Medicare Advantage plans have gained significant traction, appealing to both lawmakers and a growing number of Americans. Currently, over half of all Medicare beneficiaries, approximately 31 million individuals, are enrolled in these plans. However, this popularity is not mirrored within the medical community, where doctors and hospitals express increasing discontent.
Across the nation, healthcare providers are voicing strong concerns regarding Medicare Advantage plans, primarily due to claim denials and burdensome preapproval processes. This dissatisfaction has reached a point where some hospitals and physician practices are opting to refuse these plans altogether, even those from major insurers like UnitedHealthcare and Humana.
Chip Kahn, the president and CEO of the Federation of American Hospitals, an organization representing for-profit hospitals, emphasizes the severity of the situation. “The insurance companies managing Medicare Advantage plans are pushing physicians and hospitals to their limits,” he states, highlighting the escalating tensions between providers and insurers.
Adding to the industry-wide concern, the American Hospital Association (AHA), the largest lobbying group for hospitals, recently sent a letter to the Centers for Medicare and Medicaid Services (CMS). The AHA urged CMS to address what they perceive as insurers circumventing new regulations designed to curb excessive prior authorization requirements and claim denials, signaling a breakdown in trust and regulatory compliance.
While disputes between insurers and providers are not unprecedented, particularly concerning employer-sponsored plans, the current focus on Medicare Advantage plans feels distinct, according to David Lipschutz, associate director and senior policy attorney for the Center for Medicare Advocacy. He notes a significant increase in vocalized frustration from hospitals and doctors regarding insurers’ cost-control strategies, suggesting a systemic issue within the Medicare Advantage framework.
Baptist Health in Louisville, Kentucky, exemplifies this growing trend of provider pushback. This healthcare system, encompassing nine hospitals, alongside its clinics and physician groups, announced a potential termination of its contracts with Medicare Advantage plans from UnitedHealthcare and WellCare Health Plans Inc. starting in January. Baptist Health cited routine denials or delays in approvals and payments for necessary medical care as the primary reason for this drastic measure, directly communicating their grievances to patients on their website. Furthermore, their medical group, consisting of nearly 1,500 physicians and providers, had already withdrawn from Humana’s network in September, demonstrating a sustained and widening rejection of certain Medicare Advantage plans.
Similarly, in San Diego, the impact of this insurer-provider conflict is being felt by patients. Over 30,000 individuals are now tasked with finding new doctors after two large medical groups associated with Scripps Health declared they would no longer contract with any Medicare Advantage insurers beginning in 2024. Scripps Health cited insufficient revenue to adequately cover the costs of patient care as the driving force behind their decision, revealing the financial strain these plans impose on providers.
Fueling this provider resistance is a report from the Health and Human Services Department’s inspector general, published the previous year. The study revealed instances where Medicare Advantage plans inappropriately denied coverage for services that should have been covered under traditional Medicare guidelines. This report has emboldened providers to challenge insurer practices and advocate more forcefully for their patients and fair reimbursement.
The Biden administration has responded to these mounting concerns by introducing new rules, slated to take effect in January, partly as a direct response to the OIG report. These regulations aim to address some of the issues surrounding prior authorization and claim denials, acknowledging the validity of provider complaints and seeking to improve the system’s functionality. It’s important to note that the open enrollment period for Medicare Advantage plans, traditional Medicare, and stand-alone Medicare drug plans concludes on December 7th, giving beneficiaries a limited window to review their coverage options in light of these developments.
Even within Congress, traditionally a strong supporter of Medicare Advantage plans, there is increasing scrutiny regarding their operational practices. Prior authorization stands out as a significant point of contention. Data from KFF indicates that nearly all Medicare Advantage enrollees are in plans that mandate pre-approval for at least some medical services. Insurers defend this process as essential for care coordination and ensuring appropriate treatment protocols are followed.
However, the sheer volume of prior authorization requests and denials paints a concerning picture. KFF data shows that in 2021, over 35 million prior authorization requests were submitted for Medicare Advantage enrollees, with over 2 million being denied. Of those denials that were appealed (a mere 11 percent), a significant 82 percent were successfully overturned, suggesting that a substantial portion of initial denials may be unjustified.
While pre-authorization is also prevalent in commercial insurance plans, a key difference with Medicare lies in the availability of traditional, government-run Medicare. Traditional Medicare has far fewer instances of prior authorization and claim denials. Although doctors and hospitals have their own set of grievances regarding reimbursement rates under traditional Medicare, they generally spend less time and resources battling over coverage decisions, making it a more administratively streamlined system from their perspective.
In conclusion, the growing friction between healthcare providers and Medicare Advantage plans stems primarily from concerns about excessive claim denials and pre-authorization requirements. These administrative burdens, coupled with perceptions of inadequate reimbursement and insurer cost-control tactics, are driving increasing numbers of doctors and hospitals to push back against Medicare Advantage plans. This escalating conflict has significant implications for patient access to care and the future landscape of Medicare coverage, warranting careful attention from policymakers, insurers, providers, and beneficiaries alike.
