Medicare Advantage plans’ excessive denials, restrictive provider networks, and contentious contract negotiations continue to increase the number of health systems dropping MA plans.

This new reality leaves patients frustrated and creates significant challenges for providers searching for a sustainable solution to provide care for MA enrollees – who are projected to make up 60 percent of all Medicare members by 2030 according to policy experts and analysts.

From the article:

Medicare Advantage enrollment and profitability surged in recent years as a growing number of seniors sought plans with minimal copays and extra benefits not offered in traditional Medicare. However, Medicare Advantage enrollment growth has slowed and insurance companies’ earnings per member have declined over the past year as insurers grapple with stiffer competition, higher medical costs and utilization, lower reimbursement rates and stricter regulatory oversight.

Insurers such as Humana have tried to improve their finances by cutting Medicare Advantage plans in certain markets, lowering provider payments and pruning benefits. Several large insurers have also ramped up claim denials and prior authorization policies, leading to more contentious contract negotiations with providers.

Some of the conflicts have dented hospital margins and left patients with fewer in-network options and higher costs.

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Health systems have walked away from in-network agreements or looked to scale up as a buffer and negotiating tool.

In the second quarter alone, there were 20 public contract disputes between insurers and providers, 75% of which involved Medicare Advantage plans, according to data compiled by FTI Consulting. Since 2022, the share of contract quarrels with Medicare Advantage plans has typically been closer to 50%.

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As profitability of Medicare Advantage products declines amid a Medicare Advantage payment rate cut set to kick in next year, insurers are expected to deny more claims, further limit provider networks and more aggressively negotiate Medicare Advantage rates with providers, according to the report.

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