said.
‘I’ve long supported MA, but…’: A CEO’s shifting view
Barry Arbuckle, PhD, president and CEO of Fountain Valley, Calif.-based MemorialCare Health System, has been a longtime supporter of MA, citing the program’s emphasis on coordination, prevention and financial alignment with population health.
“MA — especially contracts where the providers are taking financial risk — is far more aligned with the health of the population,” Dr. Arbuckle said. “Having participated in dual-risk for over 25 years, I can confidently say that the MA program is better for our seniors, better for the providers (until recently), and better for the financial health of the U.S. healthcare system.”
But recent changes in regulation and reimbursement have weakened that optimism. Of particular frustration are inaccurate MedPAC reports, which Dr. Arbuckle says have led CMS and Congress to adopt increasingly restrictive policies.
“In the past few years, MA has been subjected to some serious blows,” Dr. Arbuckle said. “Some organizations — though I would argue a minority — have exploited loopholes or grey areas in MA regulations, and MedPAC has issued deeply flawed analyses of MA, which has led to CMS and members of Congress holding a very negative view of the program.”
In response, CMS and Congress have implemented changes — with more expected — that are pushing more providers and health plans to reconsider or exit MA altogether.
Dr. Arbuckle argues that many of these policy shifts stem from recent MedPAC reports that relied on simplistic comparisons between MA and traditional Medicare, failing to account for MA’s integrated care coordination, prescription drug coverage and affordability protections — features that are not part of traditional Medicare.
The March MedPAC report claims MA costs the federal government up to $84 billion more annually than traditional Medicare — figures Dr. Arbuckle believes are based on flawed assumptions about favorable selection and coding intensity.
“With worsening financial performance of MA, some providers took the tact that my organization took — appreciate the importance of MA to our community, but protect the financial stability of our hospitals — and move from taking hospital risk to fee-for-service, while keeping our physician division [in risk-based contracts],” he said. “Many more health systems have outright terminated MA contracts altogether, and an increasing number of MA health plans are abandoning multiple markets.”
Why Mayo Clinic is stepping back from Medicare Advantage
This friction is being felt at the highest levels of healthcare leadership. At Becker’s CEO+CFO Roundtable, Dennis Dahlen, CFO of Rochester, Minn.-based Mayo Clinic, discussed the health system’s decision to end contracts with most Humana and UnitedHealthcare MA plans in January 2026 — a move that reflects a broader trend.
Over the last three years, Becker’s has reported on about 90 hospitals and health systems that have dropped some or all of their MA contracts.
“There’s been a significant amount of peer and network disruption in the Medicare Advantage space, and Mayo Clinic is taking a fairly aggressive approach on that front,” Mr. Dahlen said. “We’re being very selective about which Medicare Advantage plans we contract with — but for those that we’re not in network with, patients likely won’t be able to get an appointment unless it’s clinically significant or we can make an exception.”
Mr. Dahlen emphasized that these decisions aren’t easy, but for every network or contract decision Mayo Clinic makes, there’s a clinical safety net in place.
“If a patient is currently under our care and needs to continue treatment, we will preserve access,” he said.
Some health systems are proactively advising patients aging into Medicare to consider traditional Medicare if they wish to maintain access, while others are advising seniors already enrolled in MA plans to switch to traditional Medicare.
A hidden risk for seniors
However, Dr. Arbuckle warns that advising patients to “just go back to traditional Medicare” may not be the easy fix it seems. This is especially true for seniors seeking Medigap coverage, extra insurance that can be bought to help pay for out-of-pocket costs in traditional Medicare.
“If someone buys Medigap at age 65, they get guaranteed-issue pricing,” he said. “But if they leave MA, go back to traditional Medicare, and attempt to purchase a Medigap plan, they must go through underwriting, they will have higher premiums (especially if they have any comorbidities) or they could be outright denied.”
Given that 93% of adults aged 65 or older have at least one chronic condition — and nearly a quarter have four or more — the affordability gap can be devastating. Dr. Arbuckle noted that $200 per month in added premiums is common, a steep price for many seniors on fixed incomes.
Reclaiming stability in Medicare Advantage
As MA plans evolve and providers reconsider participation, health system leaders are calling for greater education, transparency and reform.
“We must educate CMS, Congress and their healthcare staffers about the flaws in the MedPAC reports and the damage they’re causing,” he said. “It’s imperative that we get the MA program back on the right track — for our seniors, our provider systems, and the financial stability of the U.S. healthcare system.”
This level of dysfunction in something that serves 55% of America’s seniors — a demographic that votes in high numbers and holds influence with policymakers — is unsustainable, according to Mr. Dahlen.
“Seniorhood is when we need healthcare the most,” he said. “That should be the last point in life where you’re at risk of losing network access or care availability. So, while I don’t know exactly how this will play out, I don’t think the current path — where there’s massive annual disruption around network participation, plan exits and coverage drivers — is one that can continue.”
