This is just the start of insurers’ squeeze on Medicare Advantage markets and provider contracts, the effects of which will grow as Medicare Advantage enrollment is expected to account for about 60% of all Medicare membership by 2030, consultants, analysts and policy experts said.
"This is the first year that MA plans have really hammered hospitals, and I think it will get uglier," industry consultant Paul Keckley said.
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%.
Earlier this year, Bloomington, Pennsylvania-based HealthPartners said it would drop out of UnitedHealthcare's Medicare Advantage network in 2025; York, Pennsylvania-based WellSpan Health stopped accepting Humana Medicare Advantage plans; Genesis Healthcare System in Kennet Square, Ohio, went out of network with Elevance Health and Humana Medicare Advantage plans; and Raleigh, North Carolina-based WakeMed dropped its Humana Medicare Advantage network.
In addition, Sioux Falls, South Dakota-based Sanford Health said last month it’s nixing the system's in-network Medicare Advantage agreement with Humana.
“From the provider perspective, they may say, ‘I will get fewer patients if we stay out of network. But maybe I will be better off for it because of the administrative hassle and loss of revenue when claims do get denied,’” said Paul Ginsburg, health policy professor at the University of Southern California, senior fellow at the USC Schaeffer Center for Health Policy and Economics and a former commissioner at the Medicare Payment Advisory Commission.
A UnitedHealthcare spokesperson said in a statement it plans to use the remaining months in the HealthPartners contract to reach an agreement that maintains in-network access. UnitedHealthcare refuted HealthPartners' allegations that the insurer delays and denies payment approvals.
Humana and Elevance did not respond to requests for comment.
Losing Medicare Advantage contracts isn’t an option for some providers. In more than 900 counties, UnitedHealthcare and Humana account for at least 75% of Medicare Advantage enrollment, according to KFF data.
Some health systems have expanded to better weather claim denials and prior authorization requirements, as well as bolster their negotiating power with insurers.
For instance, Aspirus Health in March acquired St. Luke’s Duluth, a two-hospital system in northeastern Minnesota. Wausau, Wisconsin-based Aspirus grew its hospital market beyond northern and central Wisconsin and Michigan’s Upper Peninsula in part to improve claim documentation, denial reviews and overall revenue cycle operations as insurers have denied more claims, CEO Matthew Heywood said.
“You have a problem with your revenue getting weaker because you’re getting paid less, so you want back-office scale to be more efficient,” he said.
Health systems with broad scale and market share will be best positioned to counter claim denials, rate-cut proposals and prior authorization requirements, Moody’s Investors Service analysts wrote in a March report.
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.
At the same time, more health systems will say they don’t want to work with certain Medicare Advantage plans that have too many requirements, offer too low rates and are too strict with clinical judgments, said Michael Bagel, associate vice president of public policy at the Alliance of Community Health Plans, which represents nonprofit insurance companies.
“It is coming to a head in 2025,” he said.
Still, these contract disputes are not indicative of a broad Medicare Advantage plan-provider problem — they are about certain insurers and providers who aren’t seeing the need to come together, Bagel added.
Four insurers control two-thirds of the national Medicare Advantage market, forcing providers into rates that dramatically underestimate their operating cost performance, said Jeff Goldsmith, president and founder of the healthcare consultancy Health Futures.
“I am an MA subscriber — I do not feel like a customer in my MA plan, I feel like a source of revenue," said Jeff Goldsmith, president and founder of the healthcare consultancy Health Futures. "There is a lot of collateral damage if health systems do not think through how they can cushion the effect on what is hopefully a temporary interruption on their coverage of their patients.”
More disputes are expected to occur over the next year, according to Citseko Staples Miller, managing director at FTI.
The contracting stalemates are adding stress for patients caught in the middle like Staples Miller's mom, a Medicare Advantage beneficiary, who just received a letter saying her local provider may no longer be in network, she said.
"This provokes anxiety for any affected individual, particularly those with complex needs and medication management," Staples Miller said. "It can be especially concerning for folks who are living in a part of the country who may not have as many plan or provider choices."
A spokesperson for health insurance trade group AHIP said in a statement Medicare Advantage enrollees have robust protections to ensure access to high-quality providers.
