Medicare Advantage Growth Raises Care Access and Cost Concerns for Providers

Medicare beneficiaries in the U.S. face a choice between traditional Medicare and Medicare Advantage plans, each with distinct benefits and challenges. Medicare Advantage plans, offered by private insurers, provide lower upfront costs and additional services, which has driven enrollment to about 55% of beneficiaries nationwide by 2025. However, the Nebraska Hospital Association and other healthcare leaders express concerns about financial risks, delayed care due to prior authorization requirements, and limited provider networks associated with Medicare Advantage. Hospitals report frequent denials of care and financial burdens linked to dealing with Medicare Advantage insurers. These plans require prior authorizations that often delay treatment, sometimes significantly, impacting patient care and hospital capacity, especially in rural areas. Some hospitals, including those in Nebraska and other Midwestern states, have ceased contracting with certain Medicare Advantage plans due to these challenges. Medicare Advantage enrollees typically pay Part B premiums and often low or no additional premiums while accessing enhanced benefits such as dental, vision, and gym memberships. Unlike traditional Medicare, Medicare Advantage generally involves co-pays and out-of-pocket maximums. Traditional Medicare coverage includes Part A (hospital) and Part B (medical services), with options for Part D (prescription drugs) and supplemental Medigap plans, which can be costly but provide broader access and fewer restrictions. Data on claims denials by Medicare Advantage insurers is limited, complicating assessments of care alignment between providers and plans. Prior authorization, referral requirements, and network limitations are cost-control tools used by Medicare Advantage plans but have drawn criticism for overuse and impact on timely care. CMS plans to pilot prior authorization for certain services in traditional Medicare starting 2026. Payments to Medicare Advantage plans have increased significantly over the past decade, with Medicare spending on these plans reaching nearly $494 billion in 2024. The program was initially intended to reduce government costs but now costs about 20% more per enrollee than traditional Medicare. Upcoding practices and risk score adjustments contribute to higher payments. This issue has garnered bipartisan attention and legislative proposals aimed at improving transparency and reducing fraud. Medicare Advantage plans receive star ratings from CMS based on quality measures and consumer satisfaction, affecting bonus payments and enrollment capabilities. However, recent changes in rating criteria and lawsuits from plan providers indicate ongoing disputes over ratings accuracy. Independent insurance agents, such as Saving Seniors Money in Nebraska, play a critical role in educating Medicare beneficiaries about their coverage options during open enrollment. Cost considerations are a major factor for seniors, with rising traditional Medicare supplement premiums causing many to opt for Medicare Advantage despite its network constraints and prior authorization challenges. Legislators have introduced bills to increase reporting requirements for denied claims and address upcoding in Medicare Advantage. Despite legislative efforts, some hospitals and providers find continuing conflicts with Medicare Advantage insurers leading to limited plan acceptance. Patients and providers face complex decisions amid these dynamics. State Health Insurance Assistance Programs and Medicare.gov offer resources for beneficiaries to compare plans, understand networks, and make informed choices. However, Medicare Advantage plans' annual changes in coverage and networks require ongoing review by enrollees. Hospital systems like Great Plains Health have stopped accepting Medicare Advantage due to patient care complications and financial strain. These developments highlight a tension between Medicare privatization goals and cost and quality outcomes for seniors. Medicare Advantage's market growth, regulatory scrutiny, and system impacts create an evolving landscape that insurance professionals and healthcare providers must navigate carefully. The balance between affordability, network access, care quality, and administrative complexity remains a central concern as the U.S. Medicare program adapts to demographic and fiscal pressures.